Automatic renewal of a subscription: what the law requires of the business

You were renewed without notice: what to do

The order of steps is simple:

• Ask for the notices. Demand in writing that the business show the notice given during the notice period, the text message it sent 21 days before the end, and the end date stated on the invoices of the last three months. The burden of proof is on the business (section 13A(e)).
• Give notice that you are ending the relationship and demand that the charges stop and that the charges collected after the end date of the transaction be refunded.
• Claim exemplary damages. Section 31A(a)(2a) names this case expressly: in a fixed-term transaction, a consumer asked a business to stop charging them after the end date of the transaction or of the commitment under section 13A(c), or the consumer was not given written notice under section 13A(d), and the business kept charging contrary to those provisions. The compensation: up to NIS 10,000, and up to NIS 50,000 for a repeated or continuing breach or in aggravating circumstances (section 31A(c)). The precondition: a written request under section 31A(b).
• At the same time, complain to the Consumer Protection and Fair Trade Authority.

If the charges have already been collected, the full route of remedies is set out in the article Charged after subscription cancellation? 5 steps to get a refund, and how to give the cancellation notice is in the subscription cancellation checklist. See also canceling a gym membership, and the class actions and consumer claims practice area.

Service page: Consumer claims and class actions lawyer.

Was your subscription renewed without your knowing? This is the law’s starting point

In a fixed-term transaction, the law voids the term that extends the relationship automatically. Section 13A(c)(1) of the Consumer Protection Law, 5741-1981 provides that a term in a contract stating that the relationship between the parties will continue after the end date of the transaction or of the commitment will have no effect, and it will be treated as if the contract provided that it is void on that date. At the same time, section 13A(e) places the burden of proof that the consumer consented to extend the relationship on the business.

What this means: you do not need to prove that you did not consent. The business needs to prove that you did. And if it relies on a clause in the small print of the contract, that clause, as a rule, has no effect.

What is a “fixed-term transaction” anyway

Section 13A(a) defines three types:

• A transaction for a specific period for the purchase of goods or services;
• A transaction in which, for a specific period, goods or services are purchased at a reduced price or another benefit is given for them, whether or not the transaction itself is for a specific period; this is the classic case of “the first year at a promotional price”. Excluded is a transaction during which the business, for a limited period and without any condition, reduced the price or offered another benefit;
• A transaction linked to another transaction, so that the price in one is affected, for a specific period, by the price in the other or affects it.

Another definition worth remembering: “the notice period” is the period between the sixty days before the end date of the transaction or of the commitment and the thirty days before that date. This is the window in which the business must act.

The duty to give notice of the end date, and through which channels (section 13A(b))

In a fixed-term transaction in which the business charges the consumer’s account under a debit authorization, it must notify the consumer, during the notice period, of the end date of the transaction or of the commitment. And not just once: the date must also be stated in each of the following:

• In the contract, if there is a written contract, or in a document under section 14C(b);
• In every invoice, receipt or payment notice sent to the consumer in the period starting three months before the end date (and if one is sent more than once a month, once a month is enough); the date must be stated with special prominence and in clear, legible letters;
• In a text message to the mobile phone number the consumer gave, if they gave one, 21 days before the end date; and if that date falls on a Saturday or a holiday, on the day after. For a business listed in item 2 of the Second Schedule, if the number is blocked from receiving text messages, the notice must be given in a phone call or a voice message.

Three practical points: the duty applies when the charge is made under a debit authorization; it requires more than one notice; and it includes a prominence requirement: a footnote at the bottom of an invoice does not meet it.

What happens when the business offers an extension, and when you can change your mind (section 13A(c)(2))

An offer to extend is a regulated procedure, not a default. Section 13A(c)(2) distinguishes between two scenarios:

• An offer during the notice period: the business offered to extend and the consumer said they agree; the contract is extended as they agreed.
• An offer after the notice period: here too the extension takes effect as agreed, but during the first thirty days of the extension period the business may not raise the prices of the transaction or change its terms to the consumer’s detriment, and the consumer may give notice canceling their consent.

This is a real window for changing your mind: someone who agreed to an extension in a call initiated by the business after the notice period can change their mind within thirty days.

The exceptions: when automatic extension is possible after all (section 13A(d))

The voiding provision in section 13A(c)(1) does not apply in two situations:

• Goods or services listed in the Third Schedule to the Law (telephone service as defined in the Communications Law, and gas supply service provided by a gas supplier to a gas consumer), provided that the business notified the consumer in writing, during the notice period, of the end date; set out the terms of the transaction in the notice; stated in it expressly that the relationship will continue unless the consumer gives notice that they want to end it; and stated that the consumer has the right to end the relationship at any time. On charges and cancellation with a mobile, internet or TV company, see A claim against a telecom company.
• “Reduced price” or “linked” transactions (paragraphs (2) and (3) of the definition), provided two cumulative conditions are met: the payment amounts that will apply after the end date were stated clearly and in detail in a written document given to the consumer when the contract was made; and the consumer was given, during the notice period, a notice under section 13A(b), in writing and setting out the terms of the transaction. There is also an exemption from notice when the end date falls no later than four months after the date of the contract; in that case the consumer may give notice ending the relationship after the end date without being charged any payment because of the ending.

Note that the exceptions too are built as cumulative conditions: a business that did not meet one of them does not benefit from them, and the extension is void.

Frequently asked questions

May a company renew my subscription automatically? In a fixed-term transaction, not on the basis of a term in the contract. Section 13A(c)(1) of the Consumer Protection Law provides that a term stating that the relationship will continue after the end date of the transaction has no effect, and it is treated as void on that date. An extension is possible only with consent after an offer by the business, and the burden of proof that the consumer consented is on the business (section 13A(e)).

When exactly must I be told that the subscription is about to end? When the charge is made under a debit authorization, the business must give notice during the notice period, between 60 and 30 days before the end date. In addition, the date must be stated in the contract or in a document under section 14C(b), on every invoice or payment notice in the three months before the end, with special prominence, and in a text message 21 days before the date to the mobile number the consumer gave (section 13A(b)).

I agreed by phone to extend the subscription and I regret it. Can I cancel? If the offer to extend was made after the notice period, yes. Section 13A(c)(2) provides that during the first thirty days of the extension period the business may not raise prices or change terms to the consumer’s detriment, and the consumer may give notice canceling their consent. Beyond that, the ordinary right to cancel a continuing transaction is available to you at any time.

Are there cases in which automatic renewal is legal after all? Yes, two. The first: goods and services listed in the Third Schedule to the Law (telephone service as defined in the Communications Law, and gas supply service), provided the business gave written notice during the notice period, set out the terms of the transaction, stated expressly that the relationship will continue unless the consumer says otherwise, and stated that the consumer may end it at any time. The second: reduced-price transactions or linked transactions, subject to the cumulative conditions in section 13A(d)(2).

I was charged after the subscription was supposed to end. What am I entitled to? A refund of the charges collected after the end date of the transaction, and in addition exemplary damages under section 31A(a)(2a): up to NIS 10,000, and up to NIS 50,000 for a repeated or continuing breach or in aggravating circumstances. The precondition for a claim is a written request to the business under section 31A(b).

The company claims I agreed to the extension. Who has to prove it? The business. Section 13A(e) states expressly that the burden of proof that the consumer consented to extend the relationship is on the business. In practice, this means it must show the offer that was made and the consent that was received; referring to a clause in the original contract is not enough.