Auto Renewal and Subscription Compliance

By Hank FasthoffJuly 6, 2026

ROSCA

The Restore Online Shoppers' Confidence Act applies when a person charges a consumer for goods or services sold through an internet transaction using a negative option feature. 15 U.S.C. § 8403 requires the seller to disclose all material terms before obtaining billing information, obtain express informed consent before charging, and provide simple mechanisms to stop recurring charges.

Material terms usually include the recurring nature of the offer, price, billing frequency, renewal timing, and cancellation method. Consent should use a separate affirmative step tied to the recurring offer. ROSCA doesn't state that every prechecked box is invalid, but a prechecked box creates an avoidable proof problem.

Recent FTC enforcement illustrates these requirements. Amazon's Prime settlement required a $1 billion civil penalty and $1.5 billion in consumer refunds, along with enrollment and cancellation changes. Those changes included a clear button to decline Prime and cancellation through the same method used to enroll. FTC Amazon settlement.

Instacart agreed to provide $60 million in consumer refunds under a proposed order resolving FTC allegations involving Instacart Plus free trial enrollment and conversion into a $99 annual membership without adequate disclosure or express informed consent. FTC Instacart matter.

The FTC's pending LA Fitness case alleges that in person and mail cancellation procedures obstructed consumers who joined monthly memberships. The complaint asserts claims under ROSCA and Section 5. FTC LA Fitness complaint.

The Negative Option Rule

The FTC amended the Negative Option Rule in 2024. The amended text would have addressed broader negative option practices, including material misrepresentations, consent, disclosures, recordkeeping, and cancellation.

On July 8, 2025, the Eighth Circuit vacated that amended rule in Custom Communications, Inc. v. FTC. The court held that the FTC failed to complete a required preliminary regulatory analysis. The vacatur restored the original 1973 rule, which covers prenotification plans.

The FTC issued a 2026 advance notice of proposed rulemaking on March 11, 2026. The notice described the amended text as vacated and requested comments on whether and how to modernize the rule. It proposed no regulatory text, and the comment period closed April 13, 2026.

The vacated requirements aren't current federal rules. ROSCA, Section 5 of the FTC Act, the Telemarketing Sales Rule, state statutes, and the original prenotification rule remain relevant. A business can use the vacated rule's concepts as design guidance, but those concepts function as risk controls rather than enforceable requirements under the vacated text.

California

California's Automatic Renewal Law, Business and Professions Code sections 17600 through 17606, applies to automatic renewal and continuous service offers made to consumers in California. Amendments applying to contracts entered into, amended, or extended on or after July 1, 2025, add requirements concerning disclosures, affirmative consent, records, cancellation, material changes, reminders, and fee changes. Section 17602 contains most of the operative rules.

Present the automatic renewal terms before consent and close to the consent request. Required information includes the recurring nature of the offer, renewal period, charges, billing frequency, and cancellation method. Businesses must obtain affirmative consent and retain verification for the statutory period. A confirmation must be retainable and include the offer terms and cancellation information.

A consumer who accepted an offer online must be able to cancel online through a process that doesn't obstruct or delay the request. The current statute adds reminder requirements and requires advance notice of a fee change with cancellation information. The offer deserves analysis under the statute's consumer and transaction definitions rather than an assumption that every online subscription receives identical treatment.

Other State Requirements

State requirements differ by offer type, term, notice timing, and cancellation method. A uniform flow built for one state can fail in another.

New York's General Business Law section 527-a addresses renewal terms, acknowledgments, cancellation mechanisms, renewal notices, and material changes. Notice of a material change, including a price increase, must arrive at least five business days and no more than 30 days before the change. An offer with a free gift or trial lasting more than one month requires notice three to 21 days before the cancellation deadline for the first chargeable period.

Illinois requires written renewal notice 30 to 60 days before the cancellation deadline for consumer contracts with a term of 12 months or more that renew for more than one month. The requirement appears in the Automatic Contract Renewal Act, 815 ILCS 601/10. A violation can support a private action under the Illinois Consumer Fraud Act, including an award of attorney fees to a prevailing party.

Minnesota's section 325G.57 requires clear and conspicuous disclosures near the offer before acceptance, a retainable confirmation with the offer terms and termination options, accessible termination methods, and notice of material changes before they take effect. A free trial lasting more than 30 days requires notice of the cancellation option five to 30 days before the trial ends. Continuous service agreements require notice at least once each calendar year.

Free Trial Conversions

A free trial that converts to a paid subscription needs a prominent explanation of the conversion, the price or pricing method, the first charge, and the cancellation process. ROSCA requires material disclosure before billing information is obtained and express informed consent before charging. California adds specific requirements for automatic renewal offers that include a free gift or trial.

The confirmation should state when the trial ends, when the first charge occurs, the amount or method used to calculate it, and how the consumer can cancel before the charge. The Instacart complaint describes a free trial that converted to a $99 annual membership and alleges that the conversion wasn't adequately disclosed.

Enrollment and Cancellation Controls

At enrollment, place the recurring terms beside the consent request and preserve the version shown to the consumer. Use an affirmative action that identifies agreement to the recurring charge. Send a retainable confirmation with the terms and cancellation method.

Renewal and price change notices run on state specific clocks. A broader reminder program can reduce disputes and chargebacks, but the notice timing must match the governing statute for each consumer's state and the offer's term.

Cancellation receives close scrutiny in current enforcement. The method should satisfy applicable law and match the enrollment channel when the statute requires that result. Retention screens, repeated offers, and surveys shouldn't obstruct or delay the request. Your records should show the request, time received, account status, and date recurring charges stopped. The Amazon and LA Fitness matters illustrate the legal risk when joining is simple and leaving is difficult.

Records and Review

A defensible file holds the consent record, version of the terms presented, confirmation, renewal notices, price change notices, cancellation requests, and account history. I'd recommend reviewing the flow after any product, price, payment, or platform change. Map each offer during legal review to ROSCA, applicable state statutes, and any sector specific rule governing the product or service.