USA compliance regulations on subscriptions with auto-renewal

Overview

Consumer protection authorities across several states from USA (Colorado, California, Illinois etc.) have issued multiple compliance regulations applicable to businesses-selling subscriptions.

There is a special focus on the subscriptions renewing automatically and the disclosure of information to the shoppers throughout the subscription lifecycle, starting from the initial acquisition of the subscription and continuing with each renewal. 

The regulation is applicable starting with 1st of July 2022.

Benefits

• For shoppers: increased transparency, customer satisfaction, taking an informed decision at any point in time in self-servicing their subscriptions

• For merchants: compliance with the US regulation, being able to build a trust-based relationship with the shoppers

Availability

The USA regulations have been implemented based on the billing address country of the shopper, being US, without further split based on USA states. The USA states have issued one by one similar regulations and the expectation is that more will follow.

Impact on shopping carts

One of the US regulations is focusing on shopper awareness, for whom all the subscription details should be disclosed in a complete and clear manner when deciding to purchase a subscription.

The shopping carts were already following the guidance of the above principle.

The only change coming with this regulation is to highlight through an additional text formulation the renewal setting of the subscription, applicable regardless of if there is an automatic or manual renewal.

The new regulation states that the renewal of the contracts cannot be done for more than 12 months.

The updated version of the text placed in the shopping carts, near the Place order button: "By placing the order with the auto-renewal option selected, you are confirming that you are over 16 years of age and you agree that your license will automatically renew in accordance with the terms above (as such terms may be amended by mutual agreement), for an additional period of up to 12 months, as well as with 2Checkout’s terms and conditions."

Impact on shopper emails

E-mails sent after an order is placed

Regardless the combination of e-mails sent after an order is placed, either it is one, two or three e-mails sent based on the settings, every e-mail content has been updated with new information about the behavior of auto-renewal and the flexibility around easily turning off auto-renewal. 

The below text has been added to the Support information section from the footer area of the e-mails: 

"If applicable, the auto-renewal option for your subscription may be cancelled at any time. 

You can cancel it using myAccount as described above, by contacting 2Checkout at <2CO support e-mail address> or the applicable merchant support at <merchant_support_email> email address."

The above new text is applied only to shoppers from the USA, based on billing address country. 

The impacted e-mails are: Payment Confirmation, Payment Receipt and Delivery/Fulfillment. 

The text is visible for the e-mails sent after the initial acquisition and after each new renewal, regardless if it is a manual or an automatic one.

E-mails sent as renewal reminder before automatically renewing a subscription

For subscriptions with billing cycles higher than 6 months, which are on automatic renewal, the USA regulation is mandating that the shopper should receive a renewal reminder between 45 and 15 days before the renewal. Consequently, in the 2Checkout system, this e-mail reminder has been scheduled to be sent 30 days before the renewal.  

The content of the new renewal reminder is the same as per the existing renewal e-mail, which is mandatory sent 7 days before the renewal, applicable to all the subscriptions renewing automatically, regardless of the billing cycle length. 

For both e-mails' reminders, there has been applied an update on the Support information section, highlighting the behavior of the auto-renewal and the option available at any point to turn on/off the setting. 

"If applicable, the auto-renewal option for your subscription may be cancelled at any time. 

You can cancel it using myAccount as described above, by contacting 2Checkout at <2CO support e-mail address> or the applicable merchant support at <merchant_support_email> email address."

E-mail sent once automatic renewal is enabled

The regulation highlights the importance of keeping the shopper informed about the changes applied to the auto-renewal setting on his/her subscription. 

Consequently, there has been introduced a new e-mail sent once the auto-renewal is enabled.  

This is a confirmation e-mail with a similar content as the existing one which is sent when the auto-renewal is disabled. 

Both confirmation e-mails, either for disabling or enabling the automatic renewal, have been implemented globally, for all the shoppers, regardless of their billing address. 

The reason behind is another regulation issued by Mastercard and applicable worldwide, starting from September 2022, which emphasizes the need to keep shoppers informed at any point in time about the renewing status of their subscriptions.