Understanding Minnesota’s New Junk Fees Law: What You Need to Know
As we approach January 2025, a significant change is coming to Minnesota’s retail landscape. In May 2024, Governor Tim Walz signed a bill eliminating so-called “junk fees” from transactions. This legislation marks a vital step toward greater consumer pricing transparency and has important implications for businesses. Here’s what you need to know.
What Are Junk Fees?
Junk fees are unexpected charges added to the final price of a product or service. Common examples include service fees for online purchases, convenience charges for ticket sales, and surprise surcharges on restaurant bills. These hidden costs can frustrate consumers who feel misled about the actual cost of their purchases.
Details of the New Law
Starting in January 2025, Minnesota businesses will be prohibited from adding hidden fees at the end of transactions. Key provisions of the law include:
- Transparency in Pricing: The advertised price of goods and services must include all mandatory fees and surcharges. This includes both printed pricing and online stores
- Variables in Pricing: When pricing varies based on consumer choices during purchase, businesses comply with the law if they: 1) identify price-determining factors, 2) disclose mandatory fees, and 3) indicate that transaction costs may fluctuate.
Impact on Consumers
This new law promises greater clarity in pricing for consumers. Shoppers will no longer face unexpected charges at checkout, making it easier to compare prices and make informed purchasing decisions. However, it may also require some adjustment as consumers become accustomed to seeing the total cost upfront.
Impact on Businesses
The law will significantly impact various sectors, especially hospitality and retail. For restaurants, the requirement for clear labeling of automatic gratuities aims to reduce confusion around tipping. However, some industry representatives express concern that eliminating certain service fees could affect employee wages and the overall financial balance in their operations.
- Impact on Restaurants: While the law bans surprise service charges, it allows automatic gratuities as long as they are clearly labeled on the bill and directed to restaurant staff.
Federal Context
Minnesota’s push for transparency coincides with federal efforts to regulate similar practices nationwide. As both state and federal guidelines evolve, businesses must stay informed to navigate this changing landscape.
What Businesses Should Do Now
To prepare for the new law, businesses should:
- Review pricing structures to ensure compliance.
- Communicate any mandatory fees in advertising and pricing materials.
- Train staff on the new regulations to ensure clarity at the point of sale.
Conclusion
Minnesota’s new junk fees law represents a significant shift toward greater transparency in pricing. As its implementation in January 2025 approaches, it’s crucial for both consumers and businesses to understand the implications of this change.
Feel free to reach out by using the Contact Us form if you have questions about how this law may impact your business or finances. Copeland Buhl is here to help you navigate these changes and ensure compliance with the new regulations.