In this episode, attorney Mike Forrest of Mazow McCullough talks about new Massachusetts regulations aimed at eliminating hidden fees, also known as ‘junk fees’ or ‘price dripping.’ The discussion covers how businesses must now display full prices upfront, how these rules affect credit card surcharges and cash discounts, and what penalties exist for noncompliance. Mike also explains the implications for small businesses, consumers’ rights to file complaints, and how the new laws promote transparency and fairness in Massachusetts transactions.
John Maher: Hi, I’m John Maher, and I’m here today with Michael Forrest of the Law Office of Mazow McCullough. Today we’re talking about changes to Massachusetts rules on junk fees, price dripping, and credit card surcharges. Welcome, Michael.
Mike Forrest: Hi, how are you, John?
Massachusetts Junk Fee and Price Dripping Rules
John: Good, thanks. Michael, can you tell us a little bit about this change to the law and what junk fee rules are now requiring of businesses?
Mike: Sure. So in September of this year, September 2nd, the Massachusetts Attorney General had regulations go into effect. There are already regulations or laws in effect that prevent things like credit card surcharges. This regulation goes a little bit further. It deals with other types of junk fees or what’s also referred to sometimes as price dripping. So in essence, what happens is this regulation says that a total price has to be presented to the consumer at first impression.
In other words, you can’t get to the register and have a business charge you things like a service fee. Again, a credit card surcharge is always something that has been prohibited in Massachusetts. People have seen things like kitchen fees. So you have these additional fees that don’t show up on your bill, for example, until you’re ready to purchase or check out. So this regulation, one of its aims is to prevent that.
The other thing is to place rules into effect for things like subscriptions and trial offers, because again, unsubscribing from those can be very difficult for consumers. So this regulation also sets out the way businesses must handle those types of transactions.
Examples of Hidden Fees Now Banned in Massachusetts
John: So, can you give us some examples of these price dripping types of things that are now illegal?
Mike: Sure, of course. And like I said before, credit card surcharges were probably already considered a junk fee. Again, there was a statute in place prior to this regulation, but as I mentioned…
John: So, in other words, when you’re buying something and you see the price and you bring it to the register and you pay for it, they’re not allowed to charge you the price plus whatever the credit card fee is on top of that. It has to be built into the price that they’re showing you.
Mike: It does. Right. The other idea here is that you can’t pass that cost of doing business onto the consumer. So you do see other types of fees. So you’ll see things like I had mentioned before, you’ll see kitchen fees, you’ll see service fees, production fees, things like that. You’ll have line items at the end of a bill, and the new regulation prevents that. It pretty much says that if you want to charge these fees or any fee, it has to be part of the total price that’s initially advertised.
Credit Card Surcharges and Cash Discounts
John: Okay. So how do these rules affect credit card surcharges and cash discounts?
Mike: So, Massachusetts still allows for cash discounts. For example, you’ll see that often at gas stations. They may offer [a lesser price] for gas paid for by cash than they do for [using a] credit card. So although there is a distinction there, a cash discount can be advertised upfront for a product, but you can’t slip in that surcharge on the end to recoup those costs.
So, it falls on the business [to decide] on how the business is going to collect that actual fee. Are they going to tell the consumer upfront that they’re collecting it, or are they going to be, what this regulation implies, deceptive about how that charge is relayed to the customer?
Can Businesses Raise Prices to Offset Credit Card Costs?
John: And so, are you saying now that a business can’t just make their prices higher in order to cover credit card fees and things like that?
Mike: I think that’s an unanswered question. I think really what this regulation was trying to ensure was that the consumer upon that first contact or impression, seeing that product with the advertised price, that consumer can trust that that’s the price they’re going to see exclusive of government fees and taxes, of course, but that’s the actual price that they’re going to see and they can expect to see when they get to the checkout.
Penalties for Violating the Massachusetts Junk Fee Regulation
John: Okay. So what penalties do businesses face if they don’t comply with this rule?
Mike: Sure. So, one of the things that the regulation does is it says that if a business violates a provision of the regulation, it also commits a Consumer Protection Act violation. In other words, there’s a statute in Massachusetts, it permits for multiple damages under certain circumstances, the payment of costs and attorney’s fees by the defendant. So it definitely has some teeth to it, these laws or these regulations. The other option that people have here too is that it puts you in a position where you can file a complaint directly with the attorney general’s office.
Impact on Small Businesses and Thin Margins
John: And how might these rules affect smaller businesses that might have thinner margins and might not be able to absorb a lot of extra costs, et cetera?
Mike: Yeah. Again, I think it’s an unanswered question completely as to whether or not those prices or those charges can be wrapped up into the total price. But I think at the end of the day, transparency is the best solution for small businesses. If there’s any type of charge that they’re seeking to recoup, they need to be upfront.
Consumer Rights and How to Report Hidden Fees
John: Okay. And so what should consumers be looking out for? How do they know whether or not they’re seeing these extra charges? What should they be careful of? And then if they do notice that they’re being charged extra for things that weren’t upfront, what can they do if they’re being misled?
Mike: Yeah, I think it’s important. I mean, especially now with electronic transactions that in situations where you feel like you may have been charged or just in general when you have a transaction, it’s important to pay attention to the line items on the receipt. Now with this new regulation in place, I believe that if you see something on a line item under the total price that was advertised, there may have been a violation of the regulation. And if it’s a credit card, it may have been a violation of the statute as well.
So, I think that it’s important to pay attention to what’s written on those receipts. And if you do think that you’ve been a victim of it, I think that, well, first of all, you have the option of filing a complaint with the attorney general’s office. Otherwise, you can reach out to firms like ours, Mazow McCullough, for advice on what your legal options might be if you’ve been the victim of a violation of this regulation.
John: Does this affect things like when you buy a concert ticket or something like that and you see a line item there for handling charge or something like that? Is that what we’re talking about here or is it a little bit different?
Mike: No, I think that’s another great example. It’s something that, again, a consumer gets to that final checkout screen, they’ve provided their personal information, and all of a sudden they’re hit with a transaction fee, or a stadium fee, or a telemarketing fee, or something like that, that’s exactly what the regulation is aimed at preventing.
John: All right. Well, that’s really great information, Michael. Thanks again for speaking with me today.
Mike: You’re welcome. Have a great day. Thanks, John.
John: And for more information, you can visit the Mazow McCullough website at helpinginjured.com or call 978-744-8000.
