When your subscription business receives a consumer refund demand citing California Automatic Renewal Law (CARL) or the Consumers Legal Remedies Act (CLRA), you face a critical decision: cure the violation, fight the claim, or negotiate a settlement.
🎯 Why This Matters to Your Business
The stakes in subscription defense cases extend far beyond the individual consumer's refund request:
Attorney Fee Exposure: CLRA § 1780(e) allows consumers to recover attorney fees if they prevail—often 10-30× the refund amount
Class Action Risk: A single CARL/CLRA violation affecting thousands of subscribers creates massive exposure
Compliance Review: One complaint may reveal systemic issues requiring immediate operational changes
Settlement Precedent: How you respond sets expectations for future claimants
Cure opportunity within 30 days to avoid damages and attorney fees
Chargeback Threat
Unauthorized charges, services not rendered, cancellation not honored
Merchant account penalties, chargeback ratio thresholds, potential account suspension
Attorney Demand
Consumer represented by counsel, often seeking multiple months of refunds plus fees
Litigation risk, fee multiplier if you lose, discovery costs
⚠️ Critical Timing: The 30-Day CLRA Window
If the consumer has sent a CLRA § 1782 demand via certified mail, you have exactly 30 days from receipt to "cure" the violation by providing "appropriate relief."
Why this matters: If you cure within 30 days, the consumer cannot recover damages or attorney fees—only their actual economic loss. If you ignore the demand or refuse to cure, they can sue for:
Actual damages
Statutory damages up to $5,000 per violation (CLRA § 1780)
Attorney fees and costs (often the biggest number)
Injunctive relief requiring you to change business practices
✅ The Strategic Cure Decision
In most CARL/CLRA subscription cases, the economics favor strategic curing—providing the refund within 30 days to eliminate fee exposure:
Example: $300 Subscription Dispute
Consumer's claim: Charged $100/month for 3 months after attempting to cancel online but encountering errors.
Your cure option: Refund $300 within 30 days.
Your litigation risk if you refuse:
$300 actual damages (the refund you'd eventually pay anyway)
Consumer's attorney fees: $15,000-$30,000+ if case proceeds to trial
Your defense costs: $20,000-$50,000+
Total exposure: $35,000-$80,000+ for a $300 dispute
Cure outcome: $300 refund, zero attorney fees, matter closed.
The cure mechanism transforms even meritorious defenses into economic losers because you can't recover your attorney fees even if you win.
📜 Legal Framework for Subscription Businesses
🔄 California Automatic Renewal Law (CARL)
Bus. & Prof. Code §§ 17600-17606 imposes three core requirements on subscription businesses:
1️⃣ Clear and Conspicuous Disclosure
Before charging, you must disclose in a "clear and conspicuous manner":
That the subscription will auto-renew
The renewal frequency and amount
How to cancel
Common violation: Burying auto-renewal disclosure in dense terms of service or using small font/light gray text.
2️⃣ Affirmative Consent
The consumer must affirmatively consent to the auto-renewal terms:
Before responding, conduct an immediate internal review:
📋 Subscription Defense Checklist
☐ Review consumer's subscription sign-up flow: Were CARL disclosures clear and conspicuous?
☐ Check consent records: Did consumer affirmatively consent to auto-renewal?
☐ Audit cancellation process: Can online subscribers cancel online? Is it "easy to use"?
☐ Review cancellation attempts: Did consumer try to cancel? Were there technical errors?
☐ Check confirmation emails: Did system send renewal reminders and cancellation confirmations?
☐ Assess claim merit: Is this a legitimate compliance gap or consumer error?
☐ Calculate exposure: Refund amount vs. potential attorney fees if consumer prevails
Step 2: Cure vs. Defend Decision Matrix
Scenario
Recommended Strategy
Rationale
Clear CARL/CLRA violation (e.g., no online cancellation option)
✅ Cure immediately
You will likely lose; curing eliminates attorney fees and forces compliance improvements you need anyway
Arguable violation (e.g., disclosures present but could be more prominent)
✅ Cure + negotiate
Litigation risk and defense costs exceed refund; cure while negotiating no-admission language
Meritless claim (e.g., consumer received services, clear cancellation was available)
⚖️ Cure if cheap, defend if principle matters
Even winning costs more than small refunds; but systematic fraud attempts may justify defending
Class action threat (Consumer attorney references systemic violations)
🚨 Immediate legal counsel
Exposure may exceed individual cure; need litigation defense strategy + compliance audit
Refund already provided
✅ Document cure
Send written confirmation of refund as CLRA cure response; cuts off further exposure
✅ The Economics of Curing
In subscription defense cases, strategic curing is almost always cheaper than defending:
Dispute Amount
Cure Cost
Defense Cost
Savings
$100-$500
$100-$500
$5,000-$30,000+
$4,500-$29,500+
$500-$2,000
$500-$2,000
$10,000-$50,000+
$8,000-$48,000+
$2,000-$10,000
$2,000-$10,000
$20,000-$100,000+
$10,000-$90,000+
Remember: These defense costs apply even if you win—CLRA fee-shifting is one-way, so prevailing businesses cannot recover their attorney fees from consumers.
Step 3: Crafting Your Response
Your response should accomplish multiple objectives:
🎯 Response Objectives
Provide the cure (refund): Eliminates attorney fee exposure
Document compliance improvements: Shows good faith if claim reveals systemic issues
Avoid admissions: Cure "without admission of liability" to protect against follow-on claims
Request claim release: Negotiate mutual release if possible
Preserve defenses: Note any factual disagreements while still curing
Step 4: Process Improvements
Use consumer complaints as a compliance audit trigger:
Fix systemic issues: If one consumer complained about difficult cancellation, thousands may have the same experience
Update disclosures: Make auto-renewal terms more prominent
Improve cancellation flow: Ensure online subscribers can cancel online in 2-3 clicks
Document consent: Capture affirmative opt-in with timestamp and IP logs
Send confirmations: Email confirmations for subscriptions, renewals, and cancellations
⚠️ When NOT to Cure: The Exceptions
Rare situations where defending may make sense:
Systematic fraud: Consumer is running a refund scam across multiple merchants
Services fully performed: Consumer received full value and is attempting buyer's remorse refund after contract term
Precedent risk: Curing would encourage hundreds of similar claims from other users
Class action: Individual cure won't stop class certification; need coordinated defense strategy
In these cases, consult with counsel before responding—defending increases costs but may be necessary to protect business model.
📝 Business Response Templates
Template 1: CLRA Cure Response (Full Refund)
[Date]
[Consumer Name]
[Consumer Address]
Re: Response to CLRA Demand Letter dated [Date] – Account #[Account Number]
Dear [Consumer Name]:
I received your demand letter dated [Date] regarding your [Product/Service] subscription.
In response to your concerns and pursuant to California Civil Code § 1782, I am providing the following relief:
1. REFUND: I have processed a full refund of $[Amount] to your [payment method]. The refund includes:
- [List specific charges being refunded with dates]
The refund will appear in your account within [5-10 business days].
2. ACCOUNT STATUS: Your subscription has been canceled effective [Date]. You will not incur any further charges.
3. CONFIRMATION: This letter serves as your cancellation confirmation as required by California Business & Professions Code § 17602(c).
This resolution is provided without any admission of liability or wrongdoing. I believe I complied with all applicable laws, but I am providing this relief in the interest of resolving your concerns promptly.
If you have any questions about this refund, please contact me at [email/phone].
Sincerely,
[Business Name]
[Authorized Representative]
[Contact Information]
Template 2: Partial Cure with Explanation
[Date]
[Consumer Name]
[Consumer Address]
Re: Response to Refund Request – Account #[Account Number]
Dear [Consumer Name]:
I received your request for a refund of subscription charges.
After reviewing your account, I am providing the following resolution:
1. PARTIAL REFUND: I am refunding $[Amount] covering the period from [Date] to [Date]. This represents the unused portion of your subscription after your cancellation request on [Date].
2. CHARGES RETAINED: I am retaining $[Amount] for services provided from [Date] to [Date]. During this period:
- [List services actually delivered/access provided]
- [Note any usage/downloads/benefits consumer received]
3. ACCOUNT CANCELED: Your subscription is canceled effective [Date]. No further charges will occur.
My subscription service complies with California's Automatic Renewal Law. Your original sign-up included:
- Clear disclosure of auto-renewal terms
- Affirmative consent to recurring billing
- Access to online cancellation at [URL]
That said, I want to resolve your concerns. The partial refund above represents a fair resolution given the services provided and your usage.
This resolution is offered without admission of liability. If you agree to accept this refund as full and final resolution of all claims, please sign and return the enclosed release.
Sincerely,
[Business Name]
[Contact Information]
Template 3: Cure + Compliance Improvement Notice
[Date]
[Consumer Name]
[Consumer Address]
Re: Resolution of Subscription Complaint – Account #[Account Number]
Dear [Consumer Name]:
Thank you for bringing your subscription concerns to my attention. I take consumer feedback seriously and have investigated your account.
IMMEDIATE RESOLUTION:
1. I have issued a full refund of $[Amount] to your [payment method]. You should see this credit within [timeframe].
2. Your subscription has been canceled and you will not be charged again.
PROCESS IMPROVEMENTS:
Your feedback revealed an area where I can improve my subscription service. I have implemented the following changes:
- [Specific improvement #1, e.g., "Enhanced auto-renewal disclosure on checkout page with larger font and contrasting color"]
- [Specific improvement #2, e.g., "Added one-click cancellation button to account dashboard"]
- [Specific improvement #3, e.g., "Implemented automatic email confirmations for all cancellation requests"]
These improvements will benefit all my subscribers and ensure compliance with California's consumer protection laws.
I apologize for any inconvenience you experienced. If you have additional feedback on my subscription process, I welcome your input at [email].
This resolution is provided without admission that I violated any law, but in the interest of customer satisfaction and continuous improvement.
Sincerely,
[Business Name]
[Contact Information]
Template 4: Defense Response (Meritless Claim)
[Date]
[Consumer Name/Consumer's Attorney]
[Address]
Re: Response to Demand Letter dated [Date] – Account #[Account Number]
Dear [Name]:
I received your demand letter dated [Date] claiming violations of California's Automatic Renewal Law and the Consumers Legal Remedies Act.
After thorough review, I respectfully decline your demand for the following reasons:
COMPLIANCE WITH CARL:
My subscription service fully complies with California Business & Professions Code §§ 17600-17606:
1. CLEAR DISCLOSURE: At sign-up on [Date], you received clear and conspicuous disclosure that:
- The subscription would auto-renew [monthly/annually]
- The renewal charge would be $[Amount]
- You could cancel at any time by [method]
[Attach screenshot of sign-up page showing disclosures]
2. AFFIRMATIVE CONSENT: You affirmatively consented to auto-renewal by [checking the consent box / clicking "I agree to auto-renewal terms"]. I have records of your consent including timestamp and IP address.
3. EASY CANCELLATION: You had continuous access to online cancellation at [URL]. The cancellation process requires only [2-3] clicks. [Attach screenshot of cancellation page]
SERVICES PROVIDED:
You subscribed on [Date] and received the following services:
- [List specific services, access, downloads, or benefits]
- [Note dates of usage/logins if applicable]
You have received full value for all charges billed.
CONCLUSION:
I have not violated CARL or the CLRA. Your subscription was entered knowingly, you received the services purchased, and cancellation was available throughout.
However, in the interest of customer satisfaction, I am willing to consider a [partial refund / pro-rated refund for unused service] if you agree to release all claims. If you wish to discuss this resolution, please contact me at [email/phone].
Otherwise, if you choose to pursue litigation, I will vigorously defend this matter.
Sincerely,
[Business Name]
[Authorized Representative]
⚠️ Template Usage Warning
These templates are starting points only. Before sending any response:
Review your actual sign-up flow and cancellation process to ensure claims of compliance are accurate
Consider consulting with an attorney, especially for defense responses or high-value claims
Remember that curing is usually cheaper than defending, even if you believe you'll win
👨⚖️ Attorney Services for Subscription Businesses
Facing a CARL or CLRA consumer demand requires balancing legal compliance, business economics, and risk management. I provide strategic guidance to subscription businesses navigating consumer protection claims.
🎯 How I Help Subscription Businesses
Demand Response Strategy
Compliance audit: Review your sign-up flow, disclosures, and cancellation process to assess claim merit
Cure vs. defend analysis: Economic modeling of refund cost vs. litigation exposure and defense costs
Response drafting: Professional cure letters or defense responses that protect your interests
Settlement negotiation: Negotiating mutual releases and no-admission language when curing
Litigation Defense
Motion practice: Dismissal motions based on CLRA cure, contract defenses, or lack of standing
Discovery strategy: Developing evidence of CARL compliance and consumer's actual consent
Class action defense: Opposing certification, challenging typicality and commonality
Trial representation: Full litigation defense if settlement is not economically viable
Compliance Consulting
CARL compliance audit: Comprehensive review of auto-renewal practices under current law including AB 2863
Terms of service drafting: Legally compliant subscription agreements with proper CARL disclosures
UX/checkout review: Evaluating whether disclosures are "clear and conspicuous" under California standards
Cancellation flow design: Ensuring online cancellation meets "easy to use" legal standard
Record-keeping systems: Implementing consent logging and audit trails to defend future claims
📞 Schedule a Consultation
Discuss your subscription defense or compliance needs. I provide practical guidance tailored to your business model and risk tolerance.