Arizona Bill That Would Have Simplified Subscription Cancellations Fails to Pass

Technology and changes in consumer habits have spawned subscription-based business models in all types of industries. Companies relish predictable recurring revenue while some shoppers find it more convenient to receive products and services automatically rather than initiating distinct transactions. However, as the number of subscription offerings has grown, some consumers have objected to automatic renewal practices that are easy to miss and difficult to undo. Though some Arizona legislators sought to ease subscription cancellations in the state, their bill did not become law.

Arizona House Bill 2951 passed the state’s House of Representatives before dying in the Senate. Had it become law, the bill would have required businesses to communicate advance warning of an automatic renewal in the same manner as the original offer was made. In practical terms, this would have meant that a subscription originally offered by mail would require a mailed renewal notice, while one offered by email or phone would require the same type of advance communication before the renewal occurred. Supporters of the legislation believe this would have cut down on the number of individuals who claim their payment obligations were extended without clear warning, because language in fine print or on digital terms and conditions pages is often overlooked.

Despite the defeat of the Arizona proposal, companies that rely on rolling subscriptions should be aware of federal and state efforts to regulate auto-renewal practices. Several states have already enacted similar requirements in recent years. California, for example, has some of the most stringent automatic renewal laws in the country, so businesses that operate there must evaluate their contracts to ensure they are in compliance. 

Though states with laws on subscription renewal practices have their own unique provisions, it is wise to review whether applicable terms are clear and cancellation requirements are understandable. When changes occur, they should be effectuated transparently and with some lead time for subscribers to assess their options. An experienced Arizona business law attorney can review your subscription agreements and help you structure your auto-renewal practices in a way that is both legally sound and positioned to withstand future regulatory changes.

The Law Offices of Donald W. Hudspeth P.C. in Phoenix handles a wide range of contract and regulatory compliance matters for Arizona businesses. Please call 866-696-2033 or contact us online to schedule a consultation.