Thursday, August 4 2022

Businesses with auto-renewing contracts, including subscriptions, should take note of the new right which went into effect earlier this year on January 1, 2022. While businesses subject to other states’ automatic renewal laws and the Restoring Confidence of Online Shoppers Act (“ROSCA”) will be familiar with the three-pronged approach of clear disclosure upfront, simple cancellation, and ongoing reminders, Colorado law goes one step further by imposing notice requirements for monthly renewals.

Under Colorado law, any auto-renewing contract must make the renewal terms and cancellation policy “clear and visible” before the contract is accepted. Clear and visible is defined to mean in type larger than the surrounding text; in a type, font, or color that contrasts with surrounding text of the same size; or highlighted surrounding text of the same size by symbols or other markings in a way that clearly draws attention to the language. Colorado law also prohibits the use of a link to present the offer unless it clearly states that it is a renewal contract.

Colorado law also requires companies to provide a simple, cost-effective, and easy-to-use mechanism for canceling an auto-renewing contract or trial period offer. Businesses can comply with this requirement via an online one-step cancellation link which is located on the website and is available immediately or after the consumer has completed a reasonable authentication protocol.

However, perhaps the most notable aspects of the Colorado law are the ongoing recall provisions. Similar to the laws in force in other states, contracts of one year or more require that a renewal notice be sent between twenty-five and forty days before each renewal. But Colorado law also requires such notices for shorter contracts—for example, month-to-month contracts — notice given twenty-five to forty days before the anniversary of the initial registration. This structure is similar to the new Delaware lawbut this law only applies to goods and is therefore significantly narrower than the Colorado law.

Colorado law contains various exemptions, including services regulated by the Federal Communications Commission, entities regulated by the Division of Insurance, banks or bank holding companies, financial institutions licensed under federal or state law. State and air carriers.

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