Minnesota Jumps on the Pricing Transparency Bandwagon

Minnesota is the latest state to join the roster of those that have recently adopted pricing transparency laws.

As background, on February 11, 2024, New York amended General Business Law 518 to provide that consumers could not be charged at the point of sale any amount greater than the highest price previously displayed to them, although the law expressly permits dual pricing for different forms of payment. On July 1, 2024, California passed its sweeping Honest Pricing Law, also known as SB 478, which made it an unfair and deceptive trade practice to fail to disclose the total price a consumer would be required to pay for a good or service, excluding only taxes and shipping costs. These laws are similar to the Federal Trade Commission’s so-called Junk Fee Rule, which was proposed over a year ago, but has not yet been enacted. If it is approved, that rule would likewise require that the total price of a good or service, including all mandatory fees, be clearly and conspicuously displayed to the consumer.

On January 1, 2025, Minnesota’s pricing transparency law will take effect. Approved at the end of Minnesota’s 2024 legislative session, the new law will be codified at Minnesota Statute 325D.44. It is not a carbon copy of any of the existing price transparency laws, but instead puts its own unique spin on the issue.

Like California’s Honest Pricing Law, Minnesota’s new law also makes it a deceptive trade practice to state “a price for goods or services that does not include all mandatory fees or surcharges.” Unlike California’s law, however, Minnesota’s is much more specific about what qualifies as a mandatory fee. Specifically, a “mandatory fee” includes but is not limited to a fee or surcharge that: (1) must be paid in order to purchase the goods or services being advertised; (2) is not reasonably avoidable by the consumer; or (3) a reasonable person would expect to be included in the purchase of the goods or services being advertised.” Notably, taxes are excluded from mandatory fees, and the assessment of actual shipping costs is allowed. The law includes special provisions to address compliance for delivery platforms, auctions, food and beverage establishments, and sellers whose pricing varies based upon consumer selections.

A key question, particularly for companies in the payments space, is whether Minnesota’s law would preclude the assessment of a surcharge for payments made via credit cards, as described in Visa and Mastercard’s payment network rules. The answer is not entirely clear. “Surcharge” itself is not a defined term in the statute. Looking to the definition of a mandatory fee, a credit card surcharge seems to duck the first two prongs of the definition, in that consumers can avoid surcharges by paying via a method other than credit card. The third prong of the definition is stickier, because it broadly requires the display of all elements that “a reasonable person” would expect to be included in the price. Consumer expectations, of course, vary widely. We will likely need to await further guidance from Minnesota regulators, or otherwise, the decision of a court, for a definitive answer to whether credit card surcharging, as described by card network rules, will be permissible after January 1, 2025.