TeamViewer Automatic Renewal Disclosure and Consent Funnel Held Compliant With California’s ARL
California’s stringent Automatic Renewal Law is heavily focused upon free trial requirements, promotional periods and annual programs. Various obligations and restrictions are discussed, here.
In 2021, Jack Gershfeld initiated legal action against TeamViewer US, Inc. Mr. Gershfeld alleged that TeamViewer violated California’s Consumer Privacy Act and Unfair Competition Law when it automatically renewed his software subscription without his consent.
TeamViewer is a remote access and control computer software, allowing maintenance and management of computers and other devices. In short, Mr. Gershfeld alleged that he purchased a one-year subscription, that automatically renewed thereafter at a higher price.
The California district court reviewed TeamViewer’s website enrollment funnel and post-purchase acknowledgments. In doing so, the lower court held that TeamViewer did not violate California’s ARL because there was an adequate disclosure on the “checkout summary.” The lower court noted that the disclosure partially stated, in bold and directly above the “Continue to Payment” button, that the “subscription will automatically renew every 12 months, unless you terminate your contract at least 28 days before the end of the initial term or any renewal term.”
Additionally, TeamViewer was found to have secured appropriate consent because Mr. Gershfeld was required to check a box affirmatively acknowledging that his subscription was subject to a hyperlinked end user license agreement.
TeamViewer’s post-purchase acknowledgment was also deemed adequate. Here, it sent an invoice to Mr. Gershfeld reminding him, in bold, that “The license term of the subscription is automatically extended for another 12 months if not cancelled in written form 28 days prior to expiry.” TeamViewer forwarded another reminder two months prior to the renewal, notifying Mr. Gershfeld of the impending automatic renewal, along with a link for him to cancel the subscription.
Mr. Gershfeld appealed, challenging the dismissal of his amended complaint.
In January 2023, the Ninth Circuit upheld the ruling by the California district court that TeamViewer’s ARL practices were in compliance with California’s automatic renewal law. A rare victory for marketers that utilize ARLs in a sea of regulatory investigations and lawsuits penalizing those that utilize “dark patterns” and fail to comply with negative option offer requirements.
“Gershfeld was put on notice, both initially and thereafter, of the automatic renewal and the terms thereof; he was informed of the software subscription price, the price increase upon renewal, the cancellation policy, and the cancellation process. Gershfeld consented to the terms of the purchase, which were presented in a clear and conspicuous manner, and authorized TeamViewer US to renew his software subscription automatically.”
Notably, the court also rejected Mr. Gershfeld’s California’s Consumer Privacy Act claim that TeamViewer stored his information in a “”nonencrypted and nonredacted fashion.”
Consult with an experienced FTC advertising compliance attorney on strategies for creating enrollment funnels and post-purchase acknowledgments that comply with state ARL laws, and various statutes and FTC regulations addressing negative option marketing and operating.
Richard B. Newman is an FTC defense lawyer at Hinch Newman LLP.
Informational purposes only. Not legal advice. May be considered attorney advertising.
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