📋 Overview

You've received a demand related to your subscription or automatic renewal practices. California's Automatic Renewal Law (ARL) imposes strict requirements on businesses that offer subscriptions, free trials, or automatic renewals. Non-compliance can result in the transaction being treated as an unconditional gift - meaning full refund with no obligation to return the product/service.

⚠ "Unconditional Gift" Remedy

If ARL is violated, goods/services are deemed unconditional gifts. Consumer keeps them free, gets full refund.

🕒 2022 Amendments

California tightened ARL requirements effective July 2022. Cancellation must now be as easy as signup.

💰 Enforcement Active

California AG and private plaintiffs actively pursue ARL violations. Class actions are common.

California ARL Requirements (BPC 17602)

  • Clear disclosure - Automatic renewal terms must be presented clearly and conspicuously before purchase
  • Affirmative consent - Consumer must affirmatively consent to auto-renewal terms (pre-checked box not sufficient)
  • Acknowledgment - Must provide acknowledgment with auto-renewal terms, cancellation policy, and how to cancel
  • Easy cancellation - Cancellation method must be at least as easy as sign-up (2022 amendment)
  • Renewal reminders - For free trials converting to paid, must send reminder before charge
$450
Attorney Response on Letterhead

Compliance review, professional response, recommendations for fixing ARL issues.

Schedule Review

🔍 Evaluate the Claim

First, assess your current ARL compliance. Many businesses unknowingly violate the law, creating significant class action exposure.

ARL Compliance Checklist

Requirement What Law Requires Common Violation
Clear disclosure Terms in same font/contrast as offer, near checkout button Buried in ToS
Affirmative consent Separate checkbox or equivalent (not pre-checked) Pre-checked box
Post-purchase acknowledgment Email/document with renewal terms and cancellation info Generic confirmation
Easy cancellation Online signup = online cancel option required Phone-only cancel
Free trial reminder 3-7 day reminder before first charge No reminder sent

📄 Document Your Process

  • ✓Screenshot of checkout page
  • ✓Auto-renewal disclosure language
  • ✓Consent mechanism used
  • ✓Confirmation email template

📝 Customer Records

  • ✓This customer's signup record
  • ✓Confirmation email sent
  • ✓Any renewal reminders sent
  • ✓Cancellation requests received

⚠ The 2022 "Click to Cancel" Amendment

If you signed up customers online but require them to call, email, or mail to cancel, you likely violate the amended ARL. This is now one of the most common violations. Online signup = must offer online cancel option.

🛡 Your Defenses

If your ARL compliance is solid, several defenses may apply.

Full Compliance with ARL

If you have clear disclosure, affirmative consent, proper acknowledgment, and easy cancellation, you should prevail. Document your entire signup flow.

When to use: You can prove all ARL requirements were met for this customer.

Customer Actually Consented

If the customer affirmatively consented (unchecked box they checked, explicit click-through agreement), show the consent record. Timestamp and method matter.

When to use: You have records showing customer took affirmative action to consent to renewal.

Customer Used Service After Renewal

If the customer continued using the service after renewal (logins, activity, downloads), this may weaken their claim they didn't authorize renewal.

When to use: Usage logs show active engagement after the disputed charge.

Business-to-Business Transaction

California ARL applies to consumer transactions. B2B contracts may not be subject to the same requirements (though UCL claims still possible).

When to use: Customer signed up as a business, not for personal use.

Proper Cancellation Was Available

If cancellation was actually easy and available but customer didn't use it, show the process. Screenshots, help center links, "cancel anytime" buttons in account.

When to use: Customer claims they couldn't cancel but you offered easy online cancellation.

🚨 Common ARL Violations

  • Auto-renewal terms buried in Terms of Service (must be conspicuous)
  • Pre-checked consent box (must require affirmative action)
  • Requiring phone call to cancel when signup was online
  • No confirmation email with renewal terms and cancel info
  • Free trial converts to paid without reminder 3-7 days before

⚖ Response Options

Based on your compliance level, choose the appropriate response strategy.

Refund & Fix Compliance

If you have compliance gaps, refund this customer and immediately fix your ARL issues. Continuing non-compliance creates massive class action exposure.

  • Prevents escalation
  • Fixes future exposure
  • Reduces class action risk

Dispute with Documentation

If you're fully ARL-compliant, respond with detailed documentation of your signup flow, consent records, and acknowledgment emails.

  • Appropriate if compliant
  • Creates defense record
  • May deter class action

Partial Refund

Offer refund for periods after customer says they wanted to cancel, while disputing earlier periods if consent was clear.

  • Compromise position
  • Shows good faith
  • May resolve quickly

Negotiate Release

If the customer is represented by counsel (potential class action threat), negotiate individual settlement with class waiver release.

  • Prevents class certification
  • Pay premium for release
  • Stops bigger exposure

📊 Class Action Exposure Analysis

ARL violations often become class actions

Individual refund claim$50-500
Number of CA auto-renewal customers10,000+?
Statutory damages per violation (UCL)$2,500
Class counsel fees (if certified)$500k-2M+
Cost to fix ARL compliance now$5,000-20,000
INDIVIDUAL REFUND vs. CLASS ACTION$500 vs. millions

💡 Fix Your Compliance ASAP

Even if you deny this individual claim, audit your ARL compliance immediately. Every day of non-compliance adds more class members. Common fixes: add clear disclosure at checkout, remove pre-checked boxes, add online cancellation, send renewal reminders.

📝 Sample Responses

Copy and customize these response templates for your situation.

Granting Refund - Compliance Uncertain
Thank you for contacting us regarding your [SUBSCRIPTION NAME] subscription. After reviewing your account, we have processed a refund of [$AMOUNT] covering [describe periods being refunded]. This refund will appear on your statement within 5-10 business days. Your subscription has been canceled effective immediately. You will not be charged again. We value your feedback regarding our subscription process and have used it to improve our sign-up and cancellation experience. We apologize for any confusion and consider this matter resolved. If you have any questions, please contact us at [EMAIL/PHONE].
Denying Claim - Proper Consent
We have reviewed your claim regarding your [SUBSCRIPTION NAME] subscription. Our records indicate that you enrolled on [DATE] through our website. At checkout, you: 1. Viewed our automatic renewal terms, displayed prominently adjacent to the purchase button, stating: "[Quote your disclosure]" 2. Affirmatively checked the box indicating: "[Quote consent language]" 3. Received a confirmation email on [DATE] containing the renewal terms and instructions for cancellation (copy attached) Our cancellation process allows you to cancel online at any time through your account settings at [URL]. We received no cancellation request from you prior to your current message. Based on your clear consent and our compliance with California Business and Professions Code Section 17602, we respectfully decline your refund request. We have now canceled your subscription effective [DATE].
Partial Refund - Good Faith Compromise
Thank you for your message regarding your [SUBSCRIPTION NAME] subscription. While our records show you consented to automatic renewal at signup, we understand subscription practices can sometimes be unclear. In the interest of customer satisfaction, we offer the following resolution: 1. Full refund of your most recent [X] charges totaling [$AMOUNT] 2. Immediate cancellation of your subscription with no future charges We believe you did receive value from the service during earlier periods and therefore decline to refund charges prior to [DATE]. If you accept this resolution, the refund will process within 5-10 business days. Please confirm your acceptance by responding to this email.
Response to Attorney Letter
We acknowledge receipt of your letter dated [DATE] on behalf of [CUSTOMER NAME] regarding automatic renewal practices. We take compliance with California's Automatic Renewal Law seriously. We have reviewed your client's account and our signup process. Without admitting any violation, we are prepared to resolve your client's individual claim as follows: - Full refund of all charges: [$AMOUNT] - Cancellation of subscription This offer is contingent upon execution of a standard release of all claims by your client. We can provide a proposed release for your review. Please respond within 14 days to confirm whether your client wishes to resolve this matter. If we cannot reach resolution, we will defend any claims vigorously based on our documented compliance practices.

🚀 Next Steps

What to do after receiving a subscription trap claim.

Step 1: Audit Compliance

Screenshot your entire signup flow. Review disclosure, consent, acknowledgment, and cancellation process.

Step 2: Check This Customer

Pull their signup record, confirmation emails, and any cancellation attempts.

Step 3: Assess Class Exposure

How many CA customers? Same process for all? Potential class action scope?

Step 4: Fix Issues Immediately

Any compliance gaps found should be fixed NOW to limit ongoing exposure.

ARL Compliance Fixes

  • Disclosure: Add clear auto-renewal terms near purchase button, not buried in ToS
  • Consent: Replace pre-checked boxes with unchecked boxes requiring action
  • Acknowledgment: Send confirmation email with renewal terms and cancel instructions
  • Cancellation: Add online cancel button if signup is online
  • Reminders: For free trials, send email 3-7 days before first charge

Get Professional Help

ARL claims often lead to class actions. Get a professional compliance review and response letter.

Schedule Consultation - $450

California Resources

  • ARL: Business & Professions Code 17600-17606
  • 2022 Amendments: AB 390 (click-to-cancel requirements)
  • FTC Negative Option Rule: Federal requirements (16 CFR 425)