Fee/Surcharge Regulations Takes Effect on January 1, 2025
At the end of the 2024 Minnesota Legislative Session, lawmakers passed a new law regulating fees and surcharges. What started as an effort to eliminate or shine light on so-called “junk” fees may have major implications for your small business.
As often happens when lawmakers try to address a specific problem and end up with an economy-wide regulation, the final product can get pretty confusing. In this case, one of the law’s sponsors frequently cited hotel “resort fees” that only appear at the end of an electronic transaction as an example of “junk fees” that need to be eliminated.
The solution was to require anyone advertising a good or service for sale to include most fees and surcharges in the advertised price, rather than separately stated at the end of the transaction. However, rather than focus solely on large hotel brands, the new law applies to nearly everyone.
The final law is sometimes referred to as the Inclusive Pricing Mandate and can be read in its entirety here: Chapter 111 – MN Laws 2024.
Below are the basics of the mandate, which takes effect on January 1, 2025.
- It is a deceptive trade practice when a person or business advertises, displays, or offers a price for goods or services that does not include all mandatory fees or surcharges.
- Mandatory fee means a fee that: “(i) must be paid in order to purchase a good or service being advertised, (ii) is not reasonably avoidable by the consumer, or (iii) a reasonable person would expect to be included in the purchase of the goods or services being advertised.” It’s a very broad definition as the bill sponsor’s intent was to have as little variation between the advertised price and final price as possible.
- A mandatory fee does not include the following:
(a) Taxes imposed by a government entity on the sale, use, purchase, receipt or delivery of the goods or services.
(b) A reasonable postage or shipping fee actually incurred by a consumer who purchased a good that requires shipping.
(c) Fees authorized by law related to the purchase or lease of a motor vehicle when charged by a motor vehicle dealer.
(d) Any fees, surcharges, or other costs associated with settlement services, as defined by in the Real Estate Settlement Procedures Act.
- There are alternate requirements for certain service providers and hospitality establishments that are important for small business owners to know about:
(g) A person offering services where the total cost of a service is determined by consumer selections and preferences, or where the total cost of the service relates to distance or time, is compliant with this subdivision if the person discloses in a clear and conspicuous manner (1) the factors that determine the total price, (2) any mandatory fees associated with the transaction, and (3) that the total cost of the services may vary.
(h) A food or beverage service establishment, including a hotel, is compliant with this subdivision if, in every offer or advertisement for the purchase of a good or service that includes pricing information, the total price of the good or service being offered or advertised includes a clear and conspicuous disclosure of the percentage of any automatic and mandatory gratuities charged.
If you have questions or concerns about the inclusive pricing mandate, please feel free to contact NFIB Minnesota State Director John Reynolds at [email protected] or 651-293-1283.
