Commentary

Are Auto-Renewals Worth The Legal Liability For Publishers?

Automatic renewals of subscriptions have become a bigger liability for publishers amid greater scrutiny and a rash of class-action suits. It’s increasingly clear that publishers should review their auto-renewal procedures to avoid the possibility of costly legal entanglements.

The Washington Post agreed to pay $6.7 million to settle allegations it had automatically renewed digital subscriptions in violation of California’s Automatic Renewal Law. A federal judge overseeing the case this month offered a tentative approval of the settlement, comparing it to the $5.6 million The New York Times agreed to pay in a similar proposed settlement, Law360 reported.

The lead plaintiff in the case against the NYT claimed the paper didn’t inform subscribers of the renewal terms in a “clear and conspicuous manner,” and billed them without obtaining consent. The suit also said the NYT didn’t provide an easy way to cancel a subscription. The paper, which ended the first quarter with 7.8 million print and digital subscribers, denied the claims.
These proposed settlements come as publishers must confront a patchwork of stricter federal and state regulations on auto-renewals. Lawmakers are responding to growing complaints by consumers, who these days sign up for everything from magazines to streaming services to cloud storage. They’re more likely to lose track of their auto-renewals, and protest when hit with an unexpected charge.
Most recently, the Federal Trade Commission has been active in enforcing the Restore Shoppers’ Confidence Act (ROSCA), which targets “negative option programs” that interpret customer inaction as acceptance of an auto-renewal. The agency’s settlement last month with MoviePass, the defunct subscription ticketing service, signals its intention to seek monetary penalties for ROSCA violations.
State laws on automatic renewals also are proliferating. Among the more recent ones, New York’s automatic renewal law took effect in February, requiring businesses to provide disclosures before and after a purchase, obtain affirmative consent from customers and to provide an easy way to cancel. Colorado lawmakers are weighing an automatic renewal law mostly aimed at dating apps, but would apply to magazine and newspaper subscriptions.
In California, where the Automatic Renewal Task Force is especially fearsome, the legislature is considering a billto strengthen its automatic renewal law. Trade groups including the Association of Magazine Media and the Association of National Advertisers are opposed to the bill (AB 390), unless it’s amended. 

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Amid these legal threats, publishers have scored victories in auto-renewal suits.

An appeals court in May ruled that Time Inc. and Meredith Corp. had complied with California law when renewing a reader’s subscription to People magazine. The case may serve as a model for how publishers can follow the law while also offering the convenience of auto-renewals.

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