California ARL: What Businesses Can Do About Subscription Cancellations

California’s automatic renewal law (ARL) imposes strict requirements on subscription billing. If you offer services to consumers in California (B2C), this law applies to you. It was initially enacted in 2010 and has since been amended multiple times. It is considered to be one of the toughest in the nation after the most recent 2024 amendments.

It is crucial to be aware of the regulation surrounding the cancellation flow as it can turn into large fines. The easiest way to avoid worrying about compliance is by using a 3rd-party cancellation tool like Relixir or Churnkey.

Key ARL Requirements

The ARL and especially its 2024 “click to cancel” amendment, puts stringent requirements on straightforward cancellations and auto-renewal policies.

Auto-Renewal Requirements

Clear Disclosures Upfront

• What’s Required? You must clearly highlight:

  1. That the subscription renews automatically unless canceled.

  2. Billing frequency and costs (including any discounted or promotional rate that will change later).

  3. How to cancel.

• “Clear and Conspicuous” means larger or contrasting text, or otherwise distinguished from surrounding copy—so no burying the renewal terms in fine print.

Affirmative Consent

• Before charging a consumer, you must secure their explicit agreement to these renewal terms (often via a checkbox or button).

• Record Retention (as of the 2024 amendments): You must keep evidence of the consumer’s consent for at least three years, or one year after the contract ends, whichever is longer.

Post-Signup Acknowledgment

• Send the consumer a retainable confirmation (e.g., email) that restates:

  1. The fact that the subscription will renew automatically.

  2. The length and frequency of charges.

  3. How to cancel promptly.

• If there’s a free trial or a discounted introductory period, you must also remind them how to avoid future charges if they don’t want to continue.

Renewal Notices

• Annual Reminders: For subscriptions with terms of one year or more, or for those with a promotional period over 31 days, send a notice 15–45 days before renewal.

• Fee Changes: Give at least 7–30 days’ notice of any fee increase, making it clear how to cancel before the change takes effect.

Cancellations

1. Same Medium Requirement

   • If the consumer signed up online (or typically interacts with your business online), you must allow cancellation online.

   • If they subscribed by phone or in person, you should offer at least that method for cancellation, and ideally an online option too.

2. Online Cancellation

   • Must be “immediate” and “exclusive,” which means your site or app needs a prominently displayed ‘Cancel’ link or button.

   • While you can present retention offers or ask for optional feedback, you must not block or delay a user who simply wants to cancel.

3. Email Cancellation Option

   • If your business allows cancellation by email, you must provide a pre-formatted email that customers can send “as is,” without requiring additional information.

   • Respond promptly — delays or ignoring cancellation requests can lead to enforcement actions.

4. Phone Cancellation Option (If Offered)

   • If you provide phone-based cancellation, you must answer during normal business hours and process cancellations promptly (within one business day if a voicemail is left).

   • You can make a retention offer, but you must clearly inform the customer that they can finalize the cancellation at any time by stating their intent.

What Should Your Business Do?

1. Review and Update Disclosures

   • Are your renewal terms clear, prominently displayed, and easy to understand?

   • Do you outline all costs, renewal periods, and cancellation instructions?

2. Prepare Proper Notifications

   • Automate annual reminders if your plans last a year or more.

   • Send out fee-change notices and free trial expiration reminders within the specified time windows.

3. Maintain Records of Consent

   • Keep user consent on file for at least three years or one year after the contract ends (whichever is longer).

   • This includes proof of the specific terms the customer agreed to.

4. Train Your Support Team

   • Make sure phone or email support teams know they must not delay a valid cancellation request.

   • Provide them with a simple script or process to stay compliant and courteous.

Use An Existing Cancellation Flow Tool

The easiest way to not worry about regulation, especially in SaaS where you users are from different regions, is to use an existing cancellation flow tool.

That’s why we created Relixir, an AI-native cancellation flow tool that provides:

• Automated Compliance: Relixir is constantly being updated to be compliant with new regulations so you don’t have to worry about it. 

• Cancellation Deflections: Stop people from cancelling with dynamic retention offers.

• Automated Interviews: Using LLMs and AI voice agents, we can automate a human-like conversation to replace your exit survey. This brings a new dimensions to your feedback

• Personalized Reactivations: Win-back past users by targeting at the right time and the right message based on the feedback they gave.

Ready to make your cancellation flow compliant and turn it into a powerful retention engine? Book a Demo