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On September 2, 2025, Massachusetts ushered in one of the nation's most comprehensive consumer protection regulations. The regulation, Title 940 CMR 38.00 (the "Regulation"), is industry-agnostic and seeks to protect Massachusetts consumers from deceptive and unfair practices generally. The Regulation prohibits "junk fees" and also mandates seller transparency on product costs, hidden costs and subscription cancellation processes, while also dictating fee disclosures for product marketing, solicitation, and sales. The Regulation also governs automatic renewal features and surcharge disclosures, touching nearly every aspect of the consumer relationship, including in the food and beverage sector.
What Does The Regulation Cover?
The Regulation seeks to curtail, if not altogether obviate, unfair and deceptive product pricing. The Regulation requires businesses to disclose all fees, charges, and expenses upfront to ensure the product's total price is prominently displayed. In fact, the Regulation goes so far as to require businesses to disclose a product's total price before soliciting any personal information from the consumer, including billing information.
To further promote pricing visibility, the Regulation mandates businesses explain the nature, purpose, and amount of products' associated fees. And when fees are optional or waivable, businesses must clearly instruct consumers how to avoid them. The Regulation also prohibits companies from falsely representing fees are legally mandated.
Building on these pricing requirements, Massachusetts also regulates recurring fees, trial offers, and automatic renewals. More specifically, before a consumer accepts a trial offer, sellers must: (i) outline any financial obligation connected to the trial; (ii) specify the products affected and (iii) provide clear cancellations instructions, including deadlines to avoid charges. For products with a negative-option feature, such as auto-renewing subscriptions, the Regulation requires businesses include a written disclosure advising consumers: (i) a charge will apply after the trial's conclusion; (ii) charges may recur unless the customer cancels and (iii) step-by-step cancellation instructions. Businesses must allow consumers to easily cancel trial offers and immediately stop recurring charges upon cancellation. For contracts longer than 31 days, sellers must notify customers before new obligations commence and clearly delineate all products, amounts, cancellation methods, and relevant dates. For contracts with shorter renewal cycles, businesses must provide disclosures as often as charges recur.
Rentals, Delivery Services, Restaurants, and Insurance Providers Also Must Comply.
The Regulation's broad application also reaches all sales, marketing, advertising, and solicitation targeting Massachusetts consumers. All companies promoting products and services via websites, apps, text messages, radio or television – even those outside of Massachusetts – must comply with the Regulation's mandates. Businesses' failure to meet these requirements, especially in online transactions, exposes them to potential legal action, including class action lawsuits.
The Regulation similarly extends to restaurants and food delivery businesses. Delivery platforms and restaurants must display all mandatory fees clearly and with menu pricing. Restaurants also must include surcharges upfront and clearly and conspicuously disclose any service charges based on party size whenever pricing information is provided, and may be displayed as a percentage. The Regulation also mandates restaurants and delivery services remit the charge exclusively to wait staff employees, service employees, or service bartenders. Accordingly, food businesses must update their marketing materials and operational systems to meet these heightened standards.
Nor are rentals and leases outside the Regulation's purview. Landlords must include all fees in advertised pricing and disclose the full term covered by a periodic rental. Owners who charge tenants for measured utilities (such as water) also must comply with the Regulation. Auto-renewing lease agreements are subject to the aforementioned negative option rules, requiring full disclosure of charges, dates and cancellation instructions.
Insurance providers, too, must adhere to these requirements when insureds' contracts renew automatically or assess recurring charges due to consumer inaction. In such circumstances, insurers must disclose all obligations, timing, and cancellation procedures, even when premiums are earned over the contract term.
Review Advertising and Contracts to Avoid Legal Risks.
If businesses comply with other existing regulations related to credit advertisements, sales, or renewals, such as G.L. c. 140D, 209 CMR 32.00, 15 U.S.C. § 1601 et seq., and 12 CFR 1026 by any Creditor, as defined by 12 CFR 1026.2(a)(17), that shall also constitute compliance with the Regulation. However, and notably, the Regulation does not cover debt collectors, air carriers, or securities sales through licensed professionals and related automatic investment agreements.
The Regulation's comprehensive and onerous consumer protections impact a wide range of industries and sales channels. Companies should promptly update their advertising, business practices and contract management to align with these new rules. Noncompliance carries significant risks, including double or triple damages and class action liability. Shepard Mullin attorneys can help navigate this evolving regulatory landscape to ensure businesses understand the Regulation (and its many nuances) and comply accordingly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
