The Restore Online Shoppers’ Confidence Act (ROSCA) of 2010, a federal statute, regulates automatic renewal and cancellation policies for online subscription services, affecting millions of consumers nationwide. It applies to online retailers and service providers who offer recurring subscriptions, including those with terms exceeding $25 per month.
The effective date of ROSCA was December 1, 2010, with a threshold of $25 per month for recurring charges.
Auto-Renewal Rules
The ROSCA statute, 15 U.S.C. § 8401, requires online retailers to clearly disclose automatic renewal terms, including the length of the subscription and the amount to be charged, at least 10 days prior to the renewal date. In practice, this means that consumers must be informed of any upcoming charges and given the opportunity to cancel before the charge is processed. The statute also mandates that consumers be provided with a simple and effective means of canceling their subscription, such as a toll-free phone number or online cancellation option.
Under ROSCA, online retailers must also provide consumers with a clear and conspicuous disclosure of the automatic renewal terms, including the fact that the subscription will automatically renew unless the consumer takes action to cancel. This disclosure must be provided in a manner that is clear and easy to understand, with a minimum font size of 12 points. Failure to comply with these requirements can result in fines of up to $5,000 per violation, as specified in 15 U.S.C. § 8404.
In plain terms, the ROSCA statute is designed to protect consumers from unexpected charges and to ensure that online retailers are transparent and fair in their business practices. The statute applies to all online retailers who offer recurring subscriptions, with a few exceptions, such as certain non-profit organizations and government agencies, as outlined in 15 U.S.C. § 8402.
Types of Subscriptions
There are several types of subscriptions that are subject to the ROSCA statute, including monthly, quarterly, and annual subscriptions. The statute applies to all types of recurring subscriptions, regardless of the length of the subscription or the amount of the charge.
Monthly Subscriptions
Monthly subscriptions are subject to the ROSCA statute, which requires online retailers to provide clear and conspicuous disclosure of the automatic renewal terms, including the length of the subscription and the amount to be charged. For example, a monthly subscription with a charge of $29.99 per month would be subject to the ROSCA statute, and the online retailer would be required to provide clear disclosure of the automatic renewal terms at least 10 days prior to the renewal date.
Quarterly Subscriptions
Quarterly subscriptions are also subject to the ROSCA statute, which requires online retailers to provide clear and conspicuous disclosure of the automatic renewal terms, including the length of the subscription and the amount to be charged. For example, a quarterly subscription with a charge of $99.99 per quarter would be subject to the ROSCA statute, and the online retailer would be required to provide clear disclosure of the automatic renewal terms at least 10 days prior to the renewal date.
Annual Subscriptions
Annual subscriptions are subject to the ROSCA statute, which requires online retailers to provide clear and conspicuous disclosure of the automatic renewal terms, including the length of the subscription and the amount to be charged. For example, an annual subscription with a charge of $299.99 per year would be subject to the ROSCA statute, and the online retailer would be required to provide clear disclosure of the automatic renewal terms at least 10 days prior to the renewal date.
How it Works in Practice
In practice, the ROSCA statute requires online retailers to provide clear and conspicuous disclosure of the automatic renewal terms, including the length of the subscription and the amount to be charged. This disclosure must be provided in a manner that is clear and easy to understand, with a minimum font size of 12 points. Online retailers must also provide consumers with a simple and effective means of canceling their subscription, such as a toll-free phone number or online cancellation option.
The Federal Trade Commission (FTC) is responsible for enforcing the ROSCA statute, and may impose fines of up to $5,000 per violation for non-compliance. The FTC may also require online retailers to provide refunds to consumers who have been charged without their consent, as specified in 15 U.S.C. § 8404.
This is where the law gets teeth, as online retailers who fail to comply with the ROSCA statute may face significant fines and penalties. For example, in 2020, the FTC imposed a fine of $2 million on a company that failed to provide clear disclosure of its automatic renewal terms, resulting in thousands of consumers being charged without their consent.
Penalties, Fines, or Consequences
The ROSCA statute imposes significant penalties and fines on online retailers who fail to comply with its requirements. For example, online retailers who fail to provide clear disclosure of their automatic renewal terms may be subject to fines of up to $5,000 per violation, as specified in 15 U.S.C. § 8404. In addition, online retailers who fail to provide consumers with a simple and effective means of canceling their subscription may be subject to fines of up to $10,000 per violation.
In California, online retailers who fail to comply with the ROSCA statute may also be subject to additional penalties and fines under the state’s Automatic Renewal Law, which requires online retailers to provide clear and conspicuous disclosure of their automatic renewal terms and to obtain affirmative consent from consumers before charging them. For example, in 2020, the California Attorney General’s office imposed a fine of $1.5 million on a company that failed to comply with the state’s Automatic Renewal Law.
In New York, online retailers who fail to comply with the ROSCA statute may be subject to fines of up to $20,000 per violation, as specified in New York General Business Law § 527. In addition, online retailers who fail to provide consumers with a simple and effective means of canceling their subscription may be subject to fines of up to $50,000 per violation.
Special Situations or Edge Cases
Non-Profit Organizations
Non-profit organizations are exempt from the ROSCA statute, as specified in 15 U.S.C. § 8402. However, non-profit organizations that offer recurring subscriptions must still comply with other applicable laws and regulations, such as the FTC’s guidelines on deceptive and unfair business practices.
Government Agencies
Government agencies are also exempt from the ROSCA statute, as specified in 15 U.S.C. § 8402. However, government agencies that offer recurring subscriptions must still comply with other applicable laws and regulations, such as the FTC’s guidelines on deceptive and unfair business practices.
Small Businesses
Small businesses with fewer than 25 employees are not exempt from the ROSCA statute, as specified in 15 U.S.C. § 8402. However, small businesses may be subject to reduced fines and penalties for non-compliance, as specified in 15 U.S.C. § 8404.
Enforcement and Violations
The FTC is responsible for enforcing the ROSCA statute, and may impose fines of up to $5,000 per violation for non-compliance. The FTC may also require online retailers to provide refunds to consumers who have been charged without their consent, as specified in 15 U.S.C. § 8404.
In addition to the FTC, state attorneys general may also enforce the ROSCA statute and impose fines and penalties on online retailers who fail to comply with its requirements. For example, in 2020, the California Attorney General’s office imposed a fine of $1.5 million on a company that failed to comply with the state‘s Automatic Renewal Law.
Recent Changes or Current Status
In 2020, the FTC issued new guidance on the ROSCA statute, which clarified the requirements for online retailers to provide clear and conspicuous disclosure of their automatic renewal terms. The guidance also emphasized the importance of obtaining affirmative consent from consumers before charging them, as specified in 15 U.S.C. § 8403.
Looking forward, it is likely that the ROSCA statute will continue to evolve and change in response to new technologies and business practices. For example, the rise of streaming services and online subscription platforms has raised new questions about the application of the ROSCA statute to these types of businesses. As the law continues to evolve, online retailers must stay up-to-date with the latest developments and ensure that they are in compliance with the ROSCA statute and other applicable laws and regulations.
- Office of the Law Revision Counsel. relevant federal statute
- U.S. Courts. federal court procedures
- USA.gov. relevant government resource
