Under the proposed rule, sellers would be required to clearly and conspicuously disclose the total price of products and services in all offers and advertisements, inclusive of mandatory fees and charges, excluding shipping and government fees.
In a sweeping effort to enhance consumer protection, the Federal Trade Commission (FTC) introduced a proposed rule in October 2023 aimed at eliminating hidden charges and “junk fees” in product and service pricing. This move is part of President Biden’s broader consumer protection platform, targeting unfair pricing practices that have long frustrated consumers.
The proposed rule for advertorials also sets guidelines for nonmandatory fees, demanding greater transparency for fees that are not required but are often added at the checkout stage. This initiative aligns with ongoing efforts by states to crack down on hidden fees and improve price transparency for consumers.
California, for instance, has amended its Consumer Legal Remedies Act (CLRA), which will go into effect on July 1, 2024. The new legislation aims to eradicate hidden fees and ensure that consumers are provided with clear information on pricing upfront. Similarly, Massachusetts Attorney General Andrea Joy Campbell recently proposed new rules prohibiting deceptive pricing tactics, such as advertising a product’s price without fully disclosing the total cost—including mandatory fees—until checkout.
In New York, a law signed in December 2023 goes further by requiring sellers who impose credit card surcharges to display the total price upfront, including those surcharges. Other states, including Arizona, New Jersey, North Carolina, Rhode Island, Texas, and Virginia, have also proposed or enacted legislation targeting junk fees.
As these regulations continue to evolve at both the federal and state levels, brands are under increasing pressure to review and adjust their price disclosures to ensure compliance. The changes will require businesses to be more transparent about all fees associated with their products and services, helping consumers make more informed purchasing decisions.
With new rules on the horizon, companies should closely monitor both state and federal developments and take proactive steps to align their practices with emerging standards for price transparency.
