As the President and CEO of the largest Black non-profit organization advocating for hundreds of small and emerging businesses, I hear from entrepreneurs who are struggling to navigate the complexities of running a business every day. They grapple with escalating costs, ever-growing regulatory hurdles, and numerous daily operational challenges. These issues make it increasingly difficult for small businesses to thrive and succeed in today’s competitive landscape.
As these businesses work through their daily challenges, AB 2863 is making its way through the legislature. AB 2863 aims to protect consumers by adding additional restrictions on how businesses offer auto-renewal subscription services. While consumer protection is important, the bill’s unintended consequences could devastate small businesses and local newspapers that rely heavily on recurring subscriptions for their revenue.
All sorts of black-owned Businesses utilize automatic renewal for the convenience of their customers, for example, those offering specialty beauty products, gourmet food items, and even community-based newspapers.
The impact on local news, particularly in underserved areas, would be particularly devastating. These newspapers, already struggling, need the stability of an ongoing subscriber base to continue investing in and serving their communities.
One such example is the Sacramento Observer. Since 1962, the Observer has informed and inspired the Sacramento Black community and has been honored with more than 700 awards, including being named the nation’s top Black newspaper six times. The Observer’s impact in Sacramento is large, like all publications, they run on tight margins and do not have the staff capacity or resources to comply with this bill. If it passes, it could be devastating to the Observer, which relies on its loyal subscriber base for a stable source of revenue.
California already has robust consumer protections for auto-renewal subscriptions. Current laws ensure that businesses provide clear and detailed notifications so customers are fully aware of what they are signing up for. Companies must clearly state auto-renewal terms before consumers can accept the service and send a reminder before charging for an annual auto-renewal. These safeguards ensure that customers have ample warning and can cancel subscriptions they no longer need.
AB 2863 proposes new requirements that are not only unnecessary but also prohibitively expensive. One of the bill’s major issues is its mandate for a two-step “double opt-in” process. This process, while offering little added benefit to consumers, would force each newspaper and business to completely redesign their websites and subscription processes. I can confidently tell you that this financial burden could be insurmountable for small businesses, especially those already operating on razor-thin margins.
Moreover, the bill requires these businesses to have staff on hand to answer the phone for 12 hours daily. For small businesses and newspapers, this means diverting resources from serving their customers or investing in their business—to compliance. Instead of hiring more staff or expanding their business, they would have to hire additional staff to handle phone calls. This move offers minimal benefit to consumers but adds significant operational costs.
I hope the legislature reconsiders this well-intentioned but harmful bill. Protecting consumers is important, but California has already addressed this issue. Businesses, especially small and minority-owned businesses, need certainty to operate. Hundreds of Black entrepreneurs throughout California operate subscription-based businesses, and we need to work together so they thrive.
