Utah lawmakers take aim at auto-renewing subscriptions
Jan 23, 2024, 12:00 PM | Updated: Jan 25, 2024, 9:35 am
SALT LAKE CITY—Two Utah legislators proposed a bill to make auto-renewing subscriptions more consumer-friendly.
The subscriptions are designed to continue charging a customer with or without their ongoing consent.
State Sen. Todd Weiler, R-Woods Cross, gave an example, saying “You set a New Year’s resolution, you go down and you join the gym,” Weiler told KSL Newsradio on Tuesday. “And you sign a contract, and you go for three weeks and you never go again. And then three years later, you find out you’ve been paying thirty bucks a month from your credit card.”
Weiler and State Rep. Cheryl Acton, R-Salt Lake City, are pushing to hold companies that don’t notify their subscribers that their plan is set to automatically renew accountable.
Companies would have between 30 to 60 days ahead of the renewal deadline to tell their customer about the impending charge. Moreover, this disclosure would have to be what the bill writers call “clear and conspicuous.”
“A lot of these marketers …they know exactly what they’re doing. And they’re making it, you know, they’re burying the good stuff in the small print that most reasonable people don’t read,” Weiler said.
The bill would empower Utah’s Division of Consumer Protection to levy a $2,500 fine for each infraction of the auto-renewing subscription bill.
Utah already facing blowback
Utah has already faced blowback from technology companies protesting the state’s social media regulation. Many adult websites have completely stopped operating in Utah because of a new age-verification rule.
Sen. Weiler says he does not anticipate industry resistance against his bill.
“We may have a few companies that say, ‘We won’t do business in Utah,'” said Weiler. “But, you know, this is a state of 3.4 million people, and so it’s going to be hard for most companies just to ignore that big of a market.”
As of Tuesday morning, HB174 has passed out of the judicial committee and awaits a floor vote in both the House and Senate.
What does the federal government say?
Under federal policy, organizations have to meet three rules for autorenewal subscriptions. The Federal Trade Commission (FTC), which oversees subscription contracts, says marketers must:
- “Disclose clearly and conspicuously” all program details, including costs and how marketers will disclose a subscription renewal.
- “Obtain the consumer’s express informed consent before charging them for a product or services.” There must be an opt-out choice without distracting information.
- “Provide easy and simple cancellation to the consumer.” It should be as easy for a customer to cancel the subscription as to sign up.
Avoiding surprises from auto-renewing subscriptions
According to the FTC’s website, consumers can look for some telltale signs to avoid getting hooked on a plan with surprise charges. Free trials that begin charging for auto-renew subscriptions after they have ended are rampant.
To avoid surprise charges, the FTC advises reading all program details to find out whether the business will keep charging. If it’s unclear, it’s best to assume the company will charge.
Additionally, some businesses include “pre-checked boxes” claiming a user is agreeing to get charged. In those cases, customers must manually de-select the boxes.
Finally, the FTC suggested consumers know how to cancel, which businesses are legally required to explain. “If it’s not clear to you how to cancel, walk away.”
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