Day and Neuhaus Outline Legal Requirements for Distillery Clubs Considering Recurring Payments

Litigator and alcoholic beverage attorney Corey Day and environmental law attorney Lauren Neuhaus contributed an article to Artisan Spirit Magazine titled “Recurring Payments: Get the Revenue While Limiting the Risk,” published Winter 2021. The authors discuss legal requirements distillery clubs must meet in requiring their members to make recurring payments.

Distillery clubs — which offer memberships where participants receive periodic shipments of bottles of spirits and possibly nonalcoholic perks — can offer distillers, among other benefits, the prospect of a steady source of income to help them stay in business until the pandemic is over.

Asking distillery club members to make regular credit card payments, while appealing from an administrative perspective and to help ensure recurring income, requires club owners to consider and comply with certain federal and state legal requirements that govern such transactions.

Under the federal Restore Online Shoppers’ Act, distillery club owners must disclose material terms of a transaction before obtaining the consumer’s billing information, obtain express consent from the consumer before he or she is charged, and provide a simple way for the consumer to end the recurring charges.

Several states impose further requirements for direct-to-customer sales that could apply to distillery clubs, with those contained in California’s Automatic Renewal Law being the most stringent.

The authors conclude, “Recurring memberships are great for the bottom line but require some forethought to be implemented correctly, to fully inform consumers, and limit the chances of a lawsuit. Take the time and do it right.”