How to Avoid Getting Looped Into Contracts You Don't Like

For bakery owner Youna Karlsson, clean towels and aprons are as essential as sugar and butter.

When she signed a one-year contract with food service company Aramark to deliver clean towels and aprons every week, Karlsson thought that's what she was going to get. Instead, she says she received bad service and when she tried to cancel that contract, she was unwittingly looped back in.

"What really frustrated me is it became worse and worse," Karlsson said, noting that, as a bakery, her customers judge workers as much for their looks as they do their pastries. "The towels were totally rags with holes in them. The aprons were missing strings, dirty aprons."

She said she complained to Aramark, but things only got worse, with the company missing scheduled deliveries as piles of linens waited to be picked up. So when Karlsson's contract was up, she cancelled, but she didn't do it soon enough.

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She had done what many consumers do and overlooked the contract's "automatic renewal" clause. Karlsson was looped into the contract for another year, and if she wanted out Aramark said she had to pay $900.

Auomatic renewals are common and many consumers don't realize they've agreed to them, attorney Stuart Talley said.

In Karlssson's case, he said Aramark should let her out of its contract. "If the company isn't providing the service they agreed to provide, they're in breach contract and that gives you the right to back out of it at that point," Talley said.

However, Karlsson had no luck with that, so she turned to the NBC4 I-Team for help.

NBC4 contacted Aramark and it released Karlsson from her contract and the $900 penalty. "When we learned that Berolina Bakery was dissatisfied, we agreed to voluntarily end the contract they signed," the company said in a statement. "We wish Berolina Bakery continued success."

When it comes to automatic renewals, consumers actually have more protections than businesses do. Here's what you need to know:

  • By law, an automatic renewal clause should be in bold or in a bigger font.
  • You're also required to sign or initial the clause, acknowledging that you agree to it.
  • Cancellation details need to include an email or phone number to cancel.
  • If a company violates the automatic renewal law, it can be on the hook for returning all the money it collected under the contract.
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