Research · 12 min read
What a State Automatic-Renewal Law Requires That Federal Law Does Not
The federal statute behind a recurring online charge is three clauses long. The detailed duties — the acknowledgment, the reminder, the notice before a price moves, the cancel button — are written in state law, and two states are read here in full.
Key takeaways
- The federal statute for a recurring online charge is three clauses; the acknowledgment, the reminder and the cancel button are state law.
- The federal regulation most often named for cancellation is titled for prenotification plans and describes a mail-order announcement arrangement.
- Both states read here define a bundle of renewal offer terms that has to appear clearly and close to the request for consent, before a card is entered.
- California requires online termination for anything accepted online, and fences a retention offer with a “click to cancel” link displayed alongside it.
- A fee change under an existing California arrangement requires notice between seven and thirty days ahead, with cancellation information in retainable form.
- Goods sent under a renewal without affirmative consent are deemed an unconditional gift in both states, and the provision is written about goods rather than services.
- Two states were read; forty-eight were not, and which law reaches a reader is decided by facts that are not analyzed here.
Answer first: the detail lives in state statutes
The federal statute that governs charging a consumer online through a negative option feature says three things. Disclose all material terms before obtaining billing information, obtain express informed consent before charging, and provide simple mechanisms to stop the charges.
It does not write a notice period, a reminder, a format for an acknowledgment, or a shape for a cancel button. Those exist, and they are state law.
Two states are read here end to end: California and Virginia. They are not the same, and neither describes the law where you are unless you are there.
The point of reading them is not to tell you which applies. It is to show what a state layer looks like, so you can recognize the pieces on a checkout page before you enter a card.
The federal part people name is a different rule
There is a part of the federal trade regulations that gets named whenever cancellation comes up. Read as published, it is titled Use of Prenotification Negative Option Plans, its source note carries a February 2026 citation, and it runs to one operative section plus a second marked reserved.
Its machinery is worth seeing, because it explains the mismatch. The seller mails an announcement identifying a selection and a form. The subscriber returns the form to decline. The rule sets out how much time the subscriber gets to mail it back.
That is a mail-order arrangement of the kind a book or record club once ran. It is not a description of a website that keeps billing a card.
So a page citing that part number for an online cancellation duty is citing a real rule about something else. The operative online duty is the statute, and the specific duties are in the state codes below.
What has to be shown before the card goes in
California defines a bundle it calls the automatic renewal offer terms. They are five disclosures. That the agreement continues until the consumer cancels, and a description of the cancellation policy. The recurring charges, that the amount may change if that is the case, and what it will change to if known. The length of the renewal term or that the service is continuous, and the minimum purchase obligation, if any.
It is unlawful to fail to present those terms clearly and conspicuously before the agreement is fulfilled, and in visual proximity to the request for consent. Where the offer includes a free gift or trial, it must also explain the price that will be charged after the trial ends.
Virginia's list is six items and adds one California's does not: each deadline, by date or frequency, by which the consumer must act to prevent or stop the recurring charges.
Virginia also defines clear and conspicuous separately for an interactive electronic platform. There it means the disclosure is unavoidable by the consumer, uses diction and syntax understandable to ordinary consumers, and appears in each language that would reasonably be expected to be used by them.
One closing sentence in that definition does a lot of work. For a disclosure to be clear and conspicuous, it cannot be contradicted or mitigated by, or inconsistent with, anything else in the communication to consumers.
Consent, and the acknowledgment you can keep
Both statutes separate showing the terms from getting agreement to them. California makes it unlawful to charge a card, a debit card or a third-party payment account for a renewal without first obtaining affirmative consent. That consent has to be to the agreement containing those terms, including where the offer sits at a promotional price.
It also makes it unlawful to include anything in the contract that interferes with, detracts from, contradicts or otherwise undermines the ability of consumers to give that consent.
Then comes the document. Both states require an acknowledgment that includes the offer terms, the cancellation policy and information on how to cancel, in a manner capable of being retained by the consumer.
Where a free gift or trial is involved, that acknowledgment has to say how to cancel before the consumer pays, and California requires the business to allow cancellation before payment as well.
California adds a records duty behind all of it. A business has to maintain verification of the consumer's affirmative consent for at least three years, or one year after the contract ends, whichever is longer.
Cancellation, written as a mechanism rather than a promise
California requires a toll-free telephone number, an email address, a postal address where the seller bills directly, or another cost-effective, timely and easy-to-use mechanism, described in the acknowledgment. Where a telephone number is the mechanism, calls have to be answered promptly during normal business hours, and a voicemail requesting cancellation has to be processed or returned within one business day.
Where a consumer accepted online, California requires termination exclusively online, at will, without further steps that obstruct or delay it. The method has to be a prominently located direct link or button, or an immediately accessible termination email the business formats and the consumer can send without adding anything.
Authentication is allowed where the consumer has an account. A consumer unwilling or unable to authenticate online is not shut out; the other mechanisms remain open.
Retention offers are permitted and fenced. Where a cancellation request arrives through an online system, the business may display a discount or a benefit. It may do so only if it simultaneously displays a prominently located, continuously and proximately displayed direct link or button entitled “click to cancel,” or words to that effect.
Virginia frames the same idea as a comparison. The cancellation mechanism has to be at least as easy to use as the mechanism the consumer used to start the arrangement. It also has to be offered through each method by which a consumer may start one. No consumer may be required to interact with a live or virtual agent unless that is the only way the seller starts these offers, and a cancellation call may not cost the consumer anything.
Notice before the price moves, and once a year
California treats a change in the fee as its own event. Where the fee under an existing arrangement changes, the business has to give notice no less than seven days and no more than thirty days before it takes effect. That holds even for a change the consumer previously consented to, and the notice carries information on how to cancel, in a retainable form.
A material change in the terms triggers a separate notice with the same retainable-form requirement. Virginia's version of that duty attaches earlier: the notice has to come before the change is implemented.
California also requires an annual reminder under an annual arrangement, sent in the medium that started it or the one the customer is used to. It has to disclose the product or service, the frequency and amount of the charges, and the means to cancel.
Virginia writes two reminder rules instead of one. A free trial lasting more than thirty days requires a notice, within thirty days of the end of the trial, of the option to cancel before it ends. An offer that renews after more than thirty days and extends for more than twelve months requires its own notice. It has to arrive no less than thirty and no more than sixty days before the cancellation deadline or the end of the term.
That second Virginia notice has a content list. It states that the offer will renew unless the consumer cancels, the date by which the consumer must cancel, the method of cancellation, and a copy of the renewal provisions.
The remedy that is unusual, and its limit
Both statutes carry the same consequence, in almost the same words. Where a seller sends goods, wares, merchandise or products under a continuous service agreement or an automatic renewal without first obtaining affirmative consent, those goods are deemed an unconditional gift.
The consumer may use or dispose of them in any manner they see fit, with no obligation to the seller, including no obligation to pay for shipping them back.
Read the noun before relying on it. The provision is written about goods, wares, merchandise and products. A service period nobody consented to is not obviously inside it, and neither statute says it is.
Enforcement runs through ordinary consumer-protection machinery rather than through a criminal route. In Virginia a violation is a prohibited practice under the state's consumer protection act and is subject to that act's enforcement provisions.
Read the exemptions before you assume a rule reaches a seller
California exempts six categories. The first two cover businesses under a utility franchise or authorization from the state utilities commission, and businesses regulated by that commission or by the federal communications or energy commissions. The next three are entities regulated by the state insurance department, alarm company operators, and banks, credit unions and other licensed financial institutions. The sixth is service contract sellers and administrators under a named state program.
Virginia's list is four and covers similar ground: utility franchises and authorizations, entities regulated by the state corporation commission or the two federal commissions, banks and other licensed financial institutions, and insurers.
Neither list names a telehealth company, a pharmacy or a medical practice. That is an observation about two lists, not a conclusion that either statute reaches any particular seller.
Timing matters too. California's most recent amendments apply only to a contract entered into, amended or extended on or after July 2025. Which version of a rule governs an arrangement therefore depends on when the arrangement was made.
What this does not decide
It does not decide which state's law applies to you. That turns on where the consumer is, on how the statute defines its own reach, and on the agreement, none of which is analyzed here.
It does not describe the other forty-eight states. Many have a statute of this kind and they differ, and only two are read here.
It does not say whether any company complies with anything. No seller is named, and none of these observations is applied to a page.
And this article is not legal advice. Where what a checkout page showed and what a statute requires seem to disagree, that is a conversation for someone advising you directly.
Sources
- California Business and Professions Code section 17601, “Definitions” (Automatic Purchase Renewals)Subdivision (a)(2), the five disclosures that make up the automatic renewal offer terms and the continuous service offer terms. Subdivision (a)(1) and (a)(5), the definitions of automatic renewal and continuous service. Subdivision (a)(3), the definition of clear and conspicuous for visual and audio disclosures. Subdivision (a)(6), the definition of a free-to-pay conversion. Subdivision (b), that the amendments apply only to a contract entered into, amended or extended on or after July 2025.
- California Business and Professions Code section 17602, “Unlawful acts; notice; cancellation” (Automatic Purchase Renewals)Subdivision (a)(1) through (a)(8): presenting the offer terms clearly and conspicuously in visual proximity to the request for consent, the explanation of the price after a free gift or trial, charging only after affirmative consent, the retainable acknowledgment including the cancellation policy, the bar on contract language that undermines consent, and the three-year verification retention. Subdivision (c), the cancellation mechanisms, prompt answering during normal business hours and the one-business-day voicemail rule. Subdivision (d), termination exclusively online for anything accepted online, the direct link or button, the formatted termination email, and the authentication rule with its saving clause. Subdivision (e)(2), the requirement that a retention offer displayed online sit beside a prominently located, continuously and proximately displayed direct link or button entitled click to cancel or words to that effect. Subdivision (g)(1) and (g)(2), the material change notice and the fee change notice no less than seven and no more than thirty days before it takes effect. Subdivision (h), the annual reminder and its three disclosures.
- California Business and Professions Code section 17603, “Goods deemed unconditional gift”That goods, wares, merchandise or products sent under a continuous service agreement or an automatic renewal without first obtaining affirmative consent are for all purposes deemed an unconditional gift to the consumer, who may use or dispose of them in any manner they see fit without obligation to the business, including without bearing the cost of or responsibility for shipping them back.
- California Business and Professions Code section 17605, “Exemptions”The six exempt categories: a business or affiliate operating under a franchise issued by a political subdivision or an authorization issued by the state public utilities commission; a business or affiliate regulated by that commission, the Federal Communications Commission or the Federal Energy Regulatory Commission; an entity regulated by the state insurance department; alarm company operators; a bank, bank holding company, credit union or other financial institution licensed under state or federal law; and service contract sellers and administrators under the named state program.
- Code of Virginia section 59.1-207.45, “Definitions” (Automatic Renewal Offers and Continuous Service Offers)The six automatic renewal offer terms, including the requirement to state each deadline, by date or frequency, by which the consumer must act to prevent or stop the recurring charges. The four-part definition of clear and conspicuous, including the interactive electronic platform standard that a disclosure be unavoidable by the consumer, use diction and syntax understandable to ordinary consumers, and appear in each language that would reasonably be expected to be used by them. The closing sentence that a disclosure cannot be contradicted or mitigated by, or inconsistent with, anything else in the communication to consumers. The definitions of consumer and of seller.
- Code of Virginia section 59.1-207.46, “Making automatic renewal or continuous service offer to consumer; affirmative consent required; disclosures; prohibited conduct”Subsection A, presenting the offer terms clearly and conspicuously before the consumer becomes obligated and in visual proximity to the request for consent, charging only after affirmative consent, and the retainable acknowledgment including how to cancel a free trial before payment. Subsection B, that the cancellation mechanism must be at least as easy to use as the mechanism used to initiate the offer, must be provided through each method by which an offer may be initiated, may not require interaction with a live or virtual agent unless offers are initiated only that way, and may not impose a cost for a cancellation call. Subsection C, the material change notice before implementation. Subsection D, the notice within thirty days of the end of a free trial lasting more than thirty days. Subsection E, the notice no less than thirty and no more than sixty days before the cancellation deadline or the end of the term for an offer renewing after more than thirty days and extending for more than twelve months, and its four required disclosures. Subsection F, that each disclosure independently meets the clear and conspicuous standard.
- Code of Virginia section 59.1-207.47, “When goods, wares, merchandise, or products deemed a gift”That goods, wares, merchandise or products sent under a continuous service agreement or an automatic renewal without first obtaining the consumer's affirmative consent are for all purposes deemed an unconditional gift to the consumer, who may use or dispose of them as they see fit without any obligation to the seller, including any obligation or responsibility for shipping them back.
- Code of Virginia sections 59.1-207.48, “Exemptions,” and 59.1-207.49, “Enforcement; penalties”The four exempt categories at section 59.1-207.48: a seller or affiliate operating under a franchise from a political subdivision or an authorization issued by the state corporation commission to a public service company or public utility; a seller or affiliate regulated by that commission, the Federal Communications Commission or the Federal Energy Regulatory Commission; a bank, bank holding company, credit union or other licensed financial institution; and an insurer or regulated entity or its affiliate. The enforcement route is stated from section 59.1-207.49, which was fetched and read separately at its own address and makes a violation a prohibited practice subject to the state consumer protection act.
- 16 CFR Part 425, “Use of Prenotification Negative Option Plans”That the part as published contains section 425.1 and a section 425.2 marked reserved, and nothing else. That section 425.1 describes promotional material disclosing the aspect of the plan under which the subscriber must notify the seller if he does not wish to purchase the selection, the mailing of an announcement identifying the selection together with a form for declining it, and a timetable giving the subscriber at least ten days to mail that form. The whole part was read through the versioner interface at the title's issue date before the human-readable page was cited.
Frequently asked questions
Does federal law require a cancel button?
The federal statute for a recurring online charge requires simple mechanisms to stop the charges and leaves the shape of them open. It does not describe a button, a deadline or a notice. The federal regulation people usually name in this conversation is titled Use of Prenotification Negative Option Plans, and read as published it describes an announcement-and-form arrangement of the mail-order kind rather than a website. The specific mechanics — an online termination route, a retention-offer rule, a reminder — appear in state statutes, two of which are read here.
What is an automatic renewal offer term?
It is a defined bundle of disclosures rather than a phrase. California lists five. That the agreement continues until the consumer cancels, and a description of the cancellation policy. The recurring charges, and whether and how they may change. The length of the renewal term or that the service is continuous, and any minimum purchase obligation. Virginia lists six and adds each deadline, by date or frequency, by which the consumer must act to prevent or stop the charges. Both require the bundle to be presented clearly and conspicuously and close to the request for consent, not somewhere else on the site.
Is a seller allowed to offer me a discount when I try to cancel?
In California, yes, within a fence. A business may display a discount, a retention benefit or information about the effect of cancellation. It has to simultaneously display a prominently located, continuously and proximately displayed direct link or button entitled “click to cancel,” or words to that effect. On a telephone call, the business must first tell the consumer clearly that they can complete the process at any time by saying they want to cancel. If the consumer uses the link or says the word, the cancellation has to be processed promptly and without obstruction or delay.
Does a program have to warn me before the price goes up?
Under California's statute, a fee change under an existing arrangement requires notice no less than seven days and no more than thirty days before it takes effect. The notice carries information on how to cancel, in a form the consumer can retain. That applies even where the consumer previously consented to the change in the plan. A material change in the terms triggers a separate notice in the same retainable form. Virginia requires the material-change notice before the change is implemented. Whether either applies to a given arrangement depends on which state's law governs it.
What happens if something arrives that I never agreed to?
Both statutes carry the same remedy. Where a seller sends goods, wares, merchandise or products under a continuous service agreement or an automatic renewal without first obtaining affirmative consent, those goods are deemed an unconditional gift. The consumer may use or dispose of them as they see fit, with no obligation to the seller and none to pay for return shipping. Note the noun: the provision is written about goods, and neither statute extends it in terms to a service period. Whether it reaches a particular shipment is a question about the facts of that order.
Do these laws reach a telehealth company?
Neither exemption list names one. California exempts utility-franchised and utility-regulated businesses, insurance entities, alarm company operators, licensed financial institutions, and service contract sellers under a named program. Virginia exempts utility franchises and authorizations, entities regulated by its corporation commission or the federal communications or energy commissions, licensed financial institutions, and insurers. Reading two lists is not the same as reaching a conclusion about a company, and nothing here says a statute applies to any particular seller. What the lists do show is the shape of the carve-outs, which is worth knowing before assuming a rule is unavailable.