GoKawiilNew York City has adopted a new rule that bans companies from using deceptive subscriptions to trap customers into paying for gym memberships, streaming services and other recurring charges, the city’s consumer protection office said.
The new rule, which will start on 1 October, promises hefty fines and aggressive enforcement for violators. Companies that do not provide a simple way to cancel could pay $525 per user subscription, back fees and additional fines.
The city is also targeting so-called “junk fees” that raise the final price of everything from apartments to sporting events, with a proposed rule that requires sellers to “advertise the total price for any good or service, including all mandatory additional charges and fees, up front”, according to a release shared with the Guardian.
New York would be the first US city to implement such a ban.
“People shouldn’t have to wait on hold for half an hour or send a certified letter or show up to a store in person in order to cancel” a subscription, said Samuel AA Levine, the city’s commissioner of consumer and worker protection, in an interview.
The new measures are expected to be announced in a press conference on Friday morning.
The proposed fee rule could have an especially wide impact, sending ripples through New York’s expensive housing market, where about 70% of residents rent.
Apartment renters in the US face a rising tide of add-on fees such as “boiler management” and “lifestyle” charges from management companies, which make true rental costs hundreds of dollars higher than the price stated on real-estate company websites.
If the proposed renters rule passes after public comment and hearing, any mandatory fees, including annual ones, would need to be included in the stated monthly rental price, Levine said.
The current situation creates “a scenario where rather than competing on price, companies are competing on their ability to hide the true price. That’s the worst kind of incentive” – and one that deeply distorts the market, Levine said.
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