Beware the Auto-Renew Clause

Here at CompuVoIP, we get calls every week from customers that are unsatisfied with their current dial-tone service provider or VoIP business telephone service providers. After spending some time with the customer to get a better understanding of their concerns, we generally share with them how the CompuVoIP VoIP service will better meet their needs. That’s when it usually happens. When the CompuVoIP representative asks the question “Are you under contract with your current provider?”, a period of heavy silence usually follows. Far too often, the silence is followed by the response “Yes, and our contract just auto-renewed and we are stuck for another 24 months!!”.

While often touted as a convenience for the customer with the promise of hassle-free uninterrupted service, auto-renewal or “Evergreen” Clauses are clearly advantageous to the service provider. They lock the customer in for the full duration of the original contract term.

Auto-renewal clauses are often referred to “boilerplate clauses” with the intent of giving the impression that they are fixed and cannot be changed, and most customers are sufficiently intimidated by the term to acquiesce to their presence in their agreements. The truth, however, is that EVERYTHING is negotiable. As the customer, you can leverage the power of the purse and the pen. Never relinquish that power unless it is to your advantage.

And what to do if your carrier tells you that your 24 month contract has just auto-renewed and you want out?

California Law requires that automatically renewing charges for subscription services be disclosed in a “clear and conspicuous” manner, which means that it must be more conspicuous than the surrounding text and in close proximity to the signature line. The extraordinary remedy for a service provider failing to comply with this provision is that any additional services provided to the consumer will be deemed an “unconditional gift. Illinois, North Carolina, Louisiana, and Oregon have similar “clear and conspicuous” requirements in automatic renewal provisions.

Are you located in New York State? Rejoice!

New York has taken the “clear and conspicuous” requirement one step further by requiring the service provider to notify customers at least 15, but not more than 30, days prior to the renewal that the provision in the clause is to be activated. See New York General Obligations Law Sec. 5-903. This notice must be served on the customer personally or via certified mail and failure to comply will render the automatic renewal unenforceable. The New York statute only applies to contacts for service, maintenance, or repair, but the customer can be an individual or a business.

There’s never a contract for our service at CompuVoIP. We ‘lock you in’ by delighting you so you’ll never go anywhere else. Looking to upgrade your service, or to move to a service provider that doesn’t lock you into a contract? Visit us at www.compuvoip.com or give us a call at (718) 887-0300.