- Utah law requires companies to notify customers before auto-renewal charges occur.
- The law mandates notice of renewal date, charge amount and cancellation process.
- Non-compliance results in $2,500 fines; exceptions include utilities and insurance.
SALT LAKE CITY — Ten-year-old Alice is learning to play the piano with the help of a subscription-based app. It gave her parents a choice between paying $29.99 monthly for piano lessons or an annual subscription that works out to be way less at $13 a month.
Ahh, but that's how they get you!
Creeping subscriptions
New data from CNET finds subscription creep is on the rise, with the average adult in the U.S. spending $205 on unused subscriptions every year. The more automated subscriptions we sign up for, the harder it can be to keep track of what we're paying for.
"When 42% of the population is experiencing accidental automatic renewals, that adds up," said Utah state Rep. Cheryl Acton, who sponsored legislation requiring companies that automatically renew subscriptions with a paid term of 45 days or longer to give their customers a heads-up.
That advance notice needs to include the renewal date, how much you'll be charged, and most importantly, how to cancel.
And if it's a free trial, the company must warn you at least three days before the trial expires so you're not surprised by any charges.
"You (the subscription service) must notify ... how to cancel," Rep. Acton said.
The Legislature passed her bill, HB174, and it's now in effect.
Unused subscriptions
With autopay, free trials, and third-party platforms making subscriptions so easy to start, forgetting you've signed up for a subscription can be just as easy.
Data from the CNET survey shows 61% of Americans subscribe to a streaming TV service, making it the most popular type of subscription. E-commerce sites at 37% and music at 33% round out the top three subscription types.
Oddly enough, 6% of us subscribe to financial apps – you know, the type of apps that typically help us stay on top of our paid subscriptions.
"Almost everyone has experienced the automatic renewal of a subscription service," Acton remarked.
Companies that don't comply with Utah's new auto-renewal law can get slapped with a $2,500 fine per violation by the state Division of Consumer Protection.
Exceptions
But the law does have some exceptions. For instance, it does not apply to public utilities or insurance agencies. It also does not apply to certain types of service contracts, such as a home warranty service or vehicle service plan.
The Federal Trade Commission is considering some rules aimed at reigning in some of these auto-renewals on the national level. But those rules have been delayed, as you might imagine, as some businesses are pushing back.
