Auto-renewing subscriptions are irritating. Some states are cracking down.

At least 20 states have laws on the books regulating predatory subscription models. Is federal regulation on the way?

Sally Greenberg, executive director of the National Consumers League

National Consumers League executive director Sally Greenberg developed a list of best practices for subscription models.

Photo: Andrew Harrer/Bloomberg via Getty Images

Click banner image for more Subscription Week 2022 coverage

Everyone knows the feeling of checking a credit card statement to see random charges from subscriptions you forgot you signed up for last year, last month or even last week. You rack your brain: Was it really that expensive? And why didn’t you get a warning before the charge?

Auto-renewing subscriptions can sneak up on you without warning. Sometimes you just don’t expect the fee to hit at a specific time — setting a reminder for future you is helpful in those instances — but companies have also been known to renew contracts on an irregular basis or after lengthy periods of time. Others might increase the cost of a subscription over time without asking you whether you want to opt out.

At least 20 states, as well as the District of Columbia, have some type of law on the books that regulates auto-renewing subscriptions, many of them spurred by legislators’ own experiences. Some of the laws are narrow and focus on only one type of subscription, like online subscriptions or those related to gyms (perhaps the most annoying of all). But at least five bills passed since 2018 force companies to offer advance notice and ease of cancellation for subscriptions in most circumstances, with enforcement measures in place to hold companies accountable should they not comply.

Colorado state Rep. Cathy Kipp championed such a law regulating subscriptions in Colorado after a friend couldn’t get out of a dating app subscription.

“They said, ‘No, you’re not getting your money back,’” she said. “We were like, ‘Well, that’s just not OK.’”

As state laws race (or rather, crawl) to catch up with our increasingly subscription-oriented lives, a lot of subscription regulation comes from Apple and Google. Sneaky app subscriptions have been known to surprise users with surprisingly high new rates, lure customers into free trials that only last a few days or less or mislead people into thinking they’ve signed up for shorter subscriptions than they intended.

Currently, app developers don’t have to ask iPhone or Android users whether they’re OK with being charged for a recurring subscription upon renewal. Developers do have to ask users to opt in to price increases with a push notification, and users have to actually tap “I agree” to continue. But Apple is piloting a change to that policy, starting with Disney+. The test alerts subscribers that the price is increasing, but instead of opting in, they have to opt out.

States tackle annoying auto-renewals

Colorado’s subscription law went into effect Jan. 1, 2022, and applies to all industries, whereas a previous Colorado law only regulated health club subscriptions. It requires upfront disclosure of subscription terms, simple methods of cancellation and renewal notices. Companies that violate the rules are subject to civil penalties up to $20,000 per violation, or $50,000 per violation in cases where the customer was over 60 years old.

Many of the laws regulate predatory cancellation processes, which are deliberately opaque to make it difficult for a consumer to get out of a subscription. These include processes which require customers to show up in person, wait endlessly on the phone to speak to someone or pay for additional months or years before they can get out of a contract. Colorado’s law, for example, requires that cancellation mechanisms be “readily accessible” and that companies in violation refund overpaid subscription fees.

Companies resort to these tactics because it makes them money. And that’s not always a bad thing for consumers who might not want to confirm they still want something every week, month or year. Regardless, it’s likely in a company’s best interest to avoid annoying customers, which is inevitable when it auto-renews subscriptions just to squeeze out some extra cash.

National Consumers League executive director Sally Greenberg has developed a list of best practices for subscription models informed by her work advocating for stricter regulations. She said a good subscription model gives customers full disclosure of the terms when they enroll, notifies customers in advance of each time they’re charged, explains any price increases and lists cancellation procedures in clear, conspicuous font somewhere they will definitely see them.

Laws that regulate subscription models, she said, should also require that companies will give customers a full refund with an added penalty should they not comply with the law.

“There has to be financial risk,” she said.

State laws that comply with all of Greenberg’s guidelines (especially that last one) are hard to come by. But laws in California, Delaware, Idaho, Delaware, Colorado, New York and Washington, D.C., all require customers to be notified before charges, and require companies make it at least somewhat easy to cancel.

Where these laws differ most widely is in enforcement. In New York, companies that violate auto-renewal laws not only receive fines and a possible injunction in the state, but also must allow customers to keep whatever they received as part of the subscription as a “free gift.” Idaho’s law, on the other hand, doesn’t outline any specific penalties.

“We try to be business-friendly and don’t want to put businesses in a corner,” said Idaho state Sen. Jim Patrick, who is also chair of the committee which sponsored the bill. Patrick said the state is hesitant to pass any new regulations on businesses at all — perhaps a testament to how important the state saw this particular bill.

Even with state laws on the books, most attorneys general don’t have the resources to chase after bad subscription providers. In an emailed interview with Protocol, Colorado Attorney General Phil Weiser said that enforcement has required extensive outreach to customers, ostensibly to inform them of their rights, and companies throughout the state. Kipp said that she had personally called several news companies that charged her for an auto-renewing subscription without notice only to find out they weren’t aware they were in violation of Colorado’s barely 4-month-old law. And Patrick pointed out that companies outside of the state are often too much effort to pursue.

“For us to go find somebody in California — well, it just isn’t going to work,” he said.

Federal subscription legislation gathers steam

Momentum has gathered behind a federal law that would more tightly regulate predatory subscription models. Weiser pointed to the 2010 Restore Online Shoppers’ Confidence Act, or ROSCA, as a model for the Colorado bill, as it includes requirements for companies to provide “simple” cancellation mechanisms. However, its definition of “simple” is vague, and some companies have used it as an excuse to not offer online cancellation options or to require customers to call a customer service line during a narrow time window.

The FTC also reviewed its rulebooks last summer to see whether it had any power to curb predatory subscription practices. The agency found it could use some rules put in place nearly five decades ago, in 1973, to bring cases against a children’s education company, DirecTV and a few others. The regulations prohibit companies from interpreting a customer’s silence as consent to charge them, but are loose and out of date. Greenberg said that it’s important customers report predatory practices to the FTC, especially while they work on updating their processes.

But federal legislation could change things. The Unsubscribe Act would make it so customers can cancel subscriptions in the same manner they signed up — i.e., if they only had to click a single “subscribe” button to be enrolled, cancellation should be a one-click process, too. It also requires that companies be explicit about contract terms before enrollment, ask for additional consent to charge a customer when they transition from a free trial to a paid subscription and remind customers about the plan on at least a quarterly basis.

The bill has died before in the House, but as the COVID-19 pandemic turned us all into online shoppers, lawmakers became more aware of irritating subscription practices. The bill has been championed for years by California Democrat Mark Takano, who reintroduced it last summer. Sens. Brian Schatz, John Thune, Raphael Warnock and John Kennedy sponsored companion legislation in the Senate.

Simultaneously, Sens. Chris Van Hollen and Yvette Clarke are pushing for even more aggressive regulation in the form of the Consumer Opt-In Act. This bill would require companies to obtain affirmative consent from customers to charge their credit card any time a long-term subscription is renewed, at least once a year in the case of short-term auto-renewing contracts and in any case where a customer has not used a subscription product for at least six months.

It’s possible neither law will pass this session — between a war in Ukraine, ongoing supply-chain and COVID-19 crises and the coming midterms, Congress has higher priorities. But it’s hard to deny momentum for federal regulation is mounting.

“There’s a lot of interest among senators, and that’s something new,” Greenberg said. “There’s no [state] bill which includes all the requirements we would like to see, but there’s certainly an effort to curb abuses.”


Musk’s texts reveal what tech’s most powerful people really want

From Jack Dorsey to Joe Rogan, Musk’s texts are chock-full of überpowerful people, bending a knee to Twitter’s once and (still maybe?) future king.

“Maybe Oprah would be interested in joining the Twitter board if my bid succeeds,” one text reads.

Photo illustration: Patrick Pleul/picture alliance via Getty Images; Protocol

Elon Musk’s text inbox is a rarefied space. It’s a place where tech’s wealthiest casually commit to spending billions of dollars with little more than a thumbs-up emoji and trade tips on how to rewrite the rules for how hundreds of millions of people around the world communicate.

Now, Musk’s ongoing legal battle with Twitter is giving the rest of us a fleeting glimpse into that world. The collection of Musk’s private texts that was made public this week is chock-full of tech power brokers. While the messages are meant to reveal something about Musk’s motivations — and they do — they also say a lot about how things get done and deals get made among some of the most powerful people in the world.

Keep Reading Show less
Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

Sponsored Content

Great products are built on strong patents

Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America's technology leadership.

Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.

From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: "intellectual property protection is vital for American innovation and entrepreneurship.”

Keep Reading Show less
James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.

Circle’s CEO: This is not the time to ‘go crazy’

Jeremy Allaire is leading the stablecoin powerhouse in a time of heightened regulation.

“It’s a complex environment. So every CEO and every board has to be a little bit cautious, because there’s a lot of uncertainty,” Circle CEO Jeremy Allaire told Protocol at Converge22.

Photo: Circle

Sitting solo on a San Francisco stage, Circle CEO Jeremy Allaire asked tennis superstar Serena Williams what it’s like to face “unrelenting skepticism.”

“What do you do when someone says you can’t do this?” Allaire asked the athlete turned VC, who was beaming into Circle’s Converge22 convention by video.

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.


Is Salesforce still a growth company? Investors are skeptical

Salesforce is betting that customer data platform Genie and new Slack features can push the company to $50 billion in revenue by 2026. But investors are skeptical about the company’s ability to deliver.

Photo: Marlena Sloss/Bloomberg via Getty Images

Salesforce has long been enterprise tech’s golden child. The company said everything customers wanted to hear and did everything investors wanted to see: It produced robust, consistent growth from groundbreaking products combined with an aggressive M&A strategy and a cherished culture, all operating under the helm of a bombastic, but respected, CEO and team of well-coiffed executives.

Dreamforce is the embodiment of that success. Every year, alongside frustrating San Francisco residents, the over-the-top celebration serves as a battle cry to the enterprise software industry, reminding everyone that Marc Benioff’s mighty fiefdom is poised to expand even deeper into your corporate IT stack.

Keep Reading Show less
Joe Williams

Joe Williams is a writer-at-large at Protocol. He previously covered enterprise software for Protocol, Bloomberg and Business Insider. Joe can be reached at JoeWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.


The US and EU are splitting on tech policy. That’s putting the web at risk.

A conversation with Cédric O, the former French minister of state for digital.

“With the difficulty of the U.S. in finding political agreement or political basis to legislate more, we are facing a risk of decoupling in the long term between the EU and the U.S.”

Photo: David Paul Morris/Bloomberg via Getty Images

Cédric O, France’s former minister of state for digital, has been an advocate of Europe’s approach to tech and at the forefront of the continent’s relations with U.S. giants. Protocol caught up with O last week at a conference in New York focusing on social media’s negative effects on society and the possibilities of blockchain-based protocols for alternative networks.

O said watching the U.S. lag in tech policy — even as some states pass their own measures and federal bills gain momentum — has made him worry about the EU and U.S. decoupling. While not as drastic as a disentangling of economic fortunes between the West and China, such a divergence, as O describes it, could still make it functionally impossible for companies to serve users on both sides of the Atlantic with the same product.

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

Latest Stories