New York Subscription Cancellation Law

New York’s Automatic Renewal Law (ARL) requires subscription-based businesses to present transparent terms, secure affirmative consent, and provide hassle-free cancellation options. Updated in 2023, the law also introduces new requirements for sending renewal reminders for long-term plans and notifying customers of significant changes.

In an economy that becomes more subscription-based every year, New York is helping to set a new standard with their automatic renewal law. Is your business prepared to adapt and thrive in this evolving regulatory landscape?

New York’s Automatic Renewal Law (ARL) represents a significant step toward protecting consumers from misleading subscription practices. Modeled after California’s ARL, this subscription cancellation law requires businesses to prioritize transparency and customer-friendly practices. Failure to comply can result in hefty fines, lawsuits, and a damaged reputation.

For subscription-based businesses, this isn’t just a challenge; it’s a chance to build stronger customer relationships. By aligning with New York’s click to cancel rule, you can demonstrate your commitment to transparency, reduce churn, and set a higher standard for customer satisfaction in your industry.

This guide outlines strategies for compliance with New York’s automatic renewal law, offering insights on how to balance legal obligations with customer retention and what the law means for your business.

How to Comply with New York’s Automatic Renewal Law: Practical Steps for Businesses

Here’s a checklist to ensure your business aligns with the New York automatic renewal law requirements:

Audit Your Workflows for Cancellation

☐ Analyze your current process for canceling subscriptions.

☐ Identify any friction points, such as hidden options or unclear instructions.

☐ Gather customer feedback on the cancellation experience.

Simplify Subscription Terms and Consent

☐ Clearly disclose subscription terms upfront, including renewal and cancellation details.

☐ Obtain explicit, affirmative consent before initiating subscription billing. 

☐ Include a highly visible “Cancel Subscription” button on your website or app.

Send Required Notifications

☐ For subscriptions where the initial paid term was one year or more and the renewal term is six months or longer, send renewal notices 15-45 days before the renewal date.

☐ Notify customers of any significant changes to their agreement in a “clear and conspicuous” manner, with instructions on how to cancel if they choose.

Provide Self-Serve Cancellation Options

☐ Enable customers to cancel online or via the same medium they used to sign up.

☐ Avoid requiring customers to call or email support to cancel.

Leverage Compliance Tools

☐ Platforms like Churnkey can help automate compliance, streamline workflows, and optimize your customer experience.

What You Need to Know About New York’s Automatic Renewal Law

New York’s automatic renewal law (Section 527-A, General Business, Chapter 20, Article 29-BB) is modeled after California’s landmark legislation, but with its own nuances. Below are the core provisions every subscription-based business must address.

1. Clear and Conspicuous Disclosures

Before obtaining consent, businesses must present subscription terms in a “clear and conspicuous” manner. This includes:

• Notifying customers that the subscription will continue until canceled.
• Providing a clear description of the cancellation policy.
• Stating the amount charged and any potential changes to this amount.
• Disclosing the subscription duration or confirming it is continuous.
• Informing customers of any minimum purchase obligations.

For free trials, businesses must clearly disclose the price that will be charged once the trial period ends.

Definition of Clear and Conspicuous.

Disclosures must be:

• In a type size larger than the surrounding text or in contrasting color/font.
• Positioned near the consent request.
• For audio disclosures, spoken in a manner that is easily audible and comprehensible.

2. Affirmative Consent

Before charging a consumer, businesses must obtain their explicit agreement to the subscription terms. Failure to do so could render the goods or services an unconditional gift, leaving businesses with no right to payment.

3. Subscription Acknowledgement

After a customer sign up, businesses must send a retainable acknowledgment, such as an email. This acknowledgment should include:

• The subscription terms.
• The cancellation policy and methods for cancellation.

4. Notices for Renewal and Changes

The New York subscription cancellation law mandates proactive communication under specific circumstances:

• Renewal Notices: For initial subscription terms of one year or more, with renewals lasting six months or longer, businesses must send a notice 15-45 days prior to the renewal.
• Material Changes: If there are significant changes to the subscription terms, businesses must notify customers in a clear and retainable format.

5. Easy Cancellation

Cancellation should be as straightforward as signing up. Specifically:

• Businesses must offer a cost-effective, timely, and simple cancellation mechanism, such as a toll-free phone number, email, or online portal.
• Customers who sign up online must be able to cancel exclusively online without unnecessary steps.
• If using email for cancellation, businesses must provide an immediate termination option, allowing the customer to cancel directly via the provided email.

Who Does the New York Automatic Renewal Law Apply To?

New York’s click to cancel rule specifically applies to subscription-based businesses offering services to consumers (B2C) in New York. The law does not apply to business-to-business (B2B) transactions.

For the purposes of the automatic renewal law, a consumer is defined as: “Any individual who seeks or acquires, by purchase or lease, any goods, services, money, or credit for personal, family, or household purposes.”

If your subscription model caters to consumers for personal use, this law likely governs your business practices. Ensuring compliance is essential to avoid penalties and maintain customer trust.

Challenges Businesses Face in Compliance

Vague Subscription Terms

Some businesses struggle to provide clear and conspicuous terms, as required by the New York automatic renewal law. Ambiguous language about subscription renewals or unclear cancellation policies, such as “reach out for assistance,” can leave consumers frustrated and put businesses at risk of non-compliance.

Insufficient Renewal Notices

Failing to send timely and clear renewal reminders is a common pitfall. Under New York law, businesses must notify customers about renewals for long-term subscriptions, yet many fail to do so effectively. This oversight can lead to regulatory penalties and diminished consumer trust.

Fear of Increased Churn

Internally, businesses often resist simplifying cancellation processes, fearing it will lead to a spike in churn. However, research and best practices show that offering transparent and straightforward cancellation options builds customer loyalty and reduces long-term churn rates.

Why The New York Click to Cancel Rule Matters for Subscription Businesses

Risks of Non-Compliance

Non-compliance can lead to severe consequences, including:

• Fines and penalties.
  • The New York Attorney General may impose fines of up to $500 for each intentional violation of the law.
  • If multiple violations stem from a single act, the penalty may increase to $1,000.
• Legal action from consumers.
• Damage to your reputation.
• Increased customer churn.

Benefits of Compliance

Compliance offers an opportunity to:

• Build trust with your customers through transparency.
• Reduce churn by offering a seamless and frictionless experience.
• Gain a competitive edge by showcasing your commitment to customer satisfaction.

The Future of Subscription Regulation

With both California and New York setting high standards, other states are likely to follow suit. Early compliance with New York’s subscription cancellation law positions your business to adapt more easily to future regulations.

How Churnkey Can Help You Stay Compliant and Reduce Churn

Navigating the complexities of New York’s Automatic Renewal Law can be challenging, but with the right tools, compliance becomes an opportunity to enhance your customer experience and reduce churn. Churnkey empowers subscription-based businesses to meet regulatory requirements while building trust and loyalty with subscribers. Here’s how:

1. Streamlined, Compliant Cancellation Flows

Our intuitive cancellation flows are designed to align seamlessly with New York’s legal requirements, including the need for online cancellations if customers subscribed online. Customers can access and complete their cancellations quickly, providing a frustration-free experience while keeping your business fully compliant.

2. Self-Service Subscription Management

Eliminate the need for customer support bottlenecks with our self-service options. Customers can manage their subscriptions independently, ensuring they have the same ease of access to cancel as they did when signing up.

3. Robust Compliance Tracking and Reporting

Churnkey offers detailed tracking and reporting capabilities to ensure your business maintains a clear audit trail of subscription terms, consent, and cancellation activity. These tools help you stay on top of compliance and simplify audits or legal inquiries.

4. Optimized Retention Strategies

Churnkey goes beyond compliance by offering features like A/B testing for retention offers and AI-driven insights to optimize your cancellation flows. With our tools, you can retain more customers while demonstrating transparency and respect for their choices.

Get Started with Churnkey Today

The New York automatic renewal law is more than a regulatory hurdle; it’s an opportunity to strengthen customer relationships and foster long-term loyalty. With Churnkey’s expertise, you can achieve compliance, reduce churn, and improve customer satisfaction — all at once.

Take the next step in subscription management. Schedule a demo today to see how Churnkey can transform compliance challenges into growth opportunities for your business.

FAQ:

What is New York’s Automatic Renewal Law (ARL)?

New York’s ARL is a consumer protection law that requires subscription-based businesses to provide clear, conspicuous terms for subscription services, secure affirmative consent from customers, and offer easy cancellation options. It also mandates renewal notices for long-term subscriptions and notifications for significant changes to terms.

Does the New York automatic renewal law apply to my business?

The law applies to subscription services offered to individual consumers (B2C) for personal, family, or household purposes. It does not apply to business-to-business (B2B) transactions.

What are the requirements for cancellation under the New York ARL?

Businesses must provide:

• A cost-effective and straightforward cancellation process.
• An online cancellation option for customers who subscribed online.
• Immediate cancellation via email if email is used as the cancellation method.

Are renewal notices required under the New York ARL?

Yes, businesses must send renewal notices for subscriptions with an initial term of one year or more when the renewal term is six months or longer. Notices must be sent 15–45 days before the renewal date.

How can businesses simplify compliance with the New York ARL?

Compliance can be streamlined by:

• Auditing subscription workflows for transparency and simplicity.
• Using tools like Churnkey to automate compliance, provide self-service cancellation options, and ensure robust tracking of consent and subscription activity.

How can Churnkey help my business stay compliant?

Churnkey offers:

• Intuitive, legally compliant cancellation flows.
• Self-service subscription management.
• Robust data tracking and reporting for audits.
• Tools to optimize customer retention while meeting regulatory requirements.