What Dealers Need to Know About California’s New Auto Renewal Law

By Mark Sanborn
Senior Product and Regulatory Counsel

Starting July 1, 2025, California’s Assembly Bill 2863 (“AB 2863,” codified at Business & Professions Code §§ 17601, 17602) takes effect, bringing a new wave of compliance obligations for businesses offering automatic renewals and subscription-based services. This includes dealerships, especially those selling bundled or subscription-based products through F&I menus.

Here’s what you need to know, and how your store can stay ahead of the curve.

Key Requirements 

1. Clear Terms Upfront: Subscription terms, including post-trial costs, must be fully disclosed before purchase. Customers must receive all product agreements prior to signing.
2. Affirmative Consent: You must obtain clear, documented consent before charging for any auto-renewal, even free trials or discounted rates.
3. Written Confirmation: After sign-up, provide written acknowledgment outlining the terms, cancellation policy, and how to cancel, especially if a free trial is involved.
4. Plain Language Contracts: Avoid misleading or confusing language that could undermine the customer’s ability to understand or cancel the service.
5. Recordkeeping: Keep proof of consent for at least 3 years or 1 year after the contract is terminated, whichever is longer.
6. No Misleading Claims: Don’t obscure or misrepresent that a service includes auto-renewal.
7. Simple Cancellation: Offer clear cancellation channels (toll-free number, email, mail, etc.). Online cancellation must be immediate, unobstructed, and user-friendly. If a customer leaves a voicemail, the business must respond within one business day.
8. Retention Offers OK—With Conditions: Incentives to retain customers are allowed, but cancellation must remain quick and easy.
9. Same Method Cancellation: Customers must be able to cancel using the same method they used to enroll. If sign-up was by phone, a cancellation number must be listed online.
10. Annual Renewal Reminders: For services renewing yearly, send a reminder through the customer’s original communication channel, outlining the service, billing details, and cancellation steps. Note: This requirement applies only if your dealership is the contracting party—not if you’re reselling another provider’s service.

Dealer Impact: What This Means for Your Store

Even if you’re not the company providing the service, your dealership can still be held accountable under the law if you’re involved in selling it.

Here’s what that means in practice:

• You’re On the Hook: The law applies to any business that offers auto-renewal or continuous service products. Selling a third-party service doesn’t exempt your store from compliance.
• Vendor Oversight Is Essential: Dealers must ensure that any vendor or OEM partner has processes in place to meet disclosure, cancellation, and response deadlines. Don’t assume they’re handling it—confirm it.
• Internal Processes Matter: If a customer contacts your store to cancel, your staff must know how to respond or route the request promptly. Failing to do so could create liability.
• Staff Training Is Key: Your team should be trained to explain terms clearly, collect proper consent, and understand what records need to be kept.

Other California Legislation to Keep an Eye On

California is also weighing the CARS Act (SB 766), which is modeled after the defunct federal Vehicle Shopping Rule. If passed, it would ban deceptive sales practices, require full price transparency, restrict upselling of low-value products, require communications monitoring and record retention, and replace the current optional 2-day used car return with a mandatory 10-day return period for all used vehicles. Though still in draft form, the proposal signals California’s push toward stricter retail regulations with major implications for dealership operations.

ComplyAuto is Your Partner in Compliance 

Stay tuned for updates as ComplyAuto continues to track the CARS Act as it works its way through the state legislature. But there’s no reason to wait for new legislation—partner with ComplyAuto today and protect your dealership with confidence.

Our comprehensive suite of compliance solutions is specifically designed to simplify and automate your dealership’s regulatory responsibilities. We help dealers manage complex federal and state privacy regulations, implement privacy policies, and deploy cookie consent banners. Our solutions also include essential advertising compliance tools, deal jacket audits, and comprehensive VDP reviews. Additionally, we offer industry-leading environmental, health, and safety (EHS) compliance software. Plus, our innovative DealCheck AI tool reviews every deal before the customer leaves the lot, identifying missing documents and errors in real-time.