Claranova's $2.5M Settlement Spotlights Subscription Law Crackdown

PARIS, France – December 18, 2025 – French software group Claranova has agreed to a USD 2.5 million settlement to resolve a class-action lawsuit in the United States, a move that underscores the intensifying legal and financial risks facing companies in the booming subscription economy. The lawsuit, brought against several of the Group’s North American entities, including Avanquest Software, alleged violations of California’s stringent consumer protection laws regarding automatic subscription renewals.

In a statement, Claranova framed the decision as a “pragmatic approach to managing legal and financial risks” and specified that the agreement “does not constitute any admission of liability.” The settlement, which remains subject to court approval expected in the first half of 2026, signals a growing trend of companies opting for costly payouts to sidestep protracted and unpredictable legal battles over their recurring revenue models.

The High Cost of Convenience: California's Strict Renewal Laws

The legal challenge against Avanquest stems directly from California's Automatic Renewal Law (ARL), a piece of legislation that has become a sharp thorn in the side of the digital subscription industry. While the law has existed for over a decade, significant amendments that took effect in 2022—the same year the lawsuit was initiated—dramatically increased compliance burdens for businesses.

These regulations are designed to combat deceptive practices and ensure consumers have full transparency and control over their subscriptions. The ARL mandates that companies present auto-renewal terms in a “clear and conspicuous” manner before a customer subscribes. This includes the price, renewal frequency, and cancellation policy, which must be visually distinct and placed near the point of consent.

Furthermore, the law requires businesses to obtain explicit, affirmative consent from the consumer before initiating recurring charges. Perhaps most critically, the 2022 update strengthened cancellation requirements. If a consumer signs up for a service online, they must be able to cancel it online, immediately and without navigating confusing or obstructive hurdles—a standard often referred to as “click to cancel.” The law also introduced mandatory renewal notices for long-term subscriptions and free trials, aiming to prevent consumers from being charged for services they forgot they had.

Failure to comply can have severe consequences. Beyond facing enforcement actions from state attorneys and costly class-action lawsuits like the one Claranova faced, any services provided in violation of the law can be legally deemed an “unconditional gift” to the consumer.

A Pragmatic Move in a Litigious Landscape

For Claranova, the USD 2.5 million (approximately EUR 2.13 million) settlement appears to be a calculated business expense rather than a crippling financial blow. The company, which reported annual revenue of €286 million for its 2023-2024 fiscal year, stated the payment will be financed from available cash in two installments during 2026. Crucially, the group assured investors that the payout “will have no impact on the Group’s previously announced ambitions for 2028,” which include a target of €500 million in revenue.

This decision highlights a common strategy among corporations facing consumer class actions. The cost, uncertainty, and executive time consumed by years of litigation can often far exceed a negotiated settlement amount, even if the company believes its practices are defensible. By settling, Claranova effectively caps its financial exposure and avoids the reputational risk of a public trial, regardless of the outcome. The company’s press release noted that class actions of this nature “have become increasingly common in the consumer software sector in the United States,” acknowledging the challenging legal environment.

The settlement, negotiated under the supervision of an independent mediator, allows the Paris-based software publisher to close a contentious chapter and refocus resources on its core business, which spans utilities, PDF, and photo software in over 160 countries.

The “Dark Patterns” Driving Consumer Lawsuits

At the heart of the regulatory crackdown and subsequent litigation are so-called “dark patterns”—user interface designs crafted to mislead or trick users into actions they did not intend, such as signing up for recurring payments or making it difficult to cancel. While Claranova did not admit to any wrongdoing, the allegations in the lawsuit are reflective of widespread consumer complaints across the software industry.

Public forums and consumer review websites are filled with anecdotal evidence from users who felt trapped in subscriptions, struggled to find cancellation buttons, or were surprised by renewal charges after a free trial. These negative experiences are the fuel for class-action lawsuits, as they demonstrate a pattern of potential harm to a large group of consumers.

“The ARL and similar regulations are a direct response to a decade of user interface design that prioritized retention metrics over consumer transparency,” noted one legal analyst specializing in tech regulation. “Regulators and courts are no longer tolerating ambiguity. Consent must be explicit, and cancellation must be effortless.”

This legal focus on user experience forces companies to rethink their entire subscription process, from the initial sign-up flow and the presentation of terms to the accessibility of cancellation options. The era of burying renewal clauses in lengthy terms of service or requiring a phone call to cancel an online subscription is rapidly coming to an end.

A Bellwether for the Subscription Economy

The Claranova settlement is more than an isolated corporate event; it is a bellwether for the entire subscription economy. California has historically been a leader in consumer protection, and its ARL has inspired similar legislation in other states and influenced federal policy. The Federal Trade Commission (FTC) is also updating its “Negative Option Rule” with provisions that mirror California’s emphasis on clear consent and simple cancellation mechanisms.

This regulatory wave is only set to intensify. Further amendments to California’s ARL are scheduled to take effect on July 1, 2025, imposing even stricter requirements, including annual reminders for all auto-renewing services. For businesses operating nationwide, the complex patchwork of state laws creates a significant compliance challenge, pushing many to adopt the strictest standard—often California's—as their default practice.

As a result, companies across the digital landscape, from streaming services to SaaS providers, are under immense pressure to audit and overhaul their subscription models. The choice is becoming stark: adapt to a new era of consumer transparency or risk becoming the next target of a multi-million-dollar class-action lawsuit.