SACRAMENTO – Governor Gavin Newsom has signed legislation ensuring Californians can cancel subscriptions online, at will, and without having to jump through hoops. Authored by Assemblymember Marc Berman (D-Menlo Park), the new law also requires businesses to notify consumers before lengthy free trials and promotions end and before year-long subscriptions automatically renew.
“Canceling a subscription online should be as easy as signing up online,” said Assemblymember Marc Berman. “Yet millions of Californians are subjected to lengthy, confusing, and inconvenient cancellation processes designed to make you give up and keep paying. This change in law enables Californians to cancel unwanted subscriptions online easily and creates the first-in-the-nation requirement for businesses to notify consumers before lengthy free trials and promotions expire. I am thrilled Governor Newsom has signed AB 390 so Californians can cancel unwanted subscriptions without hassle and are better informed about when and how much they will be charged.”
After surveying 5,000 Americans in 2018, McKinsey & Company found that nearly 35% of consumers had three or more subscriptions. That same year, West Monroe, a national business consulting firm, found after surveying 2,500 American’s budgets that the respondents spent $237 per month on subscriptions and 84% underestimated how much they spend on subscriptions monthly.
Assembly Bill 390 establishes critical consumer protections for Californians as the subscription market continues to grow rapidly. In accordance with the new law, businesses that allow consumers to sign-up for subscriptions online must also permit consumers to cancel those subscriptions online, at will, and without engaging any further steps that obstruct or delay their ability to cancel immediately such as talking to a customer representative or completing a lengthy survey. In addition, businesses must notify consumers before free trials and promotions lasting longer than 31 days expire and before annual subscriptions automatically renew. The new law takes effect July 1, 2022.
California is the first state in the country to require reminder notices for free trials and promotions, and only the 9th state to require notice reminders for annual subscriptions.
Assembly Bill 390 received bipartisan support in the Legislature and was supported by the California Low-Income Consumer Coalition, Consumer Action, Consumer Attorneys, and various district attorneys.