Monthly Subscription Programs: Watch Out for Colorado's New Law
On January 1, 2022, Colorado's recently enacted law on automatically renewing consumer contracts will take effect. By and large, its requirements and prohibitions will be familiar to any company already subject to ROSCA and the auto-renewal laws of other states: clear disclosure of the terms, sending a confirmation, easy-to-use cancellation method, etc. (The full law can be found here.)
However, Colorado's new law has one important wrinkle that will impact many businesses operating in this area:
While a number of states with auto-renewal laws require a business to notify longer-term (e.g., annual) subscribers prior to each renewal, none of those laws has as yet impacted month-to-month subscription programs. Colorado's law will change that.
Colorado's law requires any business offering auto-renewing consumer agreements with a term of less than one year to send out notice to subscribers 25-40 days before the renewal that will take that subscription over the one-year mark. The business must send a similar notice 25-40 days before the start of each renewal period that will include the anniversary of the subscriber's initial enrollment date. For example, if a subscriber first enrolls in a month-to-month subscription on 1/1/22, (s)he might get a renewal reminder on 12/7/22, 12/7/23, 12/7/24 and so on. (For annual or longer subscription terms, these reminders must be sent 25-40 days before each renewal.)
The notice must inform the consumer that his or her subscription will automatically renew unless cancelled, describe the business' easy-to-use cancellation process, and clearly identify the sender.
For businesses that already offer annual or other long-term subscriptions at the national level, this additional compliance requirement for Colorado residents should be a modest lift. Businesses that have only ever offered month-to-month subscriptions, though, will need to prepare themselves to send out these notices to Colorado-based subscribers starting in January.
Originally published by InfoLawGroup LLP. If you would like to receive regular emails from us, in which we share updates and our take on current legal news, please subscribe to InfoLawGroup’s Insights HERE.