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Amending Title 9 of The Philadelphia Code, entitled “Regulation of Businesses, Trades and Professions,” by adding a new Chapter 9-7000, entitled “Cancellation of Re-Occurring Memberships,” to establish restrictions on businesses offering automatic renewal or continuous service offers to consumers.
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THE COUNCIL OF THE CITY OF PHILADELPHIA HEREBY ORDAINS:
SECTION 1. The Council of the City of Philadelphia finds and declares as follows:
Legislative Findings and Purpose.
1) The automatic renewal of contracts, such as monthly subscriptions, memberships, and/or conversion of free trials to paid subscriptions is an increasingly common business model for both brick-and-mortar establishments and online retailers and service providers.
2) Businesses that enroll customers in recurring subscriptions, offer auto-renew features, and convert free trials to paid subscriptions may fail to disclose all conditions of the subscription, fail to provide consumers with notice when charging them for such service, fail to offer an easy way to cancel a subscription, and/or establish difficult, time-consuming, and coercive roadblocks to cancellation that entrap consumers in unwanted subscriptions, and rely on consumers’ lack of action - also known as the negative option - to keep customers enrolled in unwanted services.
3) The importance of regulating businesses offering these automatically renewing subscription services has been recognized by federal and state governments, as well as peer cities.
4) The City of Philadelphia has established its interest in protecting consumers from unfair and deceptive business practices through affirmative litigation, as enabled through the Consumer Protection Ordinance, enacted in 2024.
5) The purpose of this Chapter is to enhance consumer protection from unjust and improperly disclosed subscription offers, such as automatic renewal of payments or contracts, or arrangements, including free trials, that convert into paid subscriptions; and to enable cancellation of such offers at the consumer’s discretion.
6) It shall be deemed a deceptive and unconscionable trade practice for any person to offer or provide an automatic renewal or continuous service to a consumer except in accordance with the requirements of this section.
SECTION 2. Title 9 of The Philadelphia Code is hereby amended to read as follows:
TITLE 9. REGULATION OF BUSINESSES, TRADES AND PROFESSIONS
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CHAPTER 9-7000. CANCELLATION OF RE-OCCURING MEMBERSHIPS
§ 9-7001. Definitions.
(1) For the purposes of this Chapter, the following terms shall have the following meanings:
(a) Automatic Renewal. Also known as Auto-renewal or Automatic Subscription. A plan, arrangement, or provision of a contract that contains a free-to-pay conversion or in which a paid subscription is automatically renewed at the end of a definite term for a subsequent term.
(b) Purchasing Agreement. A contract that sets out the rights, obligations, and terms for both the provider and the subscriber, including how recurring payments, renewals, and cancellations work for automatic renewal services.
(c) Continuous Service. A plan, arrangement, or provision in a contract in which a subscription continues until the consumer cancels the service.
(d) Affirmative Consent. Express, voluntary, informed, and unambiguous consent that is obtained separate from any other part of the transaction.
(e) Free-to-Pay Conversion. An offer or agreement where a consumer receives a product or service for free for a set initial period, also called a trial period, which then automatically transitions into an arrangement where a consumer is charged for continued access if they do not take affirmative action to cancel before that period ends.
(f) Initial Paid Term. Runs for a fixed period at the start of the agreement. The first contractual term set out for a continuous service which states how long the service will run before the automatic renewal process begins.
(g) Person. As defined in subsection 9-6301(1)(i).
§ 9-7002. Requirement to Obtain Affirmative Consent.
(1) No person doing business in the City of Philadelphia may charge a consumer for an automatic renewal or continuous service once the initial paid term has concluded without first obtaining affirmative consent from the consumer.
(2) No person may make a material change to an automatic renewal or continuous service without first obtaining affirmative consent from the consumer.
(3) A business that fails to obtain affirmative consent as required by this section shall refund any charges if requested by the consumer within seven (7) days of the date the charges are applied.
§ 9-7003. Mandatory Inclusion of Material Terms of the Offer.
(1) A person offering an automatic renewal or continuous service must present to the consumer, in a clear and conspicuous manner, the material terms of such renewal or service before obtaining affirmative consent or requesting billing information.
(2) If the automatic renewal or continuous service is a free-to-pay conversion or if the automatic renewal or continuous service includes an initial temporary price, the person must include a clear and conspicuous description of the date and manner any price charged to the consumer will change.
(3) Material Terms shall include either a link that directs the consumer to the cancellation process or give clear instructions for consumers to access another reasonably accessible electronic method that directs the consumer to the cancellation process if no link exists.
(4) Material Terms of an automatic renewal or continuous service shall include but are not limited to the following:
(a) The rights, obligations, and terms for both the person and the consumer;
(b) A description of the product or service subject to renewal;
(c) The minimum purchase obligation, if any;
(d) A description of the initial paid term, including the amount of each charge, the frequency the consumer will be charged, the dates the consumer will be charged, and the duration of the initial term;
(e) The date the automatic renewal will begin, the amount to be paid for each subsequent charge as part of the automatic renewal, the frequency a consumer will be charged, and the length of the automatic renewal term;
(f) The procedure a consumer must take to cancel an automatic renewal or continuous service, the cancellation mechanisms the person offers, and the cancellation policy that applies;
(g) The contact information of the person offering the automatic renewal or continuous service; and
(h) Where a consumer subscribed to an automatic renewal or continuous service via telephone, a telephone number that is capable of connecting the consumer to a way to verbally cancel or terminate the automatic renewal or continuous service, shall be provided.
(5) Any person must provide clear and conspicuous notice to the consumer at least five business days prior to the change being implemented if making a material change to the automatic renewal or continuous service offer, which includes but is not limited to: price increases, updates to the cancellation policy, and material terms of the offer or service.
§ 9-7004. Easy Cancellation Method Required.
(1) Any person offering an automatic renewal or continuous service must provide a cancellation mechanism that is of no cost to the consumer, is available to the consumer at any time, and is available through the same medium as and is no harder to use than the mechanism that the consumer used to provide affirmative consent. Cancellation of an automatic renewal or continuous service shall be immediately effective.
(2) For transactions in which affirmative consent was obtained in person, in addition to offering cancellation via an in-person method similar to that which the consumer used to consent, the person must offer cancellation through an online mechanism, such as a website, mobile application, or email.
(3) All calls made by consumers in an effort to cancel their automatic renewal or continuous offer shall be answered promptly during normal business hours.
(4) A person offering an automatic renewal or continuous service to a consumer must not impose unreasonable or unlawful conditions upon, refuse to acknowledge, obstruct or unreasonably delay a cancellation request, or attempt to request cancellation of automatic renewal or continuous service by a consumer. Unreasonable or unlawful conditions may include, but are not limited to:
(a) Disconnecting calls from consumers regarding cancellation;
(b) Keeping customers on hold for unreasonable amounts of time or failing to connect consumers with a representative who is able to assist them in cancelling in a reasonable amount of time;
(c) Obscuring or providing false information about how to cancel;
(d) Misrepresenting the consequences or costs of cancellation, or misrepresenting the reasons for delays in processing a consumer’s cancellation request;
(e) Refusing to acknowledge, obstructing or unreasonably delaying the cancellation requested; and
(f) Presenting the consumer, upon their request to cancel, with a discounted offer, retention benefit or information regarding the effect of cancellation if such offer, benefit, or presentation imposes unreasonable or unlawful conditions upon the consumer’s ability to cancel.
§ 9-7005. Notice Required.
(1) A person must provide a clear and conspicuous annual disclosure to consumers that they are enrolled in an automatically renewing subscription service. The disclosure shall identify the product or service, state the frequency and amount being charged to the consumer, and state the cancellation mechanism to end subsequent payments with clear instructions on how to end such renewal charges.
(2) For free-to-pay conversions, the person must provide the consumer with reasonable notice before the trial period ends and the consumer is subsequently charged.
§ 9-7006. Exemptions.
The provisions of this Chapter shall not apply to:
(1) Banks, bank holding companies, and their subsidiaries and affiliates; credit unions; and other financial institutions licensed under state or federal law; or
(2) Any public utility subject to the exclusive jurisdiction of the Pennsylvania Public Utility Commission.
§ 9-7007. Enforcement, Civil Penalties, and Private Right of Action.
(1) Unfair Trade Practices. Any violation of this Chapter shall constitute an unfair trade practice under Chapter 9-6300 of this Code and shall be subject to enforcement and remedies in accordance with that Chapter, including, without limitation, the powers of investigation, subpoena, and affirmative litigation and the penalties, damages, and costs set forth therein.
(2) Class Actions Permitted. Nothing in this Chapter shall be construed to limit the right of a consumer to bring or participate in a class action on behalf of similarly situated consumers.
(3) No Waiver. Any provision of a contract, invoice, or portal terms of service agreement purporting to waive, limit, or disclaim the protections of this Chapter, or to require a consumer to arbitrate individually and not on a class basis any claim arising under this Chapter, shall be void as against public policy to the extent permitted by law.
(4) Retaliation Prohibited. No person shall retaliate against any consumer who exercises any right under this Chapter, files a complaint with any governmental agency, or testifies or participates in any proceeding to enforce this Chapter.
(5) Cumulative Remedies. The remedies provided in this Chapter are cumulative and in addition to any other remedies available under federal, state, or local law.
§ 9-7008. Severability.
If any provision of this Chapter or application thereof to any person or circumstance is judged invalid, the invalidity shall not affect other provisions or applications of the Chapter that can be given effect without the invalid provision or application, and to this end the provisions of this Chapter are declared severable.
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SECTION 3. This Ordinance shall take effect 90 days after being adopted into law.
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