Stricter Automatic Renewal Requirements Take Effect in July 2025

Effective July 1, 2025, amendments to California’s Automatic Renewal Law (ARL) will take effect, introducing stricter requirements for businesses offering autorenewal or continuous service subscriptions. California’s updated ARL is effective shortly before the compliance deadline for the Federal Trade Commission’s updated Negative Option Rule (the FTC Rule), which becomes enforceable on July 14, 2025.

These laws have a common goal: increasing consumer transparency and control over subscription-based services by preventing hidden autorenewals, surprise charges, and barriers to cancellation. The California ARL applies to contracts with California consumers (B2C sales), while the FTC rule covers both B2C and B2B transactions.

While there is significant overlap between the requirements under California’s ARL, the updated FTC Rule, and other state ARLs, many of these laws have unique and nuanced requirements for consent, cancellations, and notifications. Businesses serving customers across the United States must ensure that their practices align with these overlapping federal and state regulations, which often have nuanced requirements for consent, cancellations, and notifications.

The key requirements under the California ARL and FTC Rule are as follows:

• Express Affirmative Consent. Sellers must get separate, explicit agreement to autorenewal terms. Customers must click “I agree” or check a box confirming the subscription will automatically renew. From a practical standpoint, sellers must add an additional unchecked checkbox or separate consent button tied specifically to renewal terms that is in addition to an unchecked checkbox (or similar button/means of affirmative assent) for agreement to the general terms of service. Under the FTC Rule, businesses must retain proof of consent for three years; under California ARL, for the longer of three years or one year after cancellation.
• Same‑Medium Cancellation. Under both the California ARL and FTC Rule, customers must be able to cancel the subscription using the same method they used to sign up. For example, online subscribers must be able to cancel online; phone subscribers need a toll-free cancellation line. Cancellation must be as straightforward as enrollment.
• “Click to Cancel” and Save Offers. Under the FTC Rule, when offering discounts to retain customers, businesses must provide a simple mechanism for a consumer to cancel the subscription immediately. The California ARL takes this requirement a step further, requiring that when making retention offers, businesses must simultaneously provide a clear “Click to Cancel” (or similarly worded) link or button that immediately stops renewal. For phone cancellations, inform customers they can cancel by saying “cancel” before pitching retention offers. No hidden obstacles or repetitive confirmation screens are allowed.
• Advance Notices of Changes. The California ARL requires businesses to notify customers at least 7 days and no more than 30 days before changing subscription terms (e.g., price increases). This notice must include the new price and cancellation instructions. The FTC Rule does not address this issue specifically, but the FTC has stated that it may be an unfair or deceptive practice for a company to significantly change its online terms of service or privacy policy without adequate notice and consent.
• Annual Renewal Reminders. The California ARL requires businesses to send annual notifications for all autorenewal plans, even monthly subscriptions. This reminder must include the product/service name, pricing, billing frequency, and cancellation instructions. The FTC Rule is silent on this requirement.
• No Misrepresentations. The California ARL prohibits misleading statements about subscriptions as well as about the underlying good or service. These misrepresentations are also considered to be an unfair or deceptive practice by the FTC.
• Other Rules Remain. Previous requirements under California law, FTC rules, and other state ARLs still apply (e.g., clear disclosure of terms before checkout, post-purchase confirmation with cancellation instructions, and no pre-checked boxes).

Subscription billing with autorenewals can drive recurring revenue, but regulators have made it clear: consumers (and even business customers) must not be “trapped” in unwanted contracts. As of July 2025, there will be additional contractual requirements for sellers using autorenewals. For many of our clients, this means investing effort now to redesign your subscription experience for transparency and simplicity and to ensure that records of customer consent are maintained for the applicable time period.

When in doubt, you should align your practices with the strictest requirements that apply to your company. Taking these steps now minimizes legal risk, curtails chargebacks, builds customer trust, and helps you “future-proof” against future changes to state ARLs.

For tailored guidance on implementing these requirements—or auditing your current flows—please contact your primary KO attorney or reach out to us at [email protected].