Minnesota Joins the Fee Fray with a Twist on Variable Pricing

On May 20, Minnesota Gov. Tim Waltz signed the state’s so-called junk fee bill into law. The law, similar to a proposed Federal Trade Commission rule and laws in other states, requires businesses to include all mandatory fees or surcharges in the advertised price. Mandatory fees include:

• A fee or surcharge that must be paid to complete the transaction
• A fee or surcharge that is not “reasonably avoidable” by the consumer
• A fee or surcharge that one would expect to pay when purchasing the goods or services advertised

Mandatory fees do not include taxes imposed by a government entity, such as a state tax on the purchase of goods. These requirements mirror the FTC’s Proposed Rule we have previously discussed that targets similar fees. The law will take effect on January 1, 2025.

Minnesota’s New Approach to Variable Fees

Minnesota specifically addresses variable pricing, and the bill allows for more flexibility in disclosing pricing that varies based on “distance or time,” or by the consumer’s “selections and preferences.” When advertising goods or services that may include variable fees, the advertised price must include:

• Factors that determine total price
• Mandatory fees associated with the transaction
• A disclosure that the total cost may vary in a clear and conspicuous manner

This provision departs from California’s approach. Under California’s drip pricing law, businesses that may not know the total price of a good or service at the beginning of a transaction must wait until they determine how much they will charge a consumer before advertising a price. Unlike California’s “wait and see” approach, under Minnesota’s law, if a seller discloses that the total cost a consumer pays at the end of a transaction may vary based on specific factors and additional fees, they will be compliant.

Industry Specific Provisions

All food or beverage establishments, including hotels, must include the percentage of any automatic and mandatory gratuity charges in their advertisement of goods or services. All delivery platforms must disclose the flat fee or percentage a consumer will be charged when they view or select the vendor or item they wish to purchase. They must also make available a subtotal page that itemizes the price of menu items and all additional fees included in the total cost, prior to checkout.

States Continue to Consider Price Disclosure Laws

Other states continue to advance fee disclosure laws. Connecticut Senate Bill 15 requires an “all-in-pricing” approach to advertising the total cost of goods or service. The bill is intended to protect primary and secondary ticket event websites that wait until checkout to disclose additional fees. The state’s General Law Committee unanimously approved the bill, which now awaits further action.

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Special thanks to Nagnouma F. Camara for her assistance with this article.