Colorado’s new auto-renewal law, which goes into effect January 1, 2022, imposes a unique renewal notice obligation that goes beyond what any other U.S. state or federal law currently requires. Under the existing patchwork of state auto-renewal laws, businesses are required to provide consumers in some states with notices in the run up to the renewal of subscriptions with longer billing periods. Notably, under the new Colorado law, businesses must occasionally send Colorado-based consumers renewal notices for subscriptions with shorter billing periods, even subscriptions that renew each month. It is the first law in the U.S. that requires businesses to provide renewal notices to monthly subscribers.
Specifically, the law requires businesses to send renewal notices 25-40 days prior to any renewal that will extend the contract beyond any 12-month interval (i.e., the renewal that will include the date 12 months from the initial transaction, 24 months from the initial transaction, 36 months from the initial transaction, and so on). In other words, if a subscription renews every month, the business must send a renewal notice before the 12th renewal (as that will cross over the 12-month mark), 24th renewal, etc. If a subscriber begins with a free trial or the billing period is not precisely one month (e.g., renewal every 28 days or 60 days), the timeline for sending renewal notice will vary.
Importantly, the statute says:
“This act applies to dating service contracts and automatic renewal contracts executed on or after the applicable effective date of this act.”
Accordingly, businesses may not need to send such renewal notices to Colorado monthly subscribers who purchased a subscription prior to January 1, 2022 (and thus the first notice would not be required until January 2023 and beyond).
Businesses should consider whether it is worth implementing this renewal notice globally for all consumers or whether it would be preferable to segment their customers, treating Colorado residents differently (at least unless and until other states impose similar notice requirements on monthly subscriptions).
