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D.C.’s New Auto-Renewal Law: Is Your Nonprofit Affected?

New legal requirements now apply if your nonprofit sells goods or services in D.C. – such as membership benefits, journal subscriptions, or fixed-term service contracts – that are renewed on an automatic basis.  Notably, these new rules do not apply to auto-renewing donations if your nonprofit provides no goods or services in exchange for the donation.

Pursuant to the “Structured Settlements and Automatic Renewal Protections Act of 2018,” nonprofits that automatically re-bill buyers for goods or services after a fixed term must:

1. “Clearly and conspicuously” disclose the auto-renewal provision and cancellation procedures in the sales contract or service agreement (e.g. using larger or distinctive font).

2. For transactions involving an initial term of 12 months or more and that automatically renew for a term of one month or more, notify customers at the end of the first year (and annually thereafter) that an auto-renewal will occur unless the contract is cancelled.  The notification must also clearly and conspicuously disclose the cancellation deadline for preventing an automatic renewal, the cost of the goods or services for the term of the renewal, and the specific contact methods that customers can use to cancel or obtain more details about the renewal.  Notifications can be sent via first-class mail or email, or through other electronic messaging formats including text message or mobile app message if customers have opted into receiving messages from the nonprofit through those media.  Emailed notices must contain an active web link for the consumer to cancel the automatic renewal.

3. For free trials that are automatically converted into paid, auto-renewing contracts of one month or more, notify customers about the impending expiration of the free trial between 1-7 days of the expiration date.  Sellers must then get the consumer’s affirmative consent to begin the paid auto-renewal service before they can charge the customer.

The Act allows for companies to make a “good faith mistake” in complying with these provisions, but only if they’ve adopted written procedures to comply with the requirements and if consumers were credited for or refunded all amounts billed due to the mistaken renewal.  Otherwise, violations of the Act constitute a violation of the District’s Consumer Protection Procedures Act and also terminate the underlying auto-renewal contract.