It took us a while, a few years but with the help of Premier/Downey Vendors (a Canteen Franchise Company) we did it. David Baker VP of Sales you are amazing. Now if we could just move those Texas Rangers along! Come on Randy we can do it.
Plus we got a Thank You card from TNT Vending as she retired and sold most of her company. She sent a $2000 check as a thank you for all of the work she felt we did, actually it was Tammy that did the work. Thank you Tammy, the best of luck in your future and always.
Then we closed our first video gaming company with Dependable Vending. This place has approx 800 to 1000 video players a night. Yep, really. They took a movie production studio and made it into this amazing gaming room in LA. Lots of tables with what looks like special made chairs with lots of controls. They have a screen the size of a movie theater and everyone is playing the same game at the same time. Now we have added lots of vending machines.
Isn't this business fun and exciting and frustrating. Here is the frustration...A large transportation center gave all of us the go ahead, the vending company, us, and of course the current vending company showed up with a contract signed by an employee that left 5 years ago. It had a automatic renewal clause stating they (the transporation center) had to notify them (THE VENDING COMPANY) by certified mail 90 days before expiration or it would be renewed for 3 additional years. But come July this stuff will finally change:
California Updates Its Auto-Renewal Law
From fashion clothing in the mail to gym memberships to monthly mobile app subscriptions, the subscription-based business model is everywhere and here to stay. As more companies adopt this model, states around the country have enacted laws requiring detailed disclosures that businesses must follow. The California Automatic Renewal Law (ARL) is one example—and it just got a makeover. Recently, California enacted Senate Bill No. 313, effective July 1, 2018, which further clarifies the disclosure requirements for free gift or trial offers and promotional price subscriptions, and also requires online cancellation mechanisms for online subscription services.
In recent years, several lawsuits have been filed in California under the ARL. A frequent allegation in these complaints is that a business failed to provide automatic renewal or continuous service terms in a clear and conspicuous manner. Other allegations include the failure to provide the terms in visual proximity to the request for consent, failure to provide acknowledgement of the terms and failure to provide an easy mechanism for the consumer to cancel the subscription. While there are often significant defenses to such claims, exposure can also be significant--settlements can be in the tens of millions of dollars. To minimize risk of claims, companies with subscription-based business models should carefully reassess their subscription disclosures and procedures.
To avoid potential claims under the ARL, companies should consider the following:
Ensure the initial offer terms are clear and conspicuous. Companies should disclose the material terms of the automatic renewal or continuous service in a “clear and conspicuous” manner. If there is a material change to the terms, this change should also be made clear to consumers prior to implementation.
Acquire the consumer’s consent before charging the consumer.
Make the terms comprehensive. Companies should inform consumers of everything they need to know: what they are being charged for, how much they will be charged, how often they will be charged, how long the automatic renewal term will last (or that the term will continue until the consumer cancels), the minimum purchase obligation (if any), and how and when they can cancel.
Place the terms close by. Automatic renewal terms should also be displayed to consumers before a subscription or purchase agreement is fulfilled, and the language must be near the request for consent to the offer.
Provide a mechanism that allows a consumer to cancel online if your company makes the offer online.
Confirm the terms with the consumer by providing an acknowledgment; for example, an email receipt with all the relevant terms. Companies should give the consumer a copy of the automatic renewal terms, a copy of the cancellation policy and instructions for how to cancel, all in a manner that consumers can retain for their records.
All the above should also be followed for offers of a free trial or gift, or a promotional or discounted price offer. For example, the initial offer should clearly and conspicuously state when and how consumers can cancel prior to getting charged and how much they will be charged after the promotional rate is over.
When litigation is filed, there are a number of defenses companies may rely on under the ARL. Further, while a number of cases have been filed under the ARL, only a few have discussed the substance of the statute, and these recent decisions have limited plaintiffs’ request for relief on the grounds that the ARL does not provide a private cause of action.
Should a company be targeted in an ARL case, there are several defenses that may be asserted, including but not limited to:
Good Faith: The statute provides that a business that complies with the statutory provisions in good faith will “not be subject to civil remedies.”
Extraterritoriality: The statute is limited to California consumers only.
Statutory Standing: If a plaintiff is suing under the Unfair Competition Law, he or she must show an actual loss of money or property.
Misinterpretation of the “Gift” Aspect of the Statute: The “gift” provision does not allow restitution of all money paid as part of an automatic renewal claim. Additionally, in Johnson v. Pluralsight, a district court in California declared that the gift provision did not apply to intangible services, such as website subscriptions.
Contractual Provisions: Arbitration clauses, limitations of liability, choice of law and other contractual provisions can limit a company’s exposure to liability.
As the number of cases under the ARL (and similar statutes in other states) rises, companies with a subscription-based business model should be vigilant in ensuring that the disclosure of their automatic renewal terms complies with the law to reduce their vulnerability to a claim. Recent cases indicate that the most common allegation is failure to clearly and conspicuously disclose the automatic renewal offer terms. Should a company be targeted under the ARL, a number of potentially broad defenses exist. If you have questions about this statute and its implications for your clients, please contact experienced counsel.