Pricing

Subscribe to Pricing

During the dog days of August, the Federal Trade Commission (FTC) brought two complaints against auto companies involving alleged deceptive and discriminatory price advertising.

The first complaint was filed and settled in federal court in the District of Arizona in partnership with the Arizona’s attorney general. It alleged Coulter Motor Company advertised prices that were thousands of dollars lower than the actual prices charged to consumers due to surprise charges and fees. Many of these charges and fees were add-ons that consumers allegedly never authorized. The FTC and Arizona also charged Coulter with discriminating against Latino consumers by arranging higher interest rate markups and more expensive add-ons than it did for non-Latino consumers, in violation of both the unfairness prong of Section 5 of the FTC Act and the Equal Credit Opportunity Act (ECOA).Continue Reading FTC Commissioner Claims Agency Creates Favorable Precedent Through Venue Selection

This week, the Fifth Circuit Court of Appeals issued a stay of the Department of Transportation’s (DOT) price transparency and “junk fee” rule (the Rule or the Final Rule). The ruling effectively blocks the DOT from enforcing the Rule pending the legal challenge.

The DOT issued the Final Rule, “Enhancing Transparency of Airline Ancillary Service Fees,” in April 2024, and it took effect July 1, 2024. The Rule requires airline carriers and ticket agents to clearly disclose certain “ancillary service fees,” such as baggage fees and cancellation fees, to consumers before purchase. The DOT described the purpose of the Rule as helping consumers “to avoid surprise fees that can add up quickly and add significant cost to what may, at first, look like a cheap ticket.” The DOT rule was part of the Biden administration’s whole-of-government attack on “junk fees.”Continue Reading Fifth Circuit Grounds Department of Transportation’s Price Transparency and “Junk Fee” Rule

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.Continue Reading Minnesota Joins the Fee Fray with a Twist on Variable Pricing

Late last week, the California attorney general released Frequently Asked Questions regarding California’s “Honest Pricing Law” or “Hidden Fees Statute,” which will take effect July 1, 2024. The law is anticipated to have a sizeable impact, given its breadth, and will vastly change how businesses disclose the price of their goods and services to the public. When “advertising, displaying, or offering” a price, the law requires businesses to include all required fees and charges other than certain government taxes and shipping costs.

The Advertised Price Is a Single Price, No Exceptions

The FAQs make clear that the intent of the law is to force businesses to display a single price that includes all required fees and charges that a consumer would pay at the end of the transaction. This is similar to the Federal Trade Commission’s Proposed Rule that businesses display the “Total Price” for goods and services.Continue Reading California Releases FAQs on Complying with Impending Drip Pricing Law

On March 14, the Federal Communications Commission (FCC) adopted new rules that require cable television operators and satellite video providers to specify the aggregate monthly all-in price for video programming services on customer bills, any advertising, and all promotional materials in a “clear, easy-to-understand, and accurate single line-item.”

The price must include all charges for broadcast stations, sports programming, and any other programming. Other line items such as taxes, administrative fees, equipment fees, franchise fees, and fees for public, educational, and governmental (PEG) channels are not required to be part of the all-in price.Continue Reading FCC Adopts Video Service All-In Pricing Rules

On February 11, 2024, a new law went into effect in New York, establishing important limits and rules for surcharging. Enacted in December 2023, the new statute has a price disclosure component, detailing how surcharge prices are communicated, and a surcharge price cap component. The law also imposes a $500 civil penalty for each violation, and it can be enforced by municipalities and local governments.

Surcharge Price Disclosure: First, the law provides that any seller imposing a surcharge must “clearly and conspicuously post the total price for using a credit card in such transaction, inclusive of [the] surcharge[.]” This means that the final sales price of any such transaction cannot be greater than the posted price. It would not be sufficient to include a credit card surcharge warning on a price tag or menu, or on a sign by the register.

Surcharge Price Cap: Second, the law provides that any such surcharge may not exceed the amount of the surcharge charged to the business by the credit card company for such credit card use.Continue Reading New York Implements a New Surcharge Law: What the Changes Mean for Shoppers and Businesses

This week, the Federal Trade Commission (FTC) released a Proposed Rule, “Rule on Unfair or Deceptive Fees.” The Proposed Rule comes after the FTC solicited comments through its Advance Notice of Proposed Rulemaking in November 2022. The Proposed Rule would cover any business selling in physical locations and online. There is one exception for motor vehicle dealers, which is addressed in a separate rule. The below requirements apply to businesses regardless of whether they are providing the goods or services themselves (e.g., an online travel agent advertising for a hotel chain).

The FTC broadly identified two practices that it intends to regulate: (1) omitting mandatory charges and fees from advertised prices; and (2) misrepresenting the nature and purpose of the charges or fees.Continue Reading FTC Releases Proposed Rule Targeting “Junk” Fees

On Tuesday the FCC released a Notice of Proposed Rulemaking proposing to require cable operators and direct broadcast satellite (DBS) providers to specify an “all-in” total price for their video service, both in their promotional materials and on subscribers’ bills.

The proposal is intended to help consumers understand the complete cost of video service, to provide consumers with the ability to comparison shop among competing service providers and to compare programming costs against those of alternative programming providers, such as streaming services.

The proposal builds upon the recently implemented Broadband Nutrition Label requirement, which demands that broadband Internet providers display easy-to-understand service performance labels akin to food labels. The proposal is also consistent with the broader federal effort driven by the White House to eliminate so-called junk fees across a variety of industries. Such fees are service provider mandatory fees that are not fully disclosed in provider marketing/advertisements and that later surprise consumers when they are billed.Continue Reading FCC Proposes “All-In” Video Service Advertising Rules for Cable and Satellite TV

Earlier this month, New York Attorney General Letitia James issued a Notice of Proposed Rulemaking aimed at setting greater guardrails against price increases during emergencies. The action comes exactly one year after James first initiated the rulemaking process by seeking comment regarding potential price gouging during the COVID-19 pandemic.

After amending the price gouging statute to expand its scope, in 2020 the New York legislature granted James rulemaking authority. In March 2022, James launched the first rulemaking process with an Advance Notice of Proposed Rulemaking, which sought public comment on whether and how the attorney general might provide regulatory guidance in the area of price gouging. Advocacy groups, consumers, industry representatives, and academics submitted comments, which have informed James’s proposed rules. The proposed rule tightens the screws on companies the AG believes are taking unfair advantage of market disruptions.Continue Reading New York AG Proposes New Price Gouging Rules

Supply chain disruptions and accompanying inflation for raw materials have challenged many businesses. A recent case involving paint retailer Sherwin-Williams shows how not to deal with these challenges. In a putative class action, plaintiffs accused Sherwin-Williams of surreptitiously adding a hidden “Supply Chain Charge” to every sales transaction. On October 24, the U.S. District Court for the Northern District of New York said the claims may proceed.

The plaintiffs allege they suffered economic injury as a result of a “deceptive bait-and-switch scheme” perpetrated by Sherwin-Williams. They asserted claims of deceptive acts or practices under New York General Business Law § 349, breach of contract, and unjust enrichment. On Sherwin-Williams’ motion to dismiss, the Northern District of New York tossed the unjust enrichment claim, but held that the Section 349 claim and breach of contract claim were plausibly alleged.Continue Reading Supply Chain Surcharges? Plaintiffs Say You Better Not Conceal Them