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

When the COVID-19 pandemic began, and consumers swarmed the stores for disinfectant sprays, masks, and household items, state price-gouging laws grew increasingly relevant as sellers sought to cash in on the heightened demand.

In May 2020, New York Attorney General Letitia James took action against Quality King Distributors, Inc., a wholesaler that, according to James, illegally increased its prices to sell Lysol disinfectant products to neighborhood grocery and discount stores in New York. A New York state court tossed the case a few months later, finding that Quality King did not “uniformly raise their prices on Lysol products to these customers.” This week, a New York appellate court disagreed.Continue Reading The Pandemic May Be Over, but Price-Gouging Laws Live On

In June, New York enacted a ticket transparency law seeking to make sweeping changes to how ticket prices are communicated to consumers and eliminate deceptive ticket pricing practices. The law will go into effect on August 29, 2022, leaving little time for ticket platforms, resellers, and entertainment venues to make necessary changes to their ticket selling practices and checkout flows.

The law requires ticket sellers, resellers, online ticket platforms, and entertainment venues that facilitate the sale of tickets to disclose the total cost of a ticket, including all fees that must be paid to purchase the ticket.

Significantly, this disclosure of the total cost to purchase must be displayed in the ticket listing prior to the ticket being selected for purchase. Disclosure of the total price only in the final steps of the checkout process will not be sufficient under the new law. Ticket sellers must also clearly and conspicuously state how much of the ticket price represents a service charge or other fee.Continue Reading Ticket Platforms, Beware: New York Axes Hidden Fees for Concerts and Entertainment Events

The FTC is off to the races with another proposed rulemaking. On June 23, the FTC, by a 4-1 vote, issued a notice of proposed rulemaking (NPR) to combat what it perceives as “junk fees” and “bait-and-switch advertising tactics” in the auto sales industry. Congress gave the FTC the authority to write rules governing the retail sale of automobiles, using APA rulemaking and not the more cumbersome Magnuson Moss rulemaking that the FTC normally must follow in consumer protection rulemakings. This authority is no small matter, as on June 30, the Supreme Court issued its decision in West Virginia v. EPA, which will make rulemakings by the FTC and other government agencies more challenging.

The FTC’s proposed rule would prohibit certain misrepresentations, require certain disclosures, prohibit certain “add-ons,” and require more thorough recordkeeping. First, among a whole host of potential misrepresentations, the proposed rule includes prohibiting misrepresenting regarding vehicle costs; terms of purchasing, financing, or leasing; and the availability of vehicles at an advertised price.Continue Reading FTC Starts the Engine on Car Sales Fees and Advertising Rulemaking, but Other Rulemaking Faces Major Questions

Last week, New York Attorney General Letitia James announced that online travel agency Fareportal Inc., which operates several travel-related websites and mobile platforms, including CheapOair.com and OneTravel.com, will pay $2.6 million to New York for misleading consumers with deceptive marketing tactics.

“Consumers wanted to land affordable tickets through Fareportal’s platforms, but were met with lies instead,” James said in a statement. “Fareportal used deeply deceptive tactics to trick millions of consumers into booking airline tickets and hotel rooms.”

The investigation into Fareportal revealed that, since at least 2017, the company created false urgency around the availability of airline tickets and hotel rooms to pressure consumers into making purchases on its platforms. The AG challenged these marketing tactics as “dark patterns,” referring to alleged misleading design features and methods used to manipulate consumers into buying goods and services. As we have covered previously, alleged “dark patterns” have become a priority in rulemaking and enforcement.Continue Reading New York Attorney General Secures $2.6 Million from Fareportal for Deceptive Marketing Tactics

A major point-of-sale financing and leasing company and the Federal Trade Commission (FTC) have reached a proposed settlement to resolve an investigation into whether the company’s practices and representations to retail consumers violated the FTC Act. The announcement of the settlement highlights the importance of disclosing all material pricing terms to consumers, including in an e-commerce environment and, for point-of-sale financing companies, reviewing and synchronizing their promotional messages with retail partners. The settlement also revealed disagreements among the Commissioners on issues of individual liability and the proper measure of monetary relief.

The settlement resolves an investigation into Aaron’s, Inc. and its wholly owned subsidiary, Progressive Leasing (Progressive), regarding disclosures related to lease-to-own and other financial products. Under the proposed agreement, which remains subject to the approval of the United States District Court for the Northern District of Georgia, Progressive would make a payment of $175 million to the FTC and enhance certain of its compliance-related activities, including monitoring, disclosures, and reporting.Continue Reading FTC Settlement Underscores Importance of Pricing Disclosures for Lease-to-Own Companies