While the federal government’s campaign against hidden “junk” fees intensifies, state attorneys general (AGs) have long been contesting concealed costs as unfair or deceptive — especially in the absence of sufficient disclosures. Energized by a surge in enforcement activity targeting junk fees, Massachusetts AG Andrea Campbell proposed new regulations aimed at prohibiting “junk fees” in Massachusetts. The term “junk fees” generally refers to additional charges imposed on consumers that are often unrelated to the actual cost of goods or services such as processing fees, convenience charges, or mandatory resort fees. Sometimes “junk fees” can also refer to a practice called “drip pricing” where a company advertises an initial low price to attract consumers but gradually reveals additional mandatory fees during the booking or purchasing process, providing the consumer with a false impression of the true cost.
During the 2023 State of the Union Address, President Joe Biden urged regulators to address “junk” and “hidden” fees. In response, the federal government has taken steps to strengthen regulations and enforcement efforts. By way of example, the Federal Trade Commission (FTC) proposed a new rule on junk and hidden fees in November 2023. Likewise, the Federal Communications Commission (FCC) proposed a rule in June 2023 that would require cable and satellite TV providers to give consumers the “all-in” price up front.
Following suit, Massachusetts’ proposed regulations mandate that businesses disclose the “all-in” or total price of a product in a clear, conspicuous, and prominent manner at the time of communicating the price to consumers. This “all-in” price includes all associated costs, including but not limited to fees, interest, convenience charges, or any other required expenses. Moreover, sellers must clearly articulate the nature and purpose of any fees and distinguish between mandatory and optional charges. Notably, the proposed rules prohibit businesses from requesting personal data, such as billing and credit card details, before revealing the price of a product.
Massachusetts’ initiative comes on the heels of California’s amendment to the California Consumer Legal Remedies Act (CLRA) in October 2023 (effective July 1, 2024), which prohibits companies from excluding certain expenses from the advertised or disclosed price. The CLRA makes any “advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges” unlawful, subject to certain exceptions.
The enforcement activity of state AGs in this domain is also noteworthy. State AGs regularly target deceptive trade practices across various industries, including hospitality, food delivery, event ticketing, car rental, cable television, and internet. For example, the Texas AG sued Hyatt Hotels in May 2023 for deceptive trade practices related to Hyatt’s advertised price of hotel rooms. In his complaint, the Texas AG alleged that Hyatt charged consumers mandatory and unavoidable fees — such as resort fees, destination fees, or amenity fees — in addition to daily room rates that were not disclosed at the point of sale. Additionally, Colorado, Oregon, and Pennsylvania AGs reached a settlement under similar allegations with Choice Hotels in September 2023.
Why It Matters
These recent actions emphasize the significant amount of regulatory attention into perceived hidden or “junk” fees. Regulators are attempting to promote transparency, foster consumer trust, and protect consumers from what they perceive as misleading pricing tactics. As these actions gain attention at both the federal and state levels, they begin to develop momentum to spread nationwide. Companies should evaluate their pricing practices, and specifically whether consumers are charged mandatory fees, which do not appear in marketing/advertising materials or at the point of sale, to mitigate the risk of regulatory scrutiny.
Troutman Pepper State Attorneys General Team
|Ashley Taylor – Co-leader and Firm Vice Chair
Ashley is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. He focuses primarily on federal and state government regulatory and enforcement matters involving state attorneys general, the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC). Drawing upon his experience as a deputy attorney general, Ashley has developed an extensive consumer practice with regard to the consumer financial services industry.
|Clay Friedman – Co-leader
Clay is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. Informed by nearly a decade in a state attorneys general office, and more than 25 years in private practice, Clay spends much of his time representing clients in singular or multistate regulatory actions. Clay has repeatedly led teams before all 50 state attorneys general and also handles matters with the Federal Trade Commission, the Consumer Financial Protection Bureau, and other local, state and federal agencies.
Judy is a partner in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based in the Richmond office. She brings experience serving as chair and commissioner of the Virginia State Corporate Commission (VSCC) from 2006 through 2022, which includes regulating the utilities, insurance, banking, and securities industries. She also served as Virginia’s attorney general from 2005-2006.
Stephen represents clients interacting with, and being investigated by, state attorneys general and other enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, particularly in heavily regulated industries.
A former deputy attorney general of New York, Avi applies his experience in bet-the-company matters, representing clients in criminal and civil investigations and enforcement actions before state and federal regulators, prosecutors and enforcement agencies.
Michael handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
|Samuel E. “Gene” Fishel
Gene is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) practice, based in the Richmond office. He brings extensive regulatory experience, having most recently served as senior assistant attorney general and chief of the Computer Crime Section in the Office of the Attorney General of Virginia, and as special assistant U.S. attorney in the Eastern District of Virginia for 20 years.
Tim is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, with a primary focus on financial services litigation.
Chris represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general.
Natalia is an associate in the firm’s business litigation practice. She recently received her J.D from the University of California, Davis School of Law.
Namrata is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. Her work includes advising clients in regulatory investigations and compliance matters, in addition to representing clients in civil litigation matters.
Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes. Susan also represents banks, fintechs, and financial services companies in connection with regulatory examinations and investigations brought by the CFPB, state attorneys general, and the California Department of Financial Protection and Innovation.
John represents clients in a wide variety of general and complex litigation matters, shareholder disputes, products liability, and privacy claims.
Whitney is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation.
Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement practice. His experience includes serving as a summer associate at the firm in 2021.
An experienced litigator, Daniel advises and represents regional, national and international companies, financial institutions and insurers in all facets of business, complex commercial and insurance coverage litigation. He is committed to working with his clients to find creative solutions to meet their needs.
Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.