The so-called autorenewal clause is a by-product of the new age of online commerce. More and more companies use the monthly-subscription-business model with an autorenewal clause attached. Hit “I agree to the terms and conditions” and you may find you have signed up for a lifetime supply of nightly face cream or some other product or service.
“It’s like going to the store and buying six oranges and then finding out that when you bought them you also agreed to have six oranges delivered to your house every week for the next two years!” says Flynn from the Law of Offices of Francis J. Flynn.
Unwitting consumers, blinded by the plethora information on the website, think they have made a one-time purchase but soon find out that they’ve agreed to allowing the purchase to be repeated on a monthly basis. Sometimes the service is offered for free then transitions, at some point, to a fee based service that automatically renews.
Sometimes the cost of the service after the autorenewal is much higher than the introductory price. And, sometimes even when the merchant offers free returns the product arrives too late for customers to meet the time sensitive term return policy.
The product or service just keeps coming and coming and coming.
“They try to contact the company and they can’t – or they’re on hold for hours. Sometimes they find they are in for $300 or $400 that weren’t planning to spend. Who’s got time to do that?” says attorney Casey Flynn.
“Sometimes people get so desperate they get a new credit card in an effort to shut off the recurring charges. Then they find out that companies can access their new credit card number and start putting the charges on that card. This is a nightmare for consumers!” says Flynn.
Doesn’t the Law Protect Consumers from This?
Yes, indeed it does. Every state in the country has rules about autorenewal clauses. Generally speaking it requires that the company “clearly and conspicuously” state disclosure the autorenewal terms and obtain the consent of the consumer.
Consumers have complained, and even filed class action suits claiming that the print was buried in the checkout area, or that it should have been bold print or print of a different color.
There may also be an arbitration clause somewhere in the details that means if there is a dispute when the buyer and seller the argument will be settled through arbitration where consumers give up their right to an attorney and cannot pursue their case through class action. Arbitration is generally considered not to cut in favor of the plaintiffs.
There may also be an arbitration clause, somewhere in the details, that says if there is a dispute between buyer and seller the argument will be settled through arbitration. Consumers give up their right to an attorney and cannot pursue their case through class action. Arbitration is generally considered not to work to the benefit of the plaintiffs.
There have been some successful class actions with six figure settlements. Many other challenges to a retailer’s autorenewal provisions have been dismissed by the courts.
Section 17600 in California
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The problem is, 7 years after the law came into force, attorney Flynn is still getting calls from frustrated consumers.
“The answer to this is to put all this information on a completely separate page of the website. It has to be clear. There has to be a way for consumers to contact the consumer and end the autorenewal if they want to,” he says.
Flynn has worked up a fair bit of natural lawyerly indignation over the issue. He’s taking names and making plans to file several lawsuits on behalf of consumers who’ve been stung by what he calls “nefarious” autorenewal clauses. Stay tuned.
This story will not auto-renew.