Unauthorized Contract “Auto Renewals” and Cancellation Fees

Today’s consumers purchase many types of services, memberships, and subscriptions on an ongoing basis, causing consumers to pay month-to-month, year-to-year, or term-to-term.

Services and subscriptions with these types of payment arrangements include:

 

• Gym memberships
• Social networking services
• People searching services
• Music, book, and movie downloading sites
• Alarm monitoring
• Anti-virus protection
• Cell phone service
• Satellite TV or radio
• Pest control
• Lawn care
• Garbage hauling
• Magazine subscriptions
• Electronic greeting card subscriptions
• Travel clubs

 

These types of perpetual contracts are generally acceptable; however, some unscrupulous companies take advantage of these ongoing relationships in a few reoccurring and improper ways:

First, companies may not make it clear what the price of the service actually is when consumers first sign up. For example, some companies reportedly trick consumers into signing up for a “free trial” only to place them in an “automatically renewing” contract without fully disclosing the terms to the consumer. When this happens, consumers are often unaware that they are paying for the services until much later. Similarly, companies may deceptively quote consumers a monthly or an annual fee for the membership, but instead, charge them one flat upfront rate.

Second, companies may also automatically renew these perpetual contracts without first receiving the consumer’s consent to extend the contract and without providing the customer with proper notice that the contract is about to be renewed. If consumers are not diligent, they may go on paying for a service for months, even years, without even knowing it.

Third, some companies may also make it extremely difficult for consumers to cancel their contracts. For example, some companies require consumers to submit written letters of cancellation to confusing addresses or require them to call the company multiple times before their lapsed contracts are finally terminated.

Fourth, companies may take advantage of these ongoing contracts by imposing burdensome or unjustifiable cancellation fees, often referred to as “early termination fees,” on consumers when they attempt to cancel the relationship.

If you have been placed in a contractual relationship for a period of time longer than what you originally consented to or if you were charged an unfair cancellation fee, please contact us to take action.

Several states have enacted consumer protection laws that are specifically designed to protect consumers from unauthorized contract extensions and fees, and all states prohibit unlawful and deceptive commercial practices generally.