A new law in Colorado is meant to fight back against sneaky “auto-renew” contracts, which can often result in surprising costs and long calls with customer service.
Starting on Jan. 1, companies here will face new on how they sell subscription products.
The law was inspired in part by state Rep. Cathy Kipp’s frustrations when products like newspapers subscriptions were automatically renewed.
“They never notified me — all they did was take money out of my account,” she said. “And I'm like, really? You're gonna just take money out without even, you know, asking my permission?”
Under the new law, businesses must:
- Provide detailed information about how auto-renew contracts work.
- Give notice at least 25 days before an automatic renewal.
- Offer a “simple, cost-effective, timely, and easy-to-use” way to cancel contracts.
Colorado is one of a couple of dozen states with laws on auto-renewal services. Attorney General Phil Weiser said industry representatives told him that the new state law is among the toughest in the nation. His office pushed for the change after hearing complaints — for example, from people who found themselves stuck in auto-renewed contracts with a lawn-care company.
“You might have lots of language that was incomprehensible and/or buried. They just put the burden on the customer,” Weiser said.
The auto-renewal rules don’t apply to certain businesses that are already specifically regulated by the government, such as banks, insurance companies, airlines and cable providers.
The new law also calls out dating services in particular. It says that they:
- Can’t offer contracts that have payment periods exceeding two years.
- Must release customers and their estates from contracts if the customer dies or becomes disabled.
- Provide notice if someone corresponded with a user of the app who was later banned, in order to help people know if they were a victim of attempted fraud.
Kipp said she heard from an unhappy constituent who got stuck with an inferior online matchmaking service.
Enforcement of the new laws will be based largely on complaints, which can be submitted to the Attorney General’s Office.
The AG’s office reports it received 33 complaints about auto-renewing contracts in 2021.
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