
Robert A. Marsico
Partner
201-896-7165 rmarsico@sh-law.comFirm Insights
Author: Robert A. Marsico
Date: June 9, 2014
Partner
201-896-7165 rmarsico@sh-law.comIf your business includes automatic renewal provisions in your service contracts, you could be setting yourself up for unintended liability. States across the country are increasingly passing legislation that limits or conditions the use of such provisions.
Automatic contract renewal clauses typically state that a service will automatically be renewed for a specified price on a certain date unless one party to the contract provides advance notice of its intention to terminate the agreement. Practically speaking, the provisions allow companies renew a subscription service by simply charging the customer’s credit card, which is kept on file.
These provisions are used in a variety of industries, ranging from web hosting providers to office suppliers to magazine publishers. As the business model has gained traction, so has regulation. In most cases, the laws are intended to address cases where customers claim that they were not aware of or did not authorize automatic renewals or find themselves in a situation where they are indefinitely “married” to one service provider.
California and Oregon have some of the strictest laws on the books. Companies must provide clear and conspicuous notice of automatic renewal provisions. Prior to renewal, the laws also require businesses to make additional disclosures, provide easy to use cancellation procedures, and obtain affirmative consent from the consumer. The failure to comply with these requirements can result in the service or product being classified as an “unconditional gift” to the customer.
In New York, an entity seeking to enforce an automatic renewal provision contained in a “contract for service, maintenance or repair to or for any real or personal property” must comply with certain requirements. Most importantly, the company must provide prior written notice of automatic renewal, which must be served personally or by certified mail between fifteen and thirty days prior to the termination notice deadline.
In New Jersey, legislative attempts to regulate automatic renewal provisions have so far been unsuccessful. However, businesses that operate out-of-state should be mindful of these regulations so as to ensure compliance.
If you have any questions about this post or would like to discuss your company’s service contracts, please contact me or the Scarinci Hollenbeck attorney with whom you work.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Author: Angela A. Turiano
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Author: Dan Brecher
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
Author: Robert E. Levy
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Author: Bryce S. Robins
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!