Automatic Renewal Fees: What You Need to Know

Many consumers have complained of issues with subscription-based service charges, ranging from difficult cancelling to automatic renewal fees charged without their consent. Federal agencies like the Federal Trade Commission (FTC) have recognized these services’ tactics as “negative options.” Per the FTC, a negative option is when you are automatically billed (auto-renewal) when you did not specifically say not to bill you. In other words, a consumer’s lack of action is taken as consent to be charged. Such practices seek to produce a constant stream of income for the company, risking millions in consumers’ hard-earned money.  

Understanding Automatic Renewal Fees  

An automatic renewal fee refers to a situation in which a subscription-based service bills its customers unless the customer has explicitly indicated they do not want to be billed. Many businesses not only charge automatic renewal fees if the consumer does not cancel the services but also charge cancellation fees if a consumer does cancel. Combined with evasive customer support options that can make cancelling services difficult, these tactics are known as “negative options,” and may be costing customers millions.  

Commonly Reported Issues  

  • Auto-billing: Receiving charges for services you have not explicitly opted out of is the number one complaint from subscription-based service customers.
  • Cancellation Fees: Some services may attempt to charge their customers a small fee in order to cancel their subscription.
  • Difficulty Cancelling: Customers may struggle to cancel their subscriptions due to needlessly complex processes, such as requiring a customer place a phone call rather than cancel their subscription online.

Legal Response to Automatic Renewal Fees  

Since 2020, the FTC has homed in on subscription-based marketing and business models. Much progress has been made in the curbing of automatic renewal fees to prop up corporate greed, including a major victory against internet provider Vonage in 2022. Updated laws and legal rulings have since increased consumer protections, making it easier than ever for customers to fight back.  

Timeline of Recent Legal Action  

2020: The FTC uncovers “dark patterns” in business-to-consumer marketing.

  • FTC investigations uncovered evidence that many businesses were, intentionally or unintentionally, enrolling customers in automatic renewal subscription plans without offering them necessary information upfront. The FTC raised concerns about hidden terms, unilateral changes in the subscription plan, and difficulties with cancellation.

2021: The FTC issues a policy statement revising the standards for regulatory compliance.

  • This amendment established three major themes for regulatory compliance: 1) the terms of the program must be clear before enrollment; 2) marketers must obtain express informed consent before enrollment, and 3) the program must be easy to cancel. 

2022: FTC reviews negative option rule and pursues legal action against Vonage.

  • In 2022, the FTC continued to build on consumer protections by updating its negative option rule to make it more specific to subscription-based programs. 
  • The FTC took legal action against internet service provider Vonage for their predatory junk fees and obstacles to cancellation. The action successfully forced Vonage to provide a simple way to cancel their service and required the company to pay $100 million in refunds to harmed consumers.

2025: FTC introduces “Click to Cancel” requirement.

  • Further amendments to the negative option rule went into effect in January of 2025 and should be enforceable by May 14, 2025. These amendments expanded consumer protections to nearly all forms of negative option marketing, instructing business to disclose all material terms before subscription, and requiring that they provide a simple “Click to Cancel” method.  

What Can Affected Consumers Do?  

Although we are not currently accepting new cases, you still have options if you’re being negatively impacted by an automatic renewal fee structure:  

  • File an FTC Complaint: Impacted consumers can visit FTC.gov/complaint to report predatory business practices, scams, and fraud. 
  • Explore Your Local Laws: Businesses are subject to local in addition to federal regulation. Learn more about what compliance looks like in your state. 
  • Seek Further Legal Advice: Though we’re no longer taking automatic renewal fee cases, financial services attorneys at MLG are always available to speak with you about issues related to subscription billing or other matters.  

Related Cases & Legal Areas  

If you’re struggling with an automatic renewal or auto-billing issue, we recommend exploring the following areas:  

  • Financial Services Cases: Our financial services team serves customer who have been harmed by predatory or negligent practices perpetrated by businesses or financial institutions.
  • Consumer Fraud Class Actions: When multiple consumers are impacted by a fraudulent business practice, they may pursue legal action together as a class.  
  • Class Action Lawsuits: Class actions often go beyond the scope of consumer fraud, covering issues like product liability, antitrust infringement, and more.  

Still Need Legal Assistance?  

Though we’re no longer taking new automatic renewal fee cases, our attorneys are on hand to help you with other consumer protection and financial services matters.   

Visit our Financial Services team to explore options or call 855-997-0614 to be connected to an attorney today. 

Final Note  

This page is no longer accepting new clients for automatic renewal fee claim. It will remail live as an informational resource for affected consumers.  

Frequently Asked Questions

 

Why are auto-renewals considered predatory?

 

Auto-renewals are often seen as predatory because they exploit consumers’ convenience and complacency. Companies design these systems to automatically charge customers for subscriptions or services without their explicit consent. This can result in consumers paying for services they no longer use or want, wasting their money.

Companies benefit from auto-renewals by ensuring a steady stream of revenue. When consumers forget about their subscriptions or find it challenging to cancel, businesses can continue to charge fees or sell additional products or services without having to actively engage with customers. This creates a consistent income stream for companies, often at the expense of consumers who may be unaware or unable to opt out.

Regulations regarding auto-renewals vary by jurisdiction, but many countries have started to take action to protect consumers from predatory practices. Some regulations require companies to clearly disclose auto-renewal terms and make it easier for customers to cancel subscriptions. However, enforcement can be challenging, and consumers should remain vigilant and report any instances of predatory auto-renewals to relevant authorities or consumer protection agencies for further investigation and potential action against offending companies.

Attorney Advertising

McCune Law Group is responsible for this advertisement. The information provided on this website is for general information purposes only. The information you obtain is not, nor is it intended to be, legal advice. Use of this website or submission of the online form does not create an attorney-client relationship.

Counsel Richard McCune is licensed to practice only in the state of California. The law firm of McCune Law Group has attorneys licensed to practice law in AZ, CA, IL, MO, NJ, NY, and PA. McCune Law Group is a national firm that brings lawsuits in a majority of the states. In states where one of its attorneys is not barred, it does so by filing the complaint along with local counsel barred in that state.

The results discussed do not guarantee, warrant, or predict the results in future cases.