2024 has been another huge year for automatic renewal laws and rules, both on the state and federal levels. A number of states, including Utah, Virginia, South Carolina, Tennessee, Minnesota, Illinois, and California, have introduced new laws or updated existing ones to include a range of different requirements, including those related to automatic renewal enrollment and cancellation pathways. These new and updated states laws, some of which go into effect in 2025, have added to the ever-evolving web of state laws that govern automatic renewals for residents of those specific states. In addition, the FTC finalized its Rule Concerning Recurring Subscriptions and Other Negative Option Programs (the “Final Rule”). Many of the provisions contained within the Final Rule are consistent with or similar to existing obligations that apply on certain state-wide bases. The Final Rule applies broadly, including in both business-to-consumer and business-to-business transactions, and including requirements regarding disclosures, consent, and cancellation. The Final Rule’s expansive prohibition against misrepresenting any material fact made while marketing using a negative option feature will go into effect on January 14, 2025, with the remaining substantive requirements poised to go into effective on May 14, 2025. Looking forward to 2025, we expect next year to be another active year in terms of automatic renewal laws. There remain many state laws that are pending within the respective state legislatures. Moreover, the Final Rule is facing judicial challenge from various industry groups who have asserted that the Final Rule is “arbitrary, capricious, and an abuse of discretion.” We will continue to monitor the proposed state laws and pending lawsuits. For now, marketers utilizing automatic renewals should continue to keep up to date with the various state and federal requirements. In particular, unless and until any such judicial challenges are successful, marketers should move toward compliance with the Final Rule to ensure a smooth transition when the effective dates arrive.
AssociateAs a member of Olshan’s Brand Management and Protection Group, Morgan helps guide clients on all facets of brand management, including privacy, advertising and intellectual property optimization, enforcement and defense ...