Massachusetts Attorney General (AG) Andrea Joy Campbell announced Massachusetts’ new consumer protection regulations prohibiting “junk fees” and providing consumers with greater transparency regarding trial and subscription offers, prohibiting unfair marketing tactics that obscure the true cost of a product or service. The regulations are intended to help consumers understand the total cost of products and services at the outset of a transaction, avoid fees, and make it easier to cancel unwanted costs associated with trial and subscription offers.
Eliminating Hidden and Misleading Charges
Junk fees — such as processing fees, convenience charges, and recoupment costs — can allegedly be obscure during the purchasing process. Regulators argue that these fees appear when businesses advertise an initial low price, then reveal additional fees throughout the flow of the purchasing process. The alleged lack of transparency can mislead consumers regarding the affordability of a product or service, where it is claimed the total price is often not shown until the end of the transaction. Although these practices are already prohibited under the Massachusetts Consumer Protection Act, the new regulations go a step further by requiring businesses to disclose all fees upfront.
The new regulations require that businesses do the following:
- Clearly disclose the total price of a product at the first instance the price is advertised, including mandatory charges, before collecting any personal information from consumers;
- Ensure the total price is always be displayed more prominently than other pricing details;
- Explain the nature, purpose, and amount of additional charges; and
- Indicate whether fees are optional and provide instructions on how to avoid these charges.
Oversight on Promotional/Trial Offers
The regulations also require businesses to provide detailed information when presenting trial offers:
- Disclose any fees a consumer might incur from trial offers;
- Specify the products for which charges may apply;
- Offer clear instructions and deadlines for consumers to reject, or cancel trial offers to avoid charges; and
- Indicate the exact dates when consumers must take action to avoid fees.
Requiring Auto-Renewal Transparency
For recurring charges and subscriptions, the regulations require the following transparency:
- Inform consumers what they will be billed for, including any changes in fees after trial periods;
- Provide clear instructions on how to cancel subscriptions;
- Implement simple, user-friendly processes to cancel subscriptions, ensuring the ease of canceling matches the ease of subscribing; and
- Provide advanced written notices detailing the renewal dates, charges, and cancellation methods.
Why It Matters
With these regulations, Massachusetts joins a growing list of states and the Federal Trade Commission (FTC) in clamping down on what regulators perceive as exploitative junk fees and auto-renewal practices. The increasing legislative focus on these issues signals to businesses the necessity of staying compliant with evolving consumer protection standards. Companies must reassess their advertising and billing practices to avoid becoming targets of these regulations, ensuring that their pricing methods are transparent enough to maintain regulatory compliance.
