Enterprise software giants such as Salesforce (CRM) are facing a new headwind. Starting July 1, 2025, California’s expanded automatic renewal law (ARL) will impose stricter rules on subscription-based services.
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This law seeks to protect consumers from confusing or hard-to-cancel auto-renewing contracts. For Salesforce, which relies on recurring revenue from cloud-based subscriptions, the new law could mean major operational and legal changes.
Key Changes Under the Law
Under the amended ARL, companies must get clear permission from California customers before signing them up for auto-renewing plans and keep a record of that consent for up to three years. They also need to make it easy for users to cancel online subscriptions and send yearly reminders with details about renewal terms, charges, and how to cancel. If prices or terms change, customers must be notified at least seven days in advance.
For Salesforce, which serves a mix of B2B and B2C clients, the impact will likely be felt most in its Salesforce Essentials, Marketing Cloud, and Slack offerings. These products are often purchased via self-service portals and renewed automatically.
Further, the company will need to audit its subscription flows, update its terms of service, and possibly redesign parts of its website or app to meet the new rules for easy cancellation and clear notifications.
Is CRM a Buy, Hold, or Sell?
Turning to Wall Street, CRM stock has a Moderate Buy consensus rating based on 33 Buys, nine Holds, and two Sells assigned in the last three months. At $352.03, the average Salesforce stock price target implies a 32.12% upside potential.
