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New York Significantly Toughens Laws on Automatically Renewing and Continuous Contracts

Jan.05.2021

New York’s new automatically renewing subscription law is set to take effect on February 9, 2021, 90 days after its signing. When New York Governor Cuomo signed Bill S1475A into law, he joined an increasing number of states which have enacted laws imposing strict demands on automatically renewing and continuous contracts. S1475A resembles California’s famously stringent automatic purchase renewal law, which is known for leading to a multitude of class action lawsuits. In particular, New York’s new law resembles a list of requirements that was added to the 2018 California automatic purchase renewal law.

New York’s original law covering automatically renewing contracts, GOB § 5-903, was very limited, applying only to contracts “for service, maintenance or repair” for real or personal property with an automatic renewal period of one month or more. This law required that notice of the automatic renewal period be given to the service recipient in order for the contract to be deemed renewed. The new law, on the other hand, applies broadly to businesses offering automatically renewing and continuous consumer contracts and requires these entities to:

  • Present automatic renewal or continuous service offer terms and conditions clearly and conspicuously before the consumer subscribes to the service;
  • Obtain the consumer’s affirmative consent to the terms and conditions prior to charging the consumer;
  • Provide an acknowledgement/confirmation including the offer terms, cancellation policy, and information on how to cancel the service in a manner that allows the consumer to retain the information;
  • Provide a “cost-effective, timely, and easy-to-use mechanism for cancellation,” such as a toll-free phone number, an e-mail address, or a postal address if the seller directly bills the consumer, which must also be described in the acknowledgement;
  • Provide clear and conspicuous notice any time material changes are made; and
  • Provide a consumer who accepts an automatic renewal or continuous service offer online the ability to end their subscription online. This can include a termination email that the business provides and which the consumer may send without additional information.

However, S1475A does not apply to commercial contracts, as it is limited to offers “to a consumer,” and it exempts certain businesses including but not limited to financial services entities, security system alarm operators, banks, and those administering service contracts (a/k/a extended warranties).

Any business which provides automatically renewing or continuous subscriptions to consumers in New York should carefully ensure it is aware of and complying with the law’s provisions by then to avoid liability. These businesses should also be on notice for other states following in New York’s path and enacting similar laws in the coming months.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Clayton S. Friedman
Partner – Orange County
Phone: +1 949.798.1316
Email: cfriedman@crowell.com
Michael Yaghi
Partner – Orange County
Phone: +1 949.798.1396
Email: myaghi@crowell.com
Joselle Albracht
Senior Counsel
Phone: +1 949.798.1332
Email: jalbracht@crowell.com
Suzanne Trivette
Associate – New York
Phone: +1 212.895.4312
Email: strivette@crowell.com