HB 1225: Contracts; automatic renewal provisions; provide certain consumers a pro rata refund relative to a canceled service contract in the event of a price increase

Georgia law already requires sellers of long-term service contracts (12 months or more that auto renew) to notify consumers before the contract automatically renews. This bill adds a new consumer protection: if a contract auto renews for a year or more and the renewal raises the consumer's cost by 50 percent or more, a consumer who misses the cancellation deadline can still get money back. Within 45 days after the deadline, the consumer is entitled to a pro rata (proportional) refund based on how many days remained in the renewal term when they finally canceled. The bill keeps existing rules requiring 30 to 60 days advance notice of automatic renewal and, for contracts longer than 24 months, written acknowledgment from the consumer. The new refund rule would take effect December 31, 2026, and would only apply to contracts entered into on or after that date.

• Adds a new refund right for consumers whose auto-renewing service contract (1 year or longer) increases in price by 50 percent or more upon renewal.
• Requires sellers to give a pro rata (proportional) refund if the consumer cancels late, calculated by how many days were left in the renewal term.
• Sets a 45 day window after the cancellation deadline for the consumer to receive this refund.
• Keeps the existing requirement that sellers notify consumers 30 to 60 days before an automatic renewal deadline.
• Preserves the existing rule that contracts longer than 24 months need written consumer acknowledgment and an affirmative response to be enforceable.
• Sets the new rules to take effect December 31, 2026, applying only to contracts entered into on or after that date.

Consumers who sign long-term service contracts that automatically renew, and businesses (sellers) that offer such contracts, including any company using auto-renewal terms of a year or more, especially those that raise prices sharply upon renewal.

Consumers who forget to cancel a contract before a steep price hike would no longer be stuck paying the full increased amount for the whole renewal term. Businesses offering auto-renewing contracts with big price jumps would need to track cancellation dates and issue partial refunds.

• Section 1 revises O.C.G.A. § 13-12-3 to add a new subsection (b) creating the pro rata refund right for contracts that auto renew for a year or more with a price increase of 50 percent or more.
• The refund is based on days elapsed since renewal versus total days in the renewal term, and must be paid within 45 days after the cancellation deadline.
• The existing notice requirement (30 to 60 days before the renewal deadline) in subsection (a) remains unchanged.
• The prior subsection (b), now relettered (c), keeps the rule requiring written acknowledgment and affirmative consumer response for contracts longer than 24 months.
• Section 2 sets the effective date as December 31, 2026, applying only to contracts entered into on or after that date.
• Section 3 repeals any conflicting laws.

1. 2026-02-09House Second Readers (House)
2. 2026-02-06House First Readers (House)
3. 2026-02-05House Hopper (House)

• Carter Barrett (R, HD-024)Primary sponsor
• Chuck Efstration (R, HD-104)
• Houston Gaines (R, HD-120)
• Scott Holcomb (D, HD-101)
• Beth Camp (R, HD-135)
• Jan Jones (R, HD-047)

• consumer protection
• automatic renewal contracts
• service contracts
• refunds
• price increases