Press Release  AG Campbell Proposes Regulations To Combat "Junk Fees" And Bolster Transparency For Consumers

BOSTON — Attorney General Andrea Joy Campbell has announced that her office has proposed regulations to prohibit hidden “junk fees,” which companies use to deceptively hike prices on consumers above advertised prices. The proposed regulations would require businesses to clearly disclose the total price of a product at the time it is presented to consumers, provide clear and accessible information on whether fees are optional or required, and simplify the process for cancelling trial offers and recurring charges, amongst other rules.   

“Millions of Massachusetts consumers are being harmed daily by businesses that charge hidden or surprise fees for profit,” said AG Campbell. “By prohibiting junk fees and requiring transparency, these proposed regulations will not only ensure that consumers know what they are actually paying for when buying a good or service, but also level the playing field and market for those honest businesses that clearly disclose their pricing upfront.”  

“Junk fees” are hidden or surprise fees above the advertised price of a good or service. These fees, sometimes termed “convenience fees” or “service fees,” are often not disclosed or explained, or they are disclosed only near the end of a purchase, rather than at the outset. The imposition of such fees in this manner is an unfair and deceptive practice, and subject to regulation under the Commonwealth’s consumer protection law, Chapter 93A, which is among the strongest in the nation.  

Similar concerns arise with the likewise unfair and deceptive practice of offering consumers subscriptions or trial offers without providing clear pricing information or offering a clear mechanism to cancel. Increasingly, businesses are encouraging customers in Massachusetts to enter into automatically renewing contracts or trial offers. These arrangements are made easy to enter into—sometimes without the consumer even knowing they have done so—but much more difficult to cancel. The AG’s proposed regulations would also prohibit these practices as unfair and deceptive.  

As is the case with many unfair and deceptive practices, “junk fees” are found to disproportionally impact low- and middle-income consumers and consumers of color, who have historically been financially marginalized. In addition, because “junk fees” are often undisclosed when prices are publicly marketed, they unfairly hinder consumers from making price comparisons when shopping. “Junk fees” are also unfair and harmful to those businesses that are transparent and operate fairly within a free market system. 

Accordingly, through use of the AG’s rule-making power under the Massachusetts Consumer Protection Act, the AG’s Office has proposed targeted regulations to close existing gaps within the state’s consumer protection laws and to combat the unfair and deceptive business practices related to “junk fees” across various industries. The proposed regulations offer strong protections to consumers during the marketing and sale of consumer products, including in relation to automatic renewals and recurring payments of subscription services and trial offers.   

The proposed regulations would require businesses to clearly, conspicuously, and prominently disclose the total price of a product—including all fees, interest, charges, or other necessary expenses—when a product is advertised and presented to consumers. To facilitate transparency in the presentation of a total price, the regulations require that the nature and purpose of fees be clearly explained, and that sellers disclose whether such fees are mandatory or instead optional or waivable. Additionally, the proposed regulations would prohibit businesses from requiring consumers to provide personal information, including billing and credit card information, prior to disclosing the total price of a product. 

Regarding recurring fees and trial offers, the proposed regulations would require businesses to provide readily available methods of cancelling such contracts, including a requirement that contracts entered into online must be accompanied by an option to cancel online. Among other requirements, the regulations would mandate that businesses clearly disclose the time period during which a consumer must cancel a trial offer in order to avoid incurring a financial charge, such as an automated payment or recurring fee, along with the exact calendar date that a consumer would be expected to incur such a charge if they did not cancel a trial offer. Moreover, for automatically renewing contracts or trial offers exceeding thirty days, businesses would be required to provide at least 5 (but no more than 10) calendar days of notice to consumers of the calendar date on which they must cancel such a contract in order to avoid any additional charges, along with clear cancellation instructions.   

The entirety of the AG’s proposed regulations, which will be promulgated as 940 CMR 38.00, may be viewed here. 

The AG’s Office welcomes comments from the public on their experiences with “junk fees” and on the proposed regulations. Comments may be submitted to junkfees@mass.gov.  

The AG’s Office will hold a public hearing and comment session on the proposed regulations on December 20^th. Additional information regarding the upcoming public hearing may be found here.  

Statements of Support:   

Elizabeth Warren, U.S. Senator from Massachusetts  

“American families lose tens of billions of dollars each year in hidden and misleading fees. Attorney General Campbell’s proposed rule will protect consumers, promote honest competition, and put money back in working people’s pockets. I’m proud to see Massachusetts leading the way in the fight against junk fees.” 

Michael Best, Senior Attorney at the National Consumer Law Center 

"Junk fees hurt consumers, taking tens of billions of dollars in hidden fees and charges each year from working families. Attorney General Campbell has taken a critical step toward providing immediate relief for Massachusetts families struggling to make ends meet." 

Mike Festa, AARP Massachusetts State Director 

“With at least 85% of Americans experiencing a hidden or unexpected fee within the last two years, the time has come for Massachusetts to lead the way and crack down on confusing and excessive fees. The consumers of the Commonwealth should have basic protections, including transparent pricing and disclosure of fees, and these proposed regulations get us one step closer.” 

###