All State Laws Aren't Local: Are You Ready For New Massachusetts Junk Fee And Subscription Law?

Highlights

• Massachusetts is now the fourth state – after California, Minnesota and Virginia – to enact laws targeting deceptive pricing practices, commonly referred to as "junk fees."
• New regulations under the Massachusetts Consumer Protection Act require businesses to meet stricter standards for price transparency, subscription disclosures and cancellation procedures.
• Finalized in March 2025 by the attorney general, these rules apply to any seller engaging Massachusetts consumers and outline compliance steps for affected industries.

Massachusetts recently implemented significant regulations targeting "junk fees" that have nationwide implications. Businesses across a broad array of industries now face stricter standards for price transparency, disclosures and cancellation procedures for subscription services and recurring charges. Massachusetts is the fourth state to regulate deceptive pricing practices (also known as junk fees), with California, Minnesota and Virginia enacting similar legislation. In March 2025, the Massachusetts Attorney General (AG) finalized regulations¹ (the Regulations) issued under the Massachusetts Consumer Protection Act (MCPA).² This Holland & Knight alert discusses the scope of the Regulations, their substantive requirements and compliance steps for sellers that are engaging Massachusetts consumers.

Summary of Regulations

Effective Sept. 2, 2025

• Purpose: To protect consumers from junk fees, help them avoid unnecessary charges and facilitate easy cancellation of unwanted costs related to trial and subscription offers. The Regulations modify the definition of what constitutes unfair, deceptive, or abusive acts or practices (UDAAP) under the MCPA to include inadequate price disclosures and the failure to provide specific disclosures and cancellation mechanisms for trial offers and subscriptions.
• Enforcement Authority: MCPA
• Enforcement Body: AG
• Potential Penalties: Civil penalties up to $5,000 per violation in addition to private right of action

Regulations Affect Numerous Industries

As indicated in the following chart, the Regulations apply to a wide variety of sectors:

The Regulations protect consumers (natural persons) seeking to rent, lease or barter "[p]roducts for personal, family or household use ...."³ A "product" is a "good, whether tangible or intangible, or service available for [s]ale or included as part of a [s]ale for personal, family, or household use" and includes memberships, subscriptions and "dwelling units available for rent or lease."⁴ Transactions involving business or commercial products use fall outside the scope of the Regulations.

Under the MCPA, sellers that engage in trade or commerce within Massachusetts are subject to the jurisdiction of the Commonwealth's AG and must comply with the Regulations.⁵ The scope of the Regulations is expansive, applying to "acts or practices performed in connection with any [a]dvertising or marketing, solicitation, or offer of [s]ale that is [t]argeted to or results in a [s]ale in Massachusetts."⁶ "Targeted to" means "[e]mployed to induce consumers in Massachusetts to enter into a [s]ale, regardless of whether a [s]ale is completed."⁷ This broad definition applies to any marketing effort of a product for personal, family or household use that originates from any location, regardless of whether it was intended to specifically engage Massachusetts consumers. In sum, the Regulations apply to nationwide marketing efforts that reach Massachusetts consumers, whether intended or not.

The Regulations' impact on fees and pricing is explored below.

Pricing Disclosure Requirements

Sellers must disclose prices and fees in connection with advertising, marketing and soliciting sales in Massachusetts in a manner compliant with the Regulations or risk a UDAAP violation under the MCPA.

Total Price Disclosure

A seller must clearly and conspicuously⁸ disclose the "total price" of a product or service upon initially presenting⁹ the price to a consumer before taking any consumer information for payment.¹⁰ The "total price" of a product means "[t]he maximum price a consumer must pay for a [p]roduct, inclusive of all fees, charges, or other expenses"¹¹ and includes the maximum price for any ancillary product offered as part of the same transaction. This is referred to as the "Total Price Rule." The Regulations also require that the "total price" of a product be displayed more prominently than any other pricing information. Government charges¹², such as state taxes, and shipping charges are excluded from the "total price" determination and disclosure. This is particularly evident in the food and beverage industry, where the Regulations require restaurants to clearly present the "total price" of food and beverages, including fees, on their menus and bills.¹³ A restaurant must incorporate all fees into the "total price" of a product wherever prices are displayed on menus and bills; mandatory service charges for waitstaff serving large parties are permitted; however, a restaurant must display the amount and conditions of the charge (e.g. 18 percent tip added to parties of six or more) on the menu.¹⁴ Further, food delivery services, who depend on restaurant pricing to calculate delivery fees may advertise the menu price as the "total price;" however, they are required to clearly display the maximum mandatory charges or fees that a consumer must pay to complete a transaction on their user interface at any time any pricing information is displayed.¹⁵ National restaurant and hospitality chains doing business in Massachusetts must be mindful of these requirements.

Fee Transparency

A seller must disclose the nature, purpose and amount of any fee, charge or other expense imposed on the transaction due to the purchase of a product, excluding government and shipping charges. For any fees that are optional to the consumer or waivable by the seller, a seller must disclose the fact that the fee, charge or expense is optional or waivable by the seller and must provide "readily available" instructions on how a consumer may avoid them. It is important to note that the Regulations do not require sellers to individually identify and describe components of the total price or prevent a seller from providing an all-in-one price; however, if a seller chooses to identify part of the total price as a fee, charge or other expense, the seller is required to describe the nature and purpose of that fee, charge or other expense.

Final Transaction Amount

At the final presentation of a product's price, a business must disclose the final transaction amount, which must include the "total price" and any applicable government and shipping charges. Further, the final transaction amount must be the most prominently displayed pricing information.

Trial Offer Disclosure Requirements

The Regulations set forth several disclosure requirements pertaining to trial offers, which are defined as "[a]ny offer to a consumer to participate in, acquire, or use a Product without charge to the consumer, or at a reduced charge, for a rebate, or for only incidental costs such as Shipping Charges, for a limited time."¹⁶ A seller must disclose all of the following information to a consumer, in clear and conspicuous writing, before the consumer accepts the trial offer:

• any and all financial obligations that may be incurred as a result of accepting the trial offer
• the identification of all products that the consumer may incur a financial obligation for as a result of accepting the trial offer
• instructions on how a consumer may reject or cancel the trial offer before the consumer incurs a financial obligation
• the calendar date when the consumer will incur a financial obligation upon failure to reject or cancel the trial offer

Negative Option Feature Disclosure Requirements

The Regulations also set forth written requirements pertaining to "negative option features," which are contracts under which a consumer's failure to affirmatively reject or cancel the agreement is interpreted by the seller as acceptance or continued acceptance of the offer.¹⁷ The Regulations require that the following be provided, in writing, clearly and conspicuously, prior to the purchase of the product with a negative option feature:

• disclosure stating that the consumer will be charged for the product or that charges will increase after any applicable trial period concludes
• disclosure stating that charges will occur on a recurring basis unless the consumer timely prevents or stops the charges, if applicable
• a "simple mechanism" for a consumer to cancel and avoid or immediately stop recurring charges¹⁸
• instructions for the consumer on how to utilize the seller's mechanism that allows the consumer to cancel the negative option feature and avoid charges related to the product
• written notice to consumers, five to 30 days before cancellation, to avoid recurring charges¹⁹

For internet cancellation, the mechanism is required to be available through the same website or application used by the consumer. A mechanism that supports telephone cancellation must be through a telephone number. Calls to the number must "be answered promptly" by a person during normal business hours or provide an "adequate voicemail system" for a customer to provide the required information for cancellation²⁰ and cannot cost more than what the consumer was charged to make the initial call, if applicable. In-person cancellation also requires either an internet or a telephone mechanism and, where practical, an in-person method that is similar to how the consumer initiated the negative option feature.

Application of Regulations to Bank Deposit Accounts

The Regulations' application to bank deposit accounts raise an interesting issue. The Regulations exclude advertisements, sales or renewals of credit products by a creditor that comply with Regulation Z or its Massachusetts equivalent;²¹ however, the advertising of deposit accounts appear to be subject to the Regulations' requirements. The potential application of the Regulations pertaining to advertisements for deposit accounts raise a federal preemption question. The Regulations call for additional disclosures than what Regulation DD (which implements the Truth in Savings Act) requires. The AG has not released guidance that addresses the applicability of the Regulations to that of advertisements for deposit accounts and, to date, there are no federal preemption challenges regarding the Regulations' application to deposit account advertisements.

Compliance Considerations

Sellers that engage in business in Massachusetts should quickly implement measures to ensure that their pricing and disclosure practices are compliant with the Regulations' requirements. If you sell products via website, social media or other internet-based platforms, you are most likely subject to the Regulations, as these media will reach Massachusetts consumers. Accordingly, sellers should adhere to the following key compliance steps:

• Conform consumer-facing pricing information so that it is easily understood.
• Clearly and conspicuously display the total price when a price is first presented, including all mandatory fees.
• Do not request consumer information for payment until after the total price is disclosed.
• Include fees in the total price, even if it's not the core product.
• Disclose if a fee is optional or can be waived.
• Provide what the fee is for and its amount.
• Explain clearly how the consumer can avoid this fee, when applicable.
• Disclose the final transaction amount more prominently than any other pricing information.

Regarding negative option features, sellers should:

• Clearly disclose that charges will occur on a recurring basis.
• Inform consumers on how to cancel the negative option feature to avoid future charges.
• Provide a simple cancellation mechanism that is in the same medium that the consumer initiated the negative option feature so that it is just as easy to access as the method used to sign up for the feature.
• Test user interfaces that facilitate cancellation of recurring charges to ensure they function properly.
• Provide written notices at least five days prior to the renewal of the recurring charge to remind consumers of their right to cancel and avoid future charges.

The Regulations signal enhanced enforcement by state AGs in the course of federal enforcement rollbacks. Sellers should have a compliance system that addresses the requirements of the Regulations. Currently, there is similar legislation introduced in nearly a dozen other states, signaling an enhanced focus on the topic of "junk fees."

Footnotes

1 See 940 CMR 38.00 et seq.

2 See Mass. Gen. L. Ch. 93A et seq.

3 940 CMR 38.01.

4 Id. at 38.03

5 Mass. Gen. L. Ch. 93A § (1)(b); Id. at § (2)(c).

6 940 CMR 38.02.

7 Id. at 38.03.

8 The Regulations go into a lengthy discussion on the meaning of "Clearly and Conspicuously"; however, it generally means "[r]eadily noticeable and readily understandable by ordinary consumers ..." Id. at 38.03.

9 "Initial presentation" is not defined by the Regulations; however, it can be interpreted as referring to the first instance a price is displayed within the product flow.

10 There is an exception to the prohibition of collecting consumer information prior to initial presentation of the "total price" where the consumer information is required for underwriting purposes, for a determination of availability of the product or the legality of the product's sale and to compute an aspect of pricing previously approved by a Commonwealth insurance or financial regulatory agency. Id. at 38.04(4).

11 Id. at 38.03.

12 "Government Charges" mean: All fees or charges imposed on the transaction by a Federal, State, Tribal, or local government agency, unit, or department. Government Charges shall include fees or charges imposed on the transaction by a quasi-governmental entity operating pursuant to state statute. This definition covers only fees or charges imposed by the government or quasi-governmental entity on the transaction and does not encompass fees or charges that the government or quasi-governmental entity imposes on a seller and that the seller chooses (but is not legally required) to pass on to consumers. Id. at 38.03.

13 See Massachusetts Office of the Attorney General, Junk Fees Regulations Tips for Restaurant

14 Id.

15 Id.; see also 940 CMR 38.04.

16 Id.

17 Id.

18 The "simple mechanism" must be "at least as easy to access and use" as the method the consumer used to initiate the negative option feature in the first place and must be in the same medium the consumer initiated the negative option contract, such as by Internet, telephone, mail or in-person. Id. at 38.05(3)(a)-(b).

19 A written notice that discloses clearly and conspicuously the following is required: 1) any financial obligations upon failure to cancel, 2) the products charged for, 3) instructions to cancel, 4) date cancellation is required and 5) date financial obligation occurs upon failure to cancel. Id. at 38.04. If a Negative Option Feature exceeds 31 days, the previously mentioned disclosures are to be provided in either a similar manner it was initiated by or through a "commonly-used medium that is reasonably calculated to be seen and understood by an ordinary consumer" that is "affirmatively chosen by the consumer to be their preferred method of contact." Id. at 38.04(5). If a Negative Option Feature is 31 days or less, the disclosures provided above are required or, in the alternative, a business may provide a clear and conspicuous disclosure, at least as often as the consumer is charged that provides "the amount the consumer has been charged at auto renewal and instructions as to the mechanism by which the consumer may cancel ... and avoid incurring additional charges." Id. at 38.06.

20 A seller of a product will not be in violation of the Regulations if a consumer calls to cancel and there is no one available to take the call, as long as the seller provides for an automated system for a consumer to cancel their subscription or an "adequate voicemail system" that identifies the information a consumer must provide in the voicemail to effectuate cancellation. If a consumer leaves a voicemail that expresses an interest in cancellation but does not provide the information required for cancellation, a seller should return calls in a prompt manner, allowing the consumer to cancel before a recurring charge occurs. Massachusetts' Office of the Attorney General, Guidance with Respect to Unfair and Deceptive Fees (940 CMR 38.00), July 29, 2025, at 7.

21 940 CMR 38.06(4).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.