by New Rules on Hidden Fees in Massachusetts
As of September 2nd, new transparency rules regarding additional payments, known as “junk fees,” have come into effect in Massachusetts. These rules apply to various industries, including the hotel business, concert ticket sales, and online shopping. The goal is to require businesses to display the full price of a product, including all mandatory payments, excluding government taxes and delivery. Additionally, companies must clearly label optional fees.
However, automobile dealers are largely exempt from these new requirements due to older state laws regulating advertising in this industry. For decades, dealers have been subject to rules that prohibit advertising prices without including costs such as delivery, handling, preparation, or documentation fees. Thus, many dealers already comply with the new standards.
Limitations for Dealers
Although dealers have certain exemptions, the new rules still prohibit them from falsely representing fees as mandatory if they are not. Requirements for trial offers and automatic payments that activate if a customer does not cancel them have also been introduced. Industry lawyers believe the exemptions for dealers are logical.
Thomas Quinn, a partner at Hudson Cook, noted: “This makes perfect sense,” pointing out that satellite radio subscriptions included in a car sale are the responsibility of the supplier, not the dealer.
Reaction from Dealer Associations
Robert O’Koniewski, executive vice president and general counsel of the Massachusetts State Automobile Dealers Association, expressed satisfaction that the state had listened to dealer lobbying efforts. He called the initial plan “very burdensome” for dealers but now believes the authorities have done a “very good job.”
Buying a car from a dealer remains one of the least favorite retail experiences in America, partly due to additional fees. After pressure from dealer lobbying groups, the state excluded provisions that would have allowed them to continue practicing customary methods. For now, it remains to be seen whether the customer experience in Massachusetts will improve or remain unchanged.
These changes occur against the backdrop of a nationwide discussion on pricing transparency, particularly in the automotive industry, where additional payments are often a source of frustration for consumers. While the new rules may improve the situation in other sectors, their impact on auto dealers will be limited, highlighting the complexity of balancing business interests with buyer protection. The future will tell whether similar initiatives will lead to more significant changes at the state or federal level.
