Lawsuit Targets Technical Requirements in California’s Autorenewal Law | Venable LLP

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Autorenewal programs remain in the crosshairs for private class action plaintiffs, as evidenced by another lawsuit filed in California targeting numerous technical requirements in the state’s automatic renewal law.

Plaintiff sued FloSports, an online sports streaming subscription service. According to the plaintiff, the autorenewal terms were not clearly and conspicuously disclosed when customers enrolled in the website’s subscription sports broadcasting and streaming services, and the company did not provide an opportunity to convey affirmative consent to be enrolled in the renewing subscription program or send an order acknowledgment containing all of the necessary disclosures.

The plaintiff alleged specifically that the website failed to disclose the recurring renewal price, the length of the renewal term, the date when the first charge would occur, or the complete cancellation policy associated with his subscription. The checkout page also advertised the purchase price as $12.49 per month, which contradicted the $149.99 annual purchase price (by 11 cents!). The complaint challenged the website’s failure to disclose that the amount billed each month or year might vary because of promotional offers, changes in the subscription features, and changes in applicable taxes. Thus, while the checkout page stated that consumers’ subscriptions will automatically renew and that they will be charged $149.99 immediately for the first year, the website did not disclose how much money consumers will be charged for each subsequent year. Further, the cancellation policy on the checkout page did not disclose that a consumer’s subscription automatically renews unless autorenew is turned off at least 24 hours before the end of the current period, and did not disclose the time zone that applies to the cutoff date.

The complaint challenged the presentation of the disclosures, arguing that they did not appear “clearly and conspicuously.” Under California’s automatic renewal law (and many states’ analogous laws), “clear and conspicuous” is defined as “in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks, in a manner that clearly calls attention to the language.” The plaintiff argued the terms are not “clear and conspicuous” because they appear smaller than the text featured in and around them, and they appear in a gray 10-point font, without emphasis, against a grey background, making them illegible to the naked eye unless the zoom level is increased, even on a large computer screen. This was contrasted with other statements and fonts, including black 30-point bold font that the purchase price is “$12.49.” Finally, the terms were overshadowed by the large call-to-action button, which immediately turns red after a consumer finishes entering their payment information (drawing attention away from the disclosure text).

Next, the plaintiff asserted that the checkout process does not require consumers to read or affirmatively agree to any terms of service associated with their subscriptions, such as by requiring consumers to select or click a checkbox next to the automatic renewal offer terms to complete the checkout process. Rather, the only terms that consumers could have agreed to, without a checkbox manifesting affirmative consent, was that “[b]y clicking Start Watching, you will be charged $149.99 today for the first year.” That call to action, however, did not otherwise state that by clicking the call-to-action button consumers were also agreeing to an “annual subscription.” (This was at issue in the Ninth Circuit’s decision in Berman, which we discussed here.) Thus, the plaintiff argued that at no point during the enrollment process was there an unambiguous or affirmative consent to the automatic-renewal terms.

Finally, the complaint alleged that the purchase confirmation did not include mandatory disclosures, including that the subscription will continue until the consumer cancels; a description of the cancellation policy that applies to the offer; a statement of the recurring charges, that the amount of the charge may change and the amount to which the charge will change; or the length of the automatic renewal term or that the service is continuous, unless the length of the term is chosen by the consumer.

The complaint demonstrates the type of technical challenges that plaintiffs are lodging under automatic renewal laws, including requiring disclosures about the time zone of the cancellation deadline and that state taxes might change, and posting the annual membership price in multiple places on the checkout page. It also underscores the importance of designing websites in a way that conspicuously explains the material terms of the transaction, and that by taking a certain action such as “Start Watching,” a consumer is agreeing to the terms. Given the frequency of these challenges and the many technical requirements in California’s automatic renewal law – only some of which plaintiff challenged in this complaint – businesses selling products and services on an automatic renewal basis should take heed.



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