Attn Wine Club Managers: California’s “Automatic Renewal Law” DOES Apply to Wine Clubs
03.15.2020  |  by Milton Cornwell

We at Copper Peak Logistics are always trying to stay aware of laws that can impact wineries, especially if we feel they will have an impact on DTC wine sales and shipping. Wine Institute recently issued “Important Winery Compliance Information” that directly affects wine clubs that we think is extremely important for all wineries to be aware of.

On July 1, 2018, California passed a revised version of its Automatic Renewal Law (ARL), which now requires eCommerce sellers doing business in California to be more forgiving when it comes to cancellations, and that includes DTC wine purchases and wine clubs.

The exact wording of the law states that:

“…a consumer who accepts an automatic renewal or continuous service offer online shall be allowed to terminate the automatic renewal or continuous service exclusively online, which may include a termination email formatted and provided by the business that a consumer can send to the business without additional information.” 

In addition, if a consumer was given a free gift or free trial (or promotional pricing) upon signing up for a membership, the seller must also notify customers before they are charged (or the price changes), including information about the non-discounted price and about how to cancel.

So why is this an issue, and why now? Recently, a California winery was named in a class action lawsuit for allegedly violating the ARL with their wine club subscription service. And we have good reason to believe more are on the way. Now is the time to take a hard look at your DTC business model and you wine club to make sure that you are in compliance.

How Wineries Can Comply with California’s ARL

The ARL itself is fairly clear about what businesses need to do to be in compliance:

1) Clear and Conspicuous Automatic Renewal Offer Terms.The terms of the automatic renewal must be made clear before the customer enrolls including that the subscription will continue until the customer cancels. These details should be in another color or called out in a clear way. Minimum purchase amounts must also be made clear and up-front.

2) Confirmation and Consent. After being presented with the automatic renewal terms, customers must consent to the automatic renewal prior to being charged with an affirmative check box.

3) Acknowledgement of the Consent.Once the customer has given this confirmation/consent, the seller must provide an “acknowledgement” of the fact. This is usually in an email to this effect, sent to the consumer, and with a copy of the agreement terms and cancellation policy.

4) A Simple Cancellation Mechanism.There must be an easy way for customers to cancel. This can be a toll-free number to call, an email address, an online form, etc.

However, if the enrollment can be completed online, the seller must also make cancellation fully possible online, too. (If cancellation happens via email, the seller needs to provide a pre-formatted email that can be sent without the need for any additional information.)

Just One of Many Laws to Keep in Mind

We are not going to guarantee that we here at Copper Peak Logistics are anything like legal experts but we try to stay on top of the important issues affecting DTC wine sales and shipping.

Here are just a few of the other laws we’ve discussed before:

The California Consumer Privacy Act (CCPA).The CCPA went into full effect this past January, requiring businesses operating in California to disclose the purposes behind collecting any consumer information. This is important for wine clubs collecting subscription data and other wine club metrics.

The Americans with Disabilities Act (ADA).Most people think of the ADA as affecting things like wheelchair accessibility of buildings. But the ADA can actually apply to websites, too, and there have been successful lawsuits seeking damages from eCommerce sites that were not in compliance with the ADA.

Packaging and Proposition 65 Warnings (Prop 65).Prop 65 requires businesses to provide warnings about significant exposures to chemicals that cause cancer, birth defects, or other reproductive harm. This hits wineries selling wine DTC in two ways. First, all wines that could be consumed in the state of California need to bear a warning about possible birth defects that could occur through drinking during pregnancy. Second, wine shipped in cans or bottles with bottle caps (instead of corks) need to have a label warning about possible exposure to BOA.

Keeping on Top of Compliance

Keeping on top of all the laws around DTC and wine shipping can be tricky. There are some resources your winery should be aware of to make this easier:

  • The Wine Institute’s Wine Compliance Rules website, which has DTC Shipping Laws for Wineries in all 50 states and a members-only portal for 3-tier/wholesale laws.
  • Wine shipping compliance software, such as that offered by Avalaraand ShipCompliant.
  • Our expert series interviews with compliance experts. For example, you can find our interviews with Steve Gross hereand here, and our interview with Jeff Carroll here.
  • Finally, if you are just getting started thinking about selling wine or shipping wine DTC and you’re simply researching the legal risks and obligations, I suggest our article “So, You Want to Be in the Wine Business?

Please give us a call or use our handy contact form to get the conversation started how we can help your winery!