Starting this year, there are a swath of new state and federal consumer protection laws that have already or will soon go into effect, impacting a broad range of businesses across industry types. Whether you are an established multi-million-dollar company or a small mom-and-pop shop, these new laws are far-reaching, and businesses must review their contracts, policies, and practices to ensure compliance.

Minnesota’s New Junk Fee Law

Question: What is Minnesota’s new “Junk Fee” Law?

Answer: Minnesota’s Junk Fee Law makes it a deceptive trade practice to advertise a price for a good or service that does not include all “mandatory fees.” Mandatory fees generally mean any fee that the customer cannot reasonably avoid. The law is far-reaching and affects a variety of industries where these fees are commonplace. Most notably, the law targets the hospitality industry, including hotels, restaurants, and app-based food delivery services, where things like resort fees, service charges, and health and wellness charges were often listed on customer receipts alongside state and local taxes, but were not included in the advertised price for goods or services. These industries have pushed back on the designation of these fees as “junk fees,” arguing that the fees are a direct response to increasing burdens on employers, such as rising costs to provide healthcare for employees. Trade associations for many of these industries have indicated that they will be seeking clarification from lawmakers during the 2025 legislative session. This new language will be incorporated into Minnesota’s existing Deceptive Trade Practices Act, Minnesota Statutes section 325D.44.

Question: When must businesses become compliant with the new Junk Fee Law?

Answer: The law went into effect on January 1, 2025, so most businesses are expected to already be in compliance with the law’s requirements (unless in an industry regulated by the Metropolitan Airports Commission, which becomes effective June 1, 2025).

Question: What about taxes? Does the price advertised for goods and services need to be the post-tax amount?

Answer: No. “Mandatory Fees” does not include any governmental taxes on the sale, use, purchase, receipt, or delivery of such goods and services.

Question: What if the price of a good or service is dependent on the consumer’s selection and preferences?

Answer: In those circumstances, if the business wants to advertise a price, then the business should disclose: (i) the factors that determine the total price, (ii) any mandatory fees associated with the transaction, and (iii) that the total costs of the services may vary.

2. Minnesota’s “Taylor Swift Bill”

Question: What is Minnesota’s so-called “Taylor Swift Bill”?

Answer: As Taylor Swift fans battled for their tickets to the popular Eras Tour in Minneapolis (and around the world), the checkout process sparked an outcry: the online ticket platforms had advertised one price for the tickets, only to surprise fans with upwards of hundreds of dollars of various fees at checkout. This consumer frustration was echoed coast-to-coast, prompting many states, including Minnesota, to introduce prohibitions on advertising ticket prices that were not reflected in the ticket’s total actual cost. Minnesota’s law requires online ticket retailers (including resellers) to disclose “at all times during the ticket listing and purchase process” the total cost of the ticket, including fees and surcharges, and a breakdown of the service charge and any other fees or surcharges. The law also contains several provisions regulating general business practices, such as prohibitions on selling more than one copy of the same ticket, and additional required disclosures for ticket resellers. The legislature delegated the Minnesota Department of Commerce with the authority to administer and enforce the new law.

Question: When must ticket retailers become compliant with the new Law?

Answer: This law went into effect on January 1, 2025, and applies to tickets sold on or after that date.

Bonus Question: Isn’t the Federal Trade Commission (“FTC”) proposing a similar rule?

Answer: Yes. On December 17, 2024, the FTC finalized its own Rule on Unfair or Deceptive Fees, which targets the live-event ticketing and short-term lodging industries. The rule serves a dual purpose of: (i) preventing bait-and-switch pricing that hides the total price of live-event tickets and short-term lodging by omitting mandatory fees and charges from advertised prices, including through drip pricing, and (ii) prohibiting the misrepresentation of the nature, purpose, amount, and refundability of fees or charges. This law goes into effect 120 days after publication in the Federal Register. However, as with many FTC rules, it would not be a surprise to see legal challenges attempting to delay or halt its implementation.

3. The Federal Negative Option Rule

Question: What is the Federal Negative Option Rule?

Answer: In response to the widespread surge of businesses moving to subscription-based auto-renewal contracts (e.g., Netflix, Spotify, etc.), whereby the businesses treat a consumer’s silence or failure to take affirmative action as an acceptance of an offer to purchase (or continue to purchase) goods or services (defined as a “Negative Option Feature”), the FTC enacted the Negative Option Rule. At a high level, the Negative Option Rule: (i) prohibits any material misrepresentations of material facts in connection with the offering of contract with a Negative Option Feature, (ii) requires certain disclosures to be made in connection with the offering of a contract with a Negative Option Feature, (iii) requires businesses to obtain the customer’s unambiguously informed consent to the Negative Option Feature, and (iv) requires there to be a simple mechanism for the customer to cancel the Negative Option Feature and stop incurring any associated, recurring fees.

Question: When must businesses become compliant with the new Federal Negative Option Rule?

Answer: The prohibition against material misrepresentation of material facts in connection with the offering of a contract with a Negative Option Feature became effective January 14, 2025, while the remaining requirements of the Negative Option Rule become effective on May 14, 2025.

Question: What are the disclosure requirements of the Negative Option Rule?

Answer: Prior to obtaining the billing information of a customer, all material terms relating to the sale of the good or service must be disclosed. Any misrepresentation (whether expressly or by implication) of the material terms is prohibited. At a minimum, businesses must disclose: (i) that consumers will be charged for the good or service, or that the fees will increase after a trial period ends, and if applicable, that the fees will be charged on a recurring basis, unless the consumer takes timely steps to prevent or stop such charges, (2) each deadline by which the consumer must act to prevent or stop the fees, (3) the amount the consumer will be charged, and, if applicable, the frequency of the fees the consumer will incur unless timely steps are taken, and (4) the information necessary for the consumer to easily cancel the feature.

Question: What are the informed consent requirements of the Negative Option Rule?

Answer: Before charging a customer in connection with a contract that has a Negative Option Feature, businesses must obtain the customer’s unambiguous affirmative consent to the feature separately from any other portion of the transaction, and businesses generally must keep a record of such consent for a period of three years (unless able to show that processes used ensure no customer can technologically compete the transaction without giving such consent).

Question: What are the simple cancellation requirements of the Negative Option Rule?

Answer: At a high level, businesses must provide a simple mechanism for a consumer to: (1) cancel the Negative Option Feature, (2) avoid being charged (or being charged a higher amount), and (3) immediately stop any recurring fees. Such mechanism must be at least as easy as the mechanism the consumer used to consent to the Negative Option Feature (e.g., simple check box, signature).

This Q & A answers what is anticipated to be the most common questions involving these new laws. This Q & A is not meant to be exhaustive or complete, but a starting point intended to give an introduction on the applicability and requirements of these laws. If you have specific questions about these new laws or their potential impact on your business, please feel free to reach out to the attorneys listed below.

January 28, 2025