A bit of background
On July 1st 2018, an amended version of California’s Automatic Renewal Law (ARL) went into effect, adding some further provisions to the existing law that has been in operation since December 1, 2010. Current US federal law requires a seller to disclose material terms of a transaction and to obtain the consumer’s consent prior to the charge.1 In other states, ARL laws are not uniform in scope or requirements, and over 20 states have such laws on their books.
‘California courts have held that the statute only applies to California consumers – but any California consumer who enters into an auto-renewal or subscription agreement may pursue an injunction for violations of the ARL.’2 If you run a business that offers subscription goods or services to Californian customers, you need to be compliant with ARL.
With Zuora managing your subscription billing services, Pendula for Zuora is an easy and cost-effective upgrade to be fully compliant with the ARL, ensuring best practice and peace of mind.
What are the requirements and how does Pendula ensure compliance?
Clear and conspicuous
This applies to the language you use in all offer and cancellation policies you share with customers, but also to the way you send this information. It must be sent before the customer agrees to the service and displayed very close to the request for consent.
Pendula’s cross-channel follow-up and re-direction capability means that any information your customers need to see will reach its destination on the channels they prefer. Pendula in Zuora automatically redirects the messages that bounce to another channel, so your communications are always ‘clear and conspicuous.’
The business must provide a cancellation method which is (a) a toll-free telephone number; (b) an email address; (c) a postal address, if the seller directly bills the consumer; or (d) another ‘cost-effective, timely, and easy-to-use mechanism.’ As of July 1, consumers must also be able to cancel online if they accepted the offer online.
While cancellation is never the ideal outcome for a customer, Pendula provides a ‘cost effective, timely and easy-use mechanism’ for cancelling subscription plans via email (online). Inbound messages can trigger the change in subscription automatically in Zuora, saving your back office team time previously spent dealing with cancellation mail and phone calls.
Your customers must agree to the terms of the subscription plan before being charged. This includes any material changes to the terms of their plan—and these changes must also be delivered in a ‘clear and conspicuous’ way. You must provide retainable information on how to cancel.
As of July 1, the law also requires a seller who provides an automatic offer that includes a free gift, trial, or promotional pricing to notify consumers about pricing and cancellation options before they are charged.
Pendula can send automated notifications based on any subscription account change in Zuora. If a customer is approaching their auto-renewal or have signed up for a new service, send them a message on their preferred channel notifying them of the change, and gain their consent via SMS or email, or direct them online.
Along with scheduling outbound messages, Pendula can automatically read and action inbound messages to trigger any subscription change in Zuora. Your customers can easily consent to a change in their plan and Pendula will update the subscription instantly in Zuora.
You must provide your customers with retainable acknowledgement of (a) the offer’s terms; (b) the cancellation policy; and (c) information about how to cancel. This acknowledgement can be sent after the customer has completed their initial order.
As of July 1, in the event of a ‘free gift or trial’ there must be a disclosure about how to cancel—and an allowance for cancellation—before the consumer pays for the good or service.
With Pendula, you can automatically send your terms and conditions including cancellation policy, via any digital channel. If they are reaching the end of a trial period you can schedule a message that either captures consent to continue on a paid plan or directs them to your site to upgrade or cancel. Automatic scheduling with Pendula provides both hassle-free compliance and a seamless customer experience.
1 Restore Online Shoppers’ Confidence Act, 15 U.S.C. §§ 8401-8402
2 Stricter Automatic Renewal Law in California Commences July 1, 2018, By Dan Herling on June 21, 2018