Unexpected and “junk” fees have become commonplace across many sectors of the economy and cost American consumers billions a year, according to former President Joe Biden’s council of economic advisors. In an effort to rein in those fees, Colorado Democrats passed House Bill 25-1090 last week.
The bill, titled “Protections Against Deceptive Pricing,” is a reiteration of a bill from the previous legislative session by Democratic Rep. Naquetta Ricks, who is a prime sponsor on the measure this year. Ricks said that she and her co-prime sponsor, Democratic Rep. Emily Sirota, were sponsoring the legislation to put an end to hidden junk fees.
“Our legislation will require companies to disclose the full price of a good, service or property, including mandatory fees, so Colorado consumers can trust that the advertised price is what they can expect to pay,” Ricks said. “Our legislation would make it deceptive trade practice for companies to advertise prices that do not include these mandatory fees or non-discretionary fees, improving price transparency so Coloradans can make decisions that meet their needs and their budget.”
The process from that initial committee hearing on Feb. 19 to the bill’s passage on March 28 was an active one. According to data from the Colorado Secretary of State, more than 450 lobbyists were registered on the bill, and more than 20 amendments were proposed to the measure before its final passage.
Sirota at the bill’s second reading said that the first amendment passed in committee addressed the feedback they had received from numerous stakeholders. The amendment, according to Sirota, included giving some rulemaking power to the attorney general’s office; made changes requested by the restaurant association clarifying the mandatory service charge; made changes for safe harbor for a number of federally regulated entities, largely around financial transactions; and removed the demand letter provision for everything except for landlord/tenant agreements.
She said that both the Colorado Apartment Association and the sponsors agreed that the last change was the best path forward.
The first amendment passed at the bill’s second hearing cleaned up the draft, changed how the shipping charge was defined, made changes to offer retailers more clarity, cleaned up language related to the airline industry and clarified language around the expression of utility cost, according to Sirota.
House Republicans expressed reservations about the bill, including the private right to action in the bill and the potential effect on businesses, particularly small ones, in the state.
Republican Rep. Matt Soper proposed an amendment to remove the bill’s private right to action.
“Many people are trying to do the right thing, they are disclosing, and because there was one thing that they might not have quite done that was in the bill, because the bill has changed quite a bit since it started, that they could find themselves being subject to a lawsuit,” Soper said. “And worse yet, that is quite troubling to me, is you could also have a trial lawyer go out and engage in a class action lawsuit by finding many different individuals who would claim that they did not see certain disclosures.”
Sirota asked her fellow lawmakers for a no vote on the amendment, as she viewed the private right to action as a component of the bill that was important for its enforcement.
While the bill’s sponsor received the votes needed to keep the provision in the bill on the House side, Soper ultimately got his wish when the bill underwent more changes in the Senate.
At the bill’s Senate Committee hearing, Nina DiSalvo, policy director of Towards Justice, said that existing Colorado law already prohibited deceptive pricing practices. “But despite existing law, so-called junk fees continue to proliferate in the modern economy,” DiSalvo said.
She said that the bill was actually a simple one, and that it did four things.
“It would require that businesses that advertise a price, advertise the total price, including all mandatory fees. Second, it would require that businesses not mislead consumers about what they get for that price. Third, to the extent the business sells additional ancillary goods or services that can go along with the advertised product, the bill requires that the business explain what those goods and services are. And finally, the bill provides some additional specificity about how these requirements apply in the residential housing space,” DiSalvo said. “And that’s it.”
Michael Smith, the Colorado state director of the National Federation of Independent Business, said that his organization opposed the bill.
“We recognize there are bad actors out there and do not support deceptive pricing practices by them,” Smith said. “At the same time, a vast majority of small business owners are honest and hard working and carry out their business reflecting those values every day. NFIB opposes this legislation in light of the tremendous burden it will put on small business owners.”
“This legislation creates a process that inserts government into how a business owner sets and displays pricing of products, goods and services. We feel this is a government overreach and that the legislation is not necessary,” Smith added.
Lawmakers required a second hearing on the Senate side to pass the bill after it was laid over on March 12. Three amendments were passed in the follow up meeting on March 19, including an amendment that struck the private right of action from the bill.
“There was a robust discussion about the question of who gets to enforce the law that we’re talking about here that we had in the Judiciary committee. There was an amendment that was pretty challenging, that nonetheless happened, that took out the ability of a private individual to go to court, vindicate their rights under this proposed new statutory section,” Democratic Sen. Mike Weissman said at the bill’s second reading in the Senate.
Weissman said that other two amendments passed in the hearing addressed a safe harbor provision for companies also affected by federal law and delivery network companies.
“We want to acknowledge there’s a lot of federal law in the room,” Weissman said. “Where a federal framework is sufficient to achieve our ends, we’re willing to point to that with specificity and basically provide a safe harbor from the provisions of this bill.”
This amendment specifically addressed the discussions the sponsors had with the cable, satellite and and airline industries in relation to the federal law that governs the sectors and supersedes state law.
The second amendment came after negotiations with delivery network companies. Weissman said the amendment came as part of a balancing act of wanting the bill to have general applicability and acknowledging that certain sectors might operate in unique ways. The amendment clarifies how delivery network companies can remain compliant with the law with their fee structure.
The bill, with its scaled back enforcement mechanism, is now on Gov. Jared Polis’s desk.