Tennessee automatic renewal law for restaurant memberships

Tennessee Code section 47-18-133 governs automatic renewal and continuous service offers, and a restaurant that sells a dining club, a coffee subscription or an annual pass that renews on its own must follow it. You must present the renewal terms clearly before the sale, get the customer's affirmative consent before charging a card, give the customer an acknowledgment they can keep and let an online customer cancel online. A violation is treated as an unfair or deceptive practice under the Consumer Protection Act.

What must you disclose?

The statute requires you to present the automatic renewal or continuous service terms in a clear and conspicuous manner before the purchase is fulfilled, placed near the request for consent. For an offer made by voice, the terms must be presented close in time to the request. If the offer includes a free gift or a trial, you must clearly explain the price that will apply after the trial or how pricing will change. Put the renewal price and period beside the button, not in a footer.

What is affirmative consent?

You must obtain the consumer's affirmative consent before you charge a credit or debit card, or an account through a third party, and that includes promotional or discounted offers. The statute defines affirmative consent as a clear, affirmative act showing agreement that is freely given, specific, informed and unambiguous. It may be a written statement, including an electronic one, or an unambiguous affirmative action. A pre-checked box does not look like a clear act.

What about long gaps before a renewal?

If the automatic renewal will occur more than 60 days after consent, the business with the direct billing relationship must give clear and conspicuous notice of when the charge will occur. For an annual club, that means a reminder before the renewal date, with the date and the amount. Keep a record of each notice.

What must the acknowledgment include?

You must provide an acknowledgment that the consumer can keep and that covers the offer terms, the cancellation policy and how to cancel. For offers with a free gift or trial, the acknowledgment must also explain how to cancel and allow cancellation before the consumer pays. Email is the usual method. Save a copy of the template and the send record.

How must customers be able to cancel?

The statute requires a toll-free number, an email address, a postal address if the seller bills directly, or another cost-effective, timely and easy-to-use method, and requires you to describe it in the acknowledgment. If the consumer accepted the offer online, you must allow cancellation exclusively online, and this may include a termination email that you provide and that the consumer can send without additional information. In other words, a member who joined with a click must be able to leave with one.

A worked example of a coffee club

A cafe sells a monthly coffee club for $30. The sign-up page says: $30 each month until you cancel. Cancel online at any time. The customer ticks an unchecked box next to this line. An email arrives with the same terms and a cancel link. When the cafe changes the price to $32, it sends a notice of the change with a way to cancel before the new price starts. A member who clicks cancel receives a confirmation and is not charged again. A customer who was charged without consent and asks within 7 days is refunded.

What about changes and refunds?

If the terms change materially after the customer accepts, you must give clear and conspicuous notice of the change, along with cancellation information the consumer can retain. If you charge a customer without obtaining affirmative consent, the statute says you must refund the charge on the consumer's request, made within 7 days of the charge. Plan to honor a request at once, and fix the flow so it does not recur.

Who is exempt?

The statute lists exemptions, including federally insured banks and credit unions, businesses licensed by the Department of Financial Institutions, regulated utilities and communications providers, and businesses licensed under the insurance title. A restaurant is not among them. The statute defines a consumer as an individual who acquires goods or services for personal, family or household purposes, so a sale to a company is a different case.

How do you check it is current?

The version read for this guide was marked current as of the start of 2024, and the law may have been amended since. Read the current section on the Tennessee General Assembly's website, or ask an attorney, before you finalize the sign-up flow.

What records should you keep?

Keep a dated copy of each version of the sign-up page, the consent record for each member, the acknowledgment email and the notice before each renewal. Keep a list of members with their sign-up date, renewal date and cancellation date. When you change the price or terms, save the notice and the date it went out. If a customer disputes a charge, these records let you show what they saw, what they agreed to and how they could cancel, and they make a quick, fair refund possible when you have made a mistake.

More guides for your business:

• Tennessee gift card rules for restaurants
• Tennessee credit card surcharge rules for restaurants
• Tennessee liquor-by-the-drink license and beer permits

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