Pricing

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A recent review of civil filings in Washington, DC reveals a conspicuous pattern challenging strike-through pricing: a single nonprofit plaintiff, represented by a small group of attorneys, has filed more than 150 lawsuits against online retailers across the country—many of them small businesses.

Surge in DC CPPA Pricing Lawsuits

A DC-based organization is filing the wave of lawsuits under the District of Columbia Consumer Protection Procedures Act (CPPA). The lawsuits challenge so-called reference pricing, strikethrough, or “sale” pricing. They allege misleading price comparisons, failure to disclose material facts, and ambiguous representations that tend to mislead. The letters typically seek statutory damages of $1,500 per product purchased, plus attorneys’ fees. The plaintiffs allege that selling into DC is enough to create nationwide exposure.

Continue Reading Online Retailers Face Rising Risk from Strike-Through Pricing Claims

On March 12, Venable’s Advertising and Marketing Group hosted its 12th Advertising Law Symposium in Washington, DC, bringing together in-house counsel, marketing executives, and industry professionals to examine the legal and regulatory landscape facing advertisers. The panels focused on a range of the latest topics in advertising law, including FTC enforcement priorities, pricing transparency, artificial intelligence, class action trends, and more.

In case you were unable to attend, here are some key themes that emerged from the day’s discussions.

Continue Reading Event in Review | 12th Advertising Law Symposium

This week, the Federal Trade Commission (FTC) and the Illinois attorney general announced a settlement with Grubhub Inc. to resolve allegations that the company engaged in an array of unfair and deceptive practices that violated Section 5 of the FTC Act, the Restore Online Shoppers’ Confidence Act (ROSCA), the FTC’s new Impersonation Rule, and Illinois state consumer protection laws. The FTC announced the case as Chair Lina Khan’s tenure at the helm of the FTC comes to an end, and the case highlights many of the approaches Khan has pushed for during her reign.

The complaint alleged that Grubhub, an online food ordering and delivery platform, engaged in practices that harmed diners, delivery workers, and restaurant owners. Grubhub reportedly deceived diners by advertising low or no delivery fees but then added hefty charges at checkout. Even members of the company’s subscription program, Grubhub+, who paid $9.99 per month for “unlimited free delivery,” were charged these additional fees without proper disclosure.

Continue Reading FTC and Illinois Attorney General Settle with Grubhub for Deceptive Practices

This week, the Federal Trade Commission (FTC) issued its long-awaited Final Rule on Unfair or Deceptive Fees. When the FTC released the proposed rule over a year ago, the rule covered any business that offered goods or services for sale. The Commission largely narrowed the rule’s application, which now focuses on live-event tickets and short-term lodging (defined as a hotel, motel, inn, short-term rental, vacation rental, or other place of lodging).

The Final Rule also covers third-party travel service providers, including online travel agencies and travel advisors. The FTC did not shed much light on its reasoning, but Republican Commissioner Melissa Holyoak’s concurring statement on the overly broad scope of the earlier version provides some indication of an effort to make the rule more palatable to the incoming Congress, which could repeal the rule through the Congressional Review Act.

Continue Reading FTC Issues Scaled-Back Final Fee Rule Targeting Live-Event Tickets and Short-Term Lodging

Episode 3 of Venable’s Ad Law Tool Kit Show, Season 2, is now available. Listen to “Drip Pricing” here, or search for it in your favorite podcast player.

In 2023, the Federal Trade Commission identified two junk fees-related practices it wanted to regulate—omitting mandatory charges and fees from advertised prices and misrepresenting the nature and purpose of the charges or fees. States have been active as well. “Junk fees” or “drip pricing” would be replaced by the “Total Price,” which businesses would be required to clearly disclose.

Continue Reading Listen to Venable’s Ad Law Tool Kit Show Podcast – “Drip Pricing”

Since July 1, when California’s “Honest Pricing Law” or “Hidden Fees Statute” became effective, the plaintiffs’ bar has filed more than a dozen complaints alleging violations of the statute. These complaints challenge alleged “junk fees” or “drip pricing” structures, including “service fees” charged by merchants through their websites, “processing fees” charged by third-party platforms, and various forms of credit card surcharges and debit card fees.

Background

California’s Honest Pricing Law requires “Total Price” disclosures and prohibits merchants from misrepresenting the nature and purpose of any charges or fees. Under the statute, “Total Price” means that the advertised prices of goods and services must include all mandatory charges and fees other than either government-imposed taxes or fees or postage or carriage charges “reasonably or actually incurred” to ship the physical good to the consumer.

Continue Reading A Variety of Fees and Surcharges Implicated in Early Cases Enforcing California’s Honest Pricing Law

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