Do you Need a California Subscription Service Policy?
The only thing we love more than great services is great services you can quit using and save money on at any time.
This post is for all the companies that aspire to be the next Netflix, Spotify, Stitch Fix, Class Pass, Blue Apron… and the list goes on and on.
Who wouldn’t go crazy for the subscription model? It’s a great way to ease your potential consumers into becoming loyal advocates for your brand.
Here’s one thing to consider -- if you’re operating a subscription company in California or offering a subscription service to Californians, you likely fall under a special law.
California law requires you to disclose your subscription terms in a clear and conspicuous manner, including how to cancel your subscription, and obtain affirmative consent before charging consumers on a recurring basis.
Make sure that customers affirmatively agree to the following before placing an order:
- That the subscription or purchasing agreement will continue until the consumer cancels;
- The description of the cancellation policy that applies to the offer;
- The recurring charges that will be charged to the consumer’s credit or debit card or payment account with a third party as part of the automatic renewal plan or arrangement, and that the amount of the charge may change. If that’s the case, the amount to which the charge will change if known;
- The length of the automatic renewal term or that the service is continuous unless the length of the term is chosen by the consumer; and
- The minimum purchase obligation, if any.
If the auto-renewal offer provided to the consumer contains a free trial, the business must disclose to the consumer how to cancel before he or she pays for the goods or services.
Send a confirmation receipt that includes:
- The offer terms for automatic renewal of continuous service;
- The cancellation policy; and
- A cost-effective, timely, and easy-to-use cancellation method (e.g., toll free phone number, email address) and instructions on how to cancel.
Once you’ve updated your policies, send an email to your customers notifying them of the change. Your customers (and your legal team) will thank you for making the terms & conditions clear cut and explicit.