California Passes “Click to Cancel” Subscription Law

Assembly Bill 2863 was signed into law this week by California Governor Gavin Newsom, requiring companies to comply with regulations that make opting out of digital subscriptions much simpler, among other protections for customers.

The bill was described by CA Assemblymember Pilar Schiavoa as “a model for the nation on protecting consumers from unnecessary charges – giving them more control over their finances and helping to ensure fair business practices, providing a win for both consumers and small businesses.”

In particular, the bill means that companies that offer automatic subscription renewal must make cancellation available through the same means that customers sign-up. For instance, if one subscribes to an online service, then an easy click-to-cancel must be made readily available at the same site.

As subscription-based services have become a ubiquitous fact of life, ethical questions have been raised regarding confusing cancellation processes and unfair fees. Earlier this year, California-based software company Adobe was at the center of a lawsuit presented by the Federal Trade Commission regarding hidden fees and confusing cancellation processes. In addition to addressing concerns like this, the new bill also aims to shield people from other unfair business practices like banking overdraft fees and undisclosed hospitality fees.

While national legislation has yet to pass, the move from California sets a precedent that is likely to have a wider influence across the country. The bill’s requirements are poised to go into effect in California by mid-2025.