Massachusetts Attorney General (AG) Andrea Joy Campbell has issued guidelines to help businesses comply with the recently enacted consumer protection regulations, prohibiting “junk fees” and providing consumers with greater transparency regarding trial and subscription offers. We previously covered these regulations in detail here.
Effective September 2, these regulations mandate that sellers provide upfront transparency on the total cost of products or services. This aims to eliminate alleged unfair marketing tactics that obscure true costs and to facilitate easy cancellation of unwanted fees, particularly those in trial and subscription offers.
Key Aspects of the Guidance:
- Fee and Charge Identification: Sellers must provide consumers with the total price but are not required to individually identify each component of a product’s total price. However, if they choose to highlight certain portions as fees or charges, they must accurately describe their nature and purpose. Clear and concise descriptions, such as “cleaning fee,” are acceptable if they reflect actual costs. Additional explanations can be provided using accessible methods like information buttons in digital ads.
- Negative Option Feature Pricing: For products with a negative option feature that includes recurring charges as well as one-time mandatory fees, sellers can disclose the “total price” for a single term, including any additional one-time fees for the first term. Sellers may also display the total price for subsequent terms.
- Government Charges Disclosure: “Government charges,” such as surcharges from quasi-governmental entities like a tourism destination marketing district, are exempt from inclusion in the “total price” disclosure. However, these charges must be disclosed in the final price presentation prior to sale, similar to how state, local, or federal taxes are typically presented.
- Industry-Specific Exemptions: Certain industries, such as insurance products, are exempt from the regulations. Furthermore, compliance with other relevant laws and regulations in certain industries, such as telecommunications, credit transaction assignees (except debt collectors), and rental housing would constitute compliance with the regulations.
Why It Matters
The new laws targeting junk fees and drip pricing practices have led to a complex mosaic of requirements, each with its nuances. But at baseline, businesses should take proactive steps to ensure that their advertisements clearly and conspicuously display total prices, inclusive of all mandatory fees. The updated guidelines are crucial for meeting the compliance deadline of September 2.