Key facts
- New York City is proposing a ban on deceptive subscription practices, requiring simple cancellation methods.
- A separate proposed rule mandates that sellers advertise the total price of goods and services upfront, including all mandatory fees.
- Companies failing to offer easy cancellation could face fines of $525 per user subscription, plus back fees and additional penalties.
- The proposed rules aim to combat predatory corporate practices and address affordability issues.
- The city expects to finalize the junk fee rule by the end of the year after public comment and hearings.
New York City is moving to implement new regulations aimed at curbing deceptive business practices, including a ban on misleading subscription services and a requirement for upfront pricing of all fees. The proposed rules, spearheaded by city officials Samuel AA Levine and Zohran Mamdani, seek to protect consumers from being trapped into unwanted recurring charges and hidden costs.
The new measures would penalize companies that do not provide straightforward cancellation processes for subscriptions, with potential fines of $525 per user, alongside back fees and other penalties. This initiative targets services like gym memberships and streaming platforms, aiming to simplify the often arduous process of canceling.
Additionally, the city is proposing a rule to combat "junk fees" by requiring sellers to advertise the total price of any good or service upfront. This could significantly impact sectors like the housing market, where renters face numerous add-on charges not initially disclosed. Commissioner Levine stated that current practices incentivize companies to hide true prices rather than compete on value.
These efforts are framed as a response to decades of deregulation, with Levine referencing a shift away from government oversight that began in the Reagan era. While consumer protection measures like these are generally popular, they often face strong opposition from industry groups. For instance, a federal junk fee rule was weakened after lobbying, and a national "click-to-cancel" rule was recently struck down by a judge.
The subscription rule alone is estimated to save New Yorkers as much as $162.5 million annually. The proposed junk fee rule would also affect businesses catering to tourists, such as hotels and rental car agencies. The city is also exploring a ban on "surveillance pricing," where prices vary based on consumer data. Public comment and hearings are scheduled for the junk fee rule, with a goal for implementation by year-end.