Press Release  AG's Office Releases Updated Business Guidance On New "Junk Fee" Rules; Businesses Must Comply By September 2

BOSTON — Ahead of the September 2 compliance deadline for new consumer protection regulations prohibiting “junk fees,” the Attorney General’s Office (AGO) has released updated guidance and webinar to help businesses operating in Massachusetts comply with the regulations. Beginning September 2, these regulations become enforceable, and businesses must come into compliance.

Promulgated earlier this year, the AGO’s “junk fee” regulations help consumers understand the total cost of a product or service upfront, avoid unnecessary charges and easily cancel unwanted costs that may be optional, waivable, or unwanted, including costs related to trial and subscription offers. Additionally, by increasing price transparency and helping consumers to more easily compare prices while shopping, the regulations level the playing field for businesses.

“Junk fees” are hidden, surprise, or unnecessary costs that increase the total price of a product beyond the advertised price. Businesses often do not disclose such fees, only disclose them at the end of a transaction, or disclose them after consumers have provided their personal billing information. Similarly, some businesses have engaged in practices related to trial offers, subscriptions, and automatic and recurring charges to conceal the total cost and nature of a product or service, while making it difficult for consumers to cancel or opt-out of such features.

The AGO’s regulations make clear that hidden “junk fees” and related practices violate the Massachusetts Consumer Protection Act. 

In clarifying that such practices are prohibited under the Consumer Protection Act, the AGO’s regulations impose various requirements for businesses operating in Massachusetts, including rules that increase price and billing transparency and make it easier to avoid unnecessary or unwanted costs in relation to marketing and sales; trial offers and automatic renewals; and recurring charges and subscriptions. The regulations may be viewed in their entirety here.

The AGO’s “junk fee” regulations guidance has been issued to facilitate businesses’ compliance with the regulations. The guidance has been updated to specify circumstances under which industries may already be compliant with the regulations through compliance with separate consumer protections, and to answer frequently asked questions the AGO has received since announcing the new regulations. For example, the guidance answers the below commonly asked questions, amongst others:

• Can sellers still advertise discounts – for example, “half price after 4pm,” without stating a price?
• In the context of rental housing, how must a landlord disclose water and sewer charges?
• Do restaurants violate these regulations by imposing mandatory service charges for large parties?

The updated guidance, including answers to the above and other questions, may be viewed in its entirety here. 

Additionally, the AGO has released a webinar, available here, to help businesses understand and comply with the regulations.   

Businesses across industries must ensure compliance with the new regulations by September 2. Businesses that violate the regulations will be subject to legal enforcement action by the AGO in addition to private legal actions under the state’s consumer protection law. 

Combatting Hidden, Surprise, or Unnecessary Charges During Marketing and Sales 

Among other rules, in marketing and sales, the AGO’s regulations require businesses to clearly disclose: 

• The total price of a product, including any mandatory charges or fees, whenever pricing information is presented to a consumer and prior to requiring a consumer to provide their personal information. 
• The nature, purpose, and amount of any charges that may be imposed on a transaction.
• Whether any charges are optional or waivable, along with readily available instructions on how to avoid any optional or waivable charges. 

Whenever pricing information is presented to a consumer, businesses must also display the total price of a product more prominently than any other pricing information. 

Trial Offers and Automatic Renewals

When presenting a trial offer, the AGO’s regulations require businesses to clearly disclose:

• Any charges a consumer may incur as a result of accepting a trial offer.
• Any products for which charges may be incurred as a result of accepting a trial offer.
• Instructions for consumers to reject or cancel a trial offer before being charged.
• The calendar date by which a consumer must reject or cancel a trial offer to avoid being charged.
• The calendar date on which a consumer will be charged if the consumer fails to reject or cancel a trial offer. 

Recurring Charges and Subscriptions

Among other rules, prior to the purchase of a product involving a recurring charge or subscription, the AGO’s regulations require businesses to clearly disclose: 

• What consumers will be charged for and if any charges will increase after a certain period, including trial periods.
• If charges will occur on a regular basis unless cancelled by a consumer.
• Instructions on how to cancel a recurring charge or subscription.

The AGO’s regulations also require businesses to implement simple processes for consumers to cancel subscriptions and other recurring charges, including ensuring that consumers are able to cancel subscriptions just as easily as they are able to enroll in them. For example, if a consumer enrolls in a subscription through a website, they must be able to cancel the subscription through the same website.

Additionally, the regulations require businesses to provide advance written notices regarding their subscriptions, including details of when a subscription will renew, how much the consumer will be charged and when, and how the consumer may cancel.

The entirety of the AGO’s “junk fee” regulations, promulgated as 940 CMR 38.00, may be viewed here.

Consumers who believe they have been subject to an unfair or deceptive business practice, including in relation to “junk fees,” may file a consumer complaint or call the Attorney General’s Consumer Hotline at 617-727-8400.

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