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License to Bill: The Validity of Coupling Automatic Subscription Renewals with Free Trial Offers by Online Services
Koren Grinshpoon*
Article

  The full text of this Article may be found here.

28 Fordham Intell. Prop. Media & Ent. L.J. 301
Article by Koren Grinshpoon*

 

ABSTRACT

[A]

 prominent and expanding list of online services rely on a business model which pairs free trial offers with subsequent automatic subscription renewals (e.g., Amazon Prime, Blue Apron, etc.). Offering free trials to lure new users, while employing automatic renewal clauses in its terms of use to perpetuate recurring revenue, poses a substantial legal risk to online services. Numerous claims citing unfair and deceptive business practices are filed each year against such online services, primarily raising issues of informed consent, adequate disclosure, and notice. This Article reviews applicable federal law and regulations, as well as the applicable laws of all fifty states, and examines the legal validity of this business model. This Article explores under which conditions such joint offers can be advertised as “free” and what legal requirements of consent, disclosure, and notice must be met in order for the subscription to automatically renew once the trial period lapses. By adhering to the guidelines and best practices outlined in this Article, online services may very well be able to retain their desired business model, while reducing users’ complaints and minimizing significant legal concerns.

*Corporate Associate, Kirkland & Ellis LLP. LL.M., James Kent Scholar, Columbia Law School. I wish to thank Professor Mavis Fowler-Williams for her guidance in writing this Article, as well as Alon Grinshpoon for his thorough comments and feedback.