Advertiser Disclosure

Does Your Merchant Agreement Have an Auto Renewal Clause?

Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.
Emily Hale

Emily Hale

Emily is a writer, strategist, and freelance consultant based in Indianapolis. She is driven to create content that empowers her readers and her clients to make better choices in their business and their lives. When she's not in the thick of researching and developing blogs for Merchant Maverick, she likes to cook from scratch for her family or escape outdoors and meander through nature with her rescue pup.
Leave a comment

16 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    Ronalyn

    Does anyone know what happens when you live in New York, but the company(United States Bankcard service) you signed a contract in is California. The company they use to process your money (Global Payments) is in Maryland. So which state do you use?

      Jeremy

      most likely there is a clause in the contract stating that any dispute is to be settled in a specific state. read the contract. if not then it would be n the state where the dispute is filed with the court.

        Chris

        is auto renewal enforceable in Colorado? and in Utah? Can you also find out about New York

          Jen
          Brandon

          Wisconsin passed a statute requiring certain disclosures and notices in some business contracts. Does non-specific language such as “30 days prior thereto” fulfill the Date of the Deadline disclosure requirement? Or must a contract disclose the Date of the Deadline written as a specific date i.e. December 31, 2014? Are auto renewals with the non-specific language enforceable under the Wisconsin statute?

            Bob Dooley
            Anon

            Do you know any details regarding the requirements/validity of automatic renewal clauses in MA?

              Max Ahmen

              Write to your legislators!!!!

              See below article:

              The state of Florida passed a new bill affecting automatic renewal of contracts. Under House Bill 751, titled, An act relating to automatic renewal of service contracts, service providers must include a clear and conspicuous clause in the contract specifying the terms of the automatic renewal, as well as give notice — between 30 and 60 days prior — that the contract will self-renew.

              This statute was signed by Florida governor, Charlie Crist, on May 12, 2010 and will affect all contracts entered into on or after July 1, 2010. As Ken Kirschenbaum of Kirschenbaum & Kirschenbaum, P.C., Garden City, N.Y., points out in a recent newsletter, the bill exempts business subscribers, but also all renewals of up to one month, which he suggests sellers should consider as a safe bet in light of similar statutes passed and likely to pass across the United States.

              At least 10 other states have passed or amended similar legislation in the past four years and ESA director of government relations, John Chwat says we will see many more follow suit. “I’m following about 23 to 24 [proposed bills] at the moment. Some have not passed this session but some are still active.” With all 50 state legislatures meeting in 2011, Chwat predicts those 23 or 24 bills could grow significantly. “It’s a big and popular issue in consumer protection at the state legislature level. And we haven’t seen the end of it.”

              In addition to Florida, states with similar, enacted, automatic renewal legislation include Arkansas, Connecticut, Illinois, New Mexico, North Carolina, New York, Pennsylvania, Tennessee and Utah.

              Of those states looking to pass anti-automatic renewal statutes, Tennessee, which currently has legislation stating automatic renewal on residential alarm contracts is permitted up to one year, is notable for drafting bills specifically targeting alarm system contractors. Senate Bill 1476 and House Bill 0786, which were opposed this session, would disallow automatic renewal clauses altogether, as well as impose other requirements on alarm system contracts.

              Bob Worthy, who as Legislative Committee chairman for the Alarm Association of Florida worked very closely with the new Florida statute, saw it develop from a potentially challenging legislative proposition to a manageable regulation. “It all boils down to education; a lot of states don’t have strong alarm associations to warn legislators as to possible pitfalls,” Worthy said. “We came out probably better off than a lot of states that passed bills with no industry representation.”

              Last year, the California Alarm Association (CAA) was able to secure an exemption from Senate Bill 340, which requires a conspicuous clause and specific approval from the subscriber on automatic renewal bids. According to an ESA press release, the CAA argued that the alarm industry is already regulated by Alarm Act statutes and the Department of Consumer Affairs via the Bureau of Security and Investigative Services. CAA also proposed that the alarm industry requires special consideration as automatic renewal of contracts ensures subscribers’ “safety and well-being.”

              “This is a significant victory because the legislature has now recognized that there are unique circumstances regarding alarm contracts and we will be able to cite the exemption in future legislative debates in other states,” reads the release.

              On the other side of the legislative coin, New York Senate Bill 7230, which would amend a previous law requiring notice of automatic renewal by certified mail, was referred to the Judiciary Committee March 24, 2010. The bill is particular to electronic and life safety alarm services and says that payment by a subscriber after a contract has expired acknowledges the extension of that contract and fulfills the notice requirements of the law already in place. This bill, as well as the California exemption, is the result of very active lobbying, according to Chwat.

              “This fall, everyone should be aware of these types of bills coming down the pipe,” Chwat advises. “If they’re not going to take a proactive stance like New York has, states should seek to get exemption like California.”

              Bob Ireland, president of the Alarm Association of Florida, advises, “All sides need to work together keeping an open mind about new legislation.” He stresses that whatever the law, “Every company should make it very clear to their client what the terms and conditions of the contract are — including what the renewal clause is.” ESA and Kirschenbaum agreed, in their respective literature, that maintaining open communication with consumers is key in avoiding negative repercussions from these statutes.

              For information on automatic renewal statutes state by state, visit http://www.kirschenbaumesq.com/autorenewal.htm

                Max Ahmen

                These auto renewal clauses DO NOT COMPLY with Contract law. Where are these politicians who are supposed to oppose these contract provisions? Bet they are too busy cozying up with the the corporate world violating our rights!

                  Craig

                  My state has made provisions protecting merchants from this practice. It was enacted in July of 2013. One of the last lines of the state document states: “This Act shall become effective on July 1, 2013, and shall apply only to contracts entered into on or after that date. I entered into my contract in 2010, but it auto-renewed in December of 2013.

                  So where do I stand? Is this enforceable in my case because the contract auto-renewed after the effective date of the state law? Or is it not – because the original contract was signed back in 2010?

                    Tom DeSimone

                    Hi Craig,

                    Based on similar circumstances I’ve seen, the effective date of the law would have to predate the agreement for you to be legally absolved here. (Disclosure – I’m not a lawyer and this is not legal advice!) But if you take it up with the BBB, you can usually get the early termination fee waived or at least partially waived.

                    Good luck to you, and please come back to browse our favorite providers (who do not use early termination fees).

                      G

                      I think CA SB340 might work!

                        G

                        Doesn’t ACT 192 – 2009 Senate Bill 190 void these extensions for all states?

                          jdlaughead

                          There are 5 parts of a contract
                          Offer
                          Acceptance
                          Consideration
                          CAPACITY OF THE PARTIES-MEETING OF THE MINDS
                          Legality
                          Now which 3 parts does Auto renewal violate, one,four and Five

                          Meeting of the minds stand out, how can you agree to a contract in the future when you might not even exist. What happens when you agree at a certain price, and when thy renew they raise the price 10 fold! I am going to see what the New Federal office of Consumer Protection (CFPB) can do to end it. It seems the FTC, does nothing for the consumer.

                            Jen Hoglund

                            Hello!
                            Since you mentioned looking at laws in each state that may make these types of contracts enforceable, have you had a chance to review Minnesota? And if yes, will you please share with me?
                            Looking at a five year contract signed in 2007 that NOW has renewed itself for five more years. What a hit. As you mentioned…Now I know. Had no idea this was even possible.
                            Thanks,
                            Jen H

                              Amad E.

                              Jen,

                              Unfortunately I don’t know the laws in Minnesota. I’m sure you can find out that information by contacting your state attorney general.

                              Leave a Reply

                              Your email address will not be published. Required fields are marked *

                              Your Review

                              Comment moderation is enabled. Your comment may take some time to appear.
                              Please read the "User Review and Comment Policy" before posting.

                              Share