California Enacts “Click to Cancel” Subscription Legislation

Mandating corporations to facilitate client opt-out from services by mid-2025.

Hocus-Focus

This week, California Governor Gavin Newsom signed Assembly Bill 2863 into law, mandating that firms adhere to standards that facilitate the opt-out process for digital subscriptions, along with additional customer protections.

CA Assemblymember Pilar Schiavo characterized the bill as “a national model for safeguarding consumers against superfluous charges – empowering them with greater financial control and promoting equitable business practices, benefiting both consumers and small enterprises.”

The measure mandates that organizations providing automatic subscription renewal must allow cancellation through the same methods used for sign-up. If an individual subscribes to an online service, a straightforward click-to-cancel option must be easily accessible on the same website.

The prevalence of subscription-based services has prompted ethical concerns about convoluted cancellation procedures and unjust fines. Earlier this year, the California-based software firm Adobe was embroiled in a complaint initiated by the Federal Trade Commission about concealed costs and ambiguous cancellation procedures. The proposed bill seeks to address problems such as these while also protecting individuals from further inequitable business practices, including banking overdraft fees and secret hospitality charges.

Although national law has not yet been enacted, California's initiative establishes a precedent that is expected to exert broader influence nationwide. The bill's stipulations are set to be implemented in California by mid-2025.