California Assembly Bill AB390

California 2021-2022 Regular Session

• Introduced: 2/2/21
• Refer: 2/12/21
• Report Pass: 4/12/21
• Refer: 4/13/21
• Report Pass: 4/26/21
• Engrossed: 5/3/21
• Refer: 5/4/21
• Refer: 5/12/21
• Report Pass: 6/14/21
• Refer: 6/14/21
• Report Pass: 6/23/21
• Enrolled: 9/8/21
• Chaptered: 10/4/21
• Passed: 10/4/21

Caption

Advertising: automatic renewal and continuous service offers: notice and online termination.

Impact

Starting July 1, 2022, businesses are required to provide specific notices to consumers who accept offers that include free trials or promotional rates lasting longer than a month. These notices must inform consumers of the expiration of free trials or promotional prices within a stipulated timeframe. This change is expected to reduce instances of consumers being inadvertently charged due to a lack of clear communication regarding contract terms and renewal policies, thereby enhancing consumer autonomy and awareness.

Summary

Assembly Bill No. 390, known as the Automatic Renewal and Continuous Service Offer Act, amends Section 17602 of the Business and Professions Code to strengthen consumer protections regarding automatic renewal and continuous service offers in California. The bill mandates that businesses clearly disclose the terms of automatic renewal offers and require affirmative consent from consumers before charging for continued services. It reflects an increasing legislative focus on consumer rights, particularly in the online retail environment, ensuring consumers have visibility into how and when they can terminate such services.

Sentiment

The sentiment surrounding AB 390 is largely positive among consumer advocacy groups and lawmakers focused on consumer rights. They argue that such measures are necessary to safeguard against deceptive practices and ensure consumers maintain control over their subscriptions. Meanwhile, some business groups have expressed concerns about the potential administrative burden of compliance and the impact it may have on promotional strategies.

Contention

Controversy around the bill primarily stems from the balance between consumer protection and business flexibility. Supporters contend that the requirements will protect vulnerable consumers from hidden fees and complicating renewal policies, particularly in the context of digital services where automatic renewals are common. Critics argue that overly stringent regulations could hinder businesses from offering competitive promotions or could lead to increased costs associated with compliance. The discussions surrounding AB 390 underscore a broader debate over the role of regulation in the consumer marketplace.