Cecily Zamora
In the context of contract law, automatic renewals refer to the practice of automatically extending the duration of a contract for an additional period without requiring explicit consent from the consumer. Tennessee has recently amended its Consumer Protection Act to include new regulations governing automatic renewals, which took effect in January 2023. These amendments aim to protect consumers by requiring businesses to obtain affirmative consent for subscription offers and provide clear and conspicuous terms, including cancellation policies. Tennessee's law also imposes restrictions on the duration of contracts, with a maximum valid term of 18 months, and prohibits automatic renewal clauses, allowing instead for the buyer to exercise a renewal. The state's legislation also addresses automatic renewal clauses in specific industries, such as alarm system contracts, where renewals are limited to one year, and consumers have the right to cancel under certain circumstances, such as relocation to a hospital or assisted living facility. These evolving legal developments in Tennessee are part of a broader trend across multiple states to enhance consumer protection and transparency in subscription-based services.
| Characteristics | Values |
|---|---|
| Effective date | July 1, 2024 |
| Renewal notice | Required if the renewal will occur after a period of more than 30 days and the renewal will be in effect for more than 12 months |
| Notice period | Between 30-60 days before the cancellation deadline or end of the current contract term |
| Notice contents | (i) That the contract will automatically renew, unless cancelled, (ii) the date by which the consumer must cancel, (iii) the method(s) to cancel, and (iv) a copy of the automatic renewal or continuous service offer provisions |
| Contracts covered | Contracts with small businesses and individuals |
| Contracts exempt | Contracts governed by another state or federal statute or regulation specifically intended to regulate automatic renewal or continuous service |
| Subscription apps covered | Apple Music, Amazon Music, YouTubeTV, Netflix, Peacock, HBO Max, Paramount+, and Disney+ |
| Penalties for non-compliance | Class B misdemeanor; private right of action for claimants to recover damages; enforcement action by Tennessee Attorney General's Office |
| Law citation | T.C.A. § 47-18-103 |
| Definition of automatic renewal | A plan or arrangement in which a paid subscription or purchasing agreement is automatically renewed at the end of a definite term for a subsequent term |
| Definition of clear and conspicuous visual terms | (1) Larger than the surrounding text; (2) In contrasting type, font, or color than the surrounding text of the same size; or (3) Set off from surrounding same-sized text by symbols or other marks in a way that calls attention to the terms |
| Definition of clear and conspicuous audible terms | In a volume and cadence that is sufficiently audible and understandable |
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What You'll Learn
Tennessee's Consumer Protection Act
The TCPA defines a wide range of activities as unfair or deceptive trade practices, including:
- Falsely passing off goods and services as those of another business.
- Causing confusion or misunderstanding about the source, sponsorship, approval, or certification of goods or services.
- Using deceptive representations or designations of geographic origin.
- Making false or misleading representations about the characteristics, ingredients, uses, benefits, or quantities of goods or services.
- Unreasonably raising prices or restricting supplies of essential goods, commodities, or services in response to a crisis or natural disaster.
- Representing oneself as a licensed contractor without the appropriate licence.
- Causing confusion about the authority of a salesperson, representative, or agent to negotiate the final terms of a transaction.
- Failing to disclose that a charge for servicing goods is based on a predetermined rate or charge rather than the value of the services performed.
- Advertising a sale by falsely claiming that a business is going out of business.
- Using a chain referral sales plan.
The TCPA also provides for compensation in consumer protection claims. Consumers can seek compensation for their actual losses caused by unfair or deceptive practices. If the violating product or service caused other damages, consumers may be entitled to claim those damages as well. Additionally, the TCPA allows a court to triple the award of actual damages if it is determined that the offender willfully or knowingly violated the TCPA. The court can also award attorney's fees and legal costs.
It is worth noting that Tennessee law also has provisions regarding contract duration and automatic renewal clauses. No contract shall be valid for longer than 18 months from the date it is signed, and contracts shall not contain automatic renewal clauses. However, such agreements may provide for the buyer to exercise a renewal.
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Contract duration
In Tennessee, contract law states that no contract shall be valid for a term longer than 18 months from the date it is signed. However, a club may allow a member to convert their contract into a contract for longer than 18 months if they have been a member for at least six months. The duration of the contract must be clearly and conspicuously disclosed in the contract in boldface type with a minimum size of 14 points.
Tennessee law also prohibits contracts from containing automatic renewal clauses, though such agreements may provide for the buyer to exercise a renewal. An automatic renewal is defined as a plan or arrangement in which a paid subscription or purchasing agreement is automatically renewed at the end of a definite term for a subsequent term.
In 2023, Tennessee amended its Consumer Protection Act to impose several requirements on businesses offering subscriptions to consumers. These businesses must ensure that the subscription offer is clear and conspicuous and must obtain the consumer's affirmative consent to the subscription offer. They must also provide a detailed acknowledgment including the offer's terms and a cancellation policy.
Tennessee's auto-renewal law was further supplemented in July 2024, adding an ambiguous notice requirement. When "the automatic renewal" will occur more than 60 days after the consumer provides affirmative consent, a business must provide a consumer with clear and conspicuous notice of when the consumer will be charged.
Additionally, Tennessee law specifies that a contract with an automatic renewal clause between an alarm systems contractor and a homeowner or renter for alarm services may be automatically renewed for a period not exceeding one year at a time. Any waiver of the renewal limitation period included in the contract is void as contrary to public policy. During an automatic renewal period, a party to the contract who is being relocated to a hospital, nursing home, or assisted living facility may cancel the contract by giving 30 days' written notice to the alarm system contractor.
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Subscription services
Tennessee has a patchwork of laws and requirements regarding subscription services, with new amendments to its Consumer Protection Act that came into effect in January 2023. These amendments aim to protect consumers by ensuring subscription offers are clear and conspicuous. Subscription businesses must obtain affirmative consent from consumers and provide a detailed acknowledgement of the offer's terms and cancellation policy.
The state's laws apply to a range of subscription services, including popular apps like Apple Music, Amazon Music, YouTubeTV, Netflix, and Disney+. These services have seen price increases, and the new laws help consumers cut services they may no longer want.
Tennessee's auto-renewal laws have specific requirements for notices and consent. A recent addition, effective July 1, 2024, mandates that when automatic renewal occurs more than 60 days after consumer consent, businesses must provide clear and conspicuous notice of the upcoming charge. This notice requirement is somewhat ambiguous, making it challenging to determine precisely when and under what circumstances it applies.
Additionally, Tennessee law restricts presenting "save" offers during cancellation. This restriction is unique and not present in other states' laws. The state also has specific provisions for contracts with alarm systems contractors, allowing for automatic renewals of up to one year. However, if a party to the contract needs to move to a hospital or assisted living facility, they can cancel by providing 30 days' written notice.
Tennessee's laws regarding subscription services and automatic renewals are evolving, with new requirements being added and existing ones amended. Businesses offering subscription services must stay updated to avoid penalties and provide consumers with the required information and protections.
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Automatic renewal clauses
In Tennessee, automatic renewals or continuous services refer to subscriptions that renew at the end of a term or continue until the consumer cancels. Tennessee's Consumer Protection Act, which came into effect in January 2023, imposes several requirements on businesses offering subscriptions to consumers. These businesses must ensure that the subscription offer is clear and conspicuous, obtain the consumer's affirmative consent, and provide a detailed acknowledgment, including the offer's terms and a cancellation policy.
The Tennessee Code addresses automatic renewal clauses in contracts between alarm systems contractors and homeowners or renters for alarm services. According to this code, such contracts may be automatically renewed for a period not exceeding one year at a time. Any attempt to waive this renewal limitation in the contract is void as it contradicts public policy. Additionally, during an automatic renewal period, a party to the contract who is relocating to a hospital, nursing home, or assisted living facility may cancel the contract by providing thirty days' written notice to the alarm system contractor.
Tennessee law also specifies that no contract shall be valid for a term longer than eighteen months from the signing date. While a contract may not contain an automatic renewal clause, it can provide the buyer with the option to exercise a renewal.
Furthermore, Tennessee's recent amendments to its Consumer Protection Act include expanding notice requirements related to automatic renewals. Businesses must provide clear and conspicuous notices to consumers, informing them of when they will be charged if the automatic renewal occurs more than 60 days after they provide affirmative consent.
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Contract cancellation
Tennessee's contract law regarding automatic renewals and cancellations has seen recent updates, with new amendments to its Consumer Protection Act. These changes, which came into effect in January 2023, are designed to help consumers better manage their subscriptions and services.
The key points of the updated law include:
- Businesses offering subscriptions must ensure the subscription offer is clear and conspicuous, with the duration of the contract clearly disclosed in boldface type with a minimum font size of 14 points.
- Automatic renewal clauses in contracts between alarm system contractors and homeowners or renters for alarm services can be renewed for a maximum of one year at a time. Any waiver of this renewal limitation is void. Additionally, if a party to the contract needs to relocate to a hospital or assisted living facility, they can cancel by giving 30 days' written notice.
- Businesses must obtain the consumer's affirmative consent to the subscription offer and provide a detailed acknowledgment, including the offer's terms and a cancellation policy.
- The law applies to indefinite subscription agreements that contain an automatic renewal provision or continuous service provision.
- The Tennessee Attorney General's Office may take enforcement action for violations of these rules.
It's worth noting that Tennessee's law on automatic renewals and cancellations may be subject to change, as state legislatures continue to adapt and introduce new requirements. For instance, an update to Tennessee's auto-renewal law, S.B. 1894, came into effect on July 1, 2024, adding an ambiguous notice requirement. This requires businesses to provide clear and conspicuous notice of when a consumer will be charged if the automatic renewal occurs more than 60 days after the consumer gives their consent.
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Frequently asked questions
A contract with an automatic renewal clause in Tennessee can be renewed for a period not exceeding one year at a time.
In Tennessee, a contract without an automatic renewal clause is valid for a term not longer than 18 months from the date it is signed.
Businesses in Tennessee must ensure that the subscription offer is clear and conspicuous. They must also obtain the consumer's affirmative consent and provide a detailed acknowledgment, including the offer's terms and a cancellation policy.
