Massachusetts AG Proposes Rule on "Junk Fees" and Auto-Renew Offers

Last week, the Massachusetts Attorney General announced that her office is proposing new rules that would prohibit so-called “junk fees" and restrict the use of auto-renew offers. 

In making the announcement, Mass AG Andrea Joy Campbell explained, "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.” 

The Mass AG's office is soliciting public comments on the proposed rules and will hold a public hearing on the proposal later this month.  

Junk Fees

The Mass AG's proposed junk fee rule would prohibit the advertising of a price without clearly and conspicuously disclosing the total price of the product.  In many situations, the total price must be the most prominent price shown as well.  

The “total price” of a product is the entire price to be paid by the consumer, including all required fees, interest, charges, and other expenses, but excluding taxes, shipping charges, and fees required by federal, state, or local law.  While shipping charges may be excluded from the “total price,” those charges must “reasonably reflect the amount a business incurs to send physical goods to a consumer.” 

The proposed rule will also require the disclosure of any other amounts that a consumer will be charged as a result of the purchase of the product and whether those charges are required (and the circumstances when they are waivable).  The rule will also generally require the disclosure of the total price prior to consumers being required to disclose personal information.  

Auto-Renew Offers

The Mass AG's proposal also includes new requirements in connection with the use of auto-renew offers.  The proposal includes specific requirements related to cancellation and related to disclosures that must be given for trial offers and auto-renew offers.