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Businesses react to ‘Junk Fees’ ban in Minnesota starting January 1st

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Published  December 24, 2024 7:50am CST
Minnesota
FOX 9

‘Junk fees’ costs addressed in new law

Minnesotans will no longer see hidden "junk fees" when purchasing an item or agreeing to a service after a new law takes effect that requires businesses and providers to show all pricing upfront.

The Brief

    • The "Junk fees" law goes into effect in Minnesota on Jan. 1, 2025.
    • The new law requires prices advertised to include all fees and surcharges.
    • Some in the hospitality industry say the mandate is over simplified and that operating models are too diverse to mandate one sweeping change.

ST. PAUL, Minn. (FOX 9) - Minnesotans will no longer see what some call "Junk Fees" starting at the top of the new year. However, some in the hospitality industry say this mandate is oversimplified.

Minnesota law seeks to provide consumers more streamlined advertised prices

What we know: Rep. Emma Greenman (DFL-Minneapolis) and Sen. Lindsey Port (DFL-Burnsville) sponsored the law.

Governor Tim Walz signed the "Junk Fees" bill into law earlier this year, which requires the ban of any hidden fees for goods and services that were not included in the advertised price up front.

According to the law, for services determined by consumer selection or preference or related to distance or time, those factors must be clearly disclosed.

READ MORE: New laws in Minnesota that go into effect on Jan. 1: List

Provisions impacting industries regulated by the Metropolitan Airports Commission will go into effect on June 1st.

Government-imposed sales taxes are separate from this mandate, and transactions related to cars, utilities, or real estate are exempt.

Hospitality industry voices concern

The other side: Advocates for the hospitality industry like Angie Whitcomb, President and CEO of Hospitality Minnesota, said operating models are too diverse to mandate one sweeping change. Plus, the organization said, now operators are faced with the tough decision of how to be in compliance, while balancing operating costs with competitive market pricing for consumers.

"When you think about the hospitality industry, all of our members have unique business operating models. Private clubs operate differently than catering companies that operate differently than the restaurants," said Whitcomb. "Each of them utilizes these fees in a different manner. One-size-fits-all legislation is like trying to fit a square peg in a round hole."

Critics also question how these fees are viewed.

"The message I want people to understand are service fees are not junk. These fees are dedicated funds that go directly to the employees in the form of wages and or benefits," said Whitcomb. "By disclosing these fees on a menu rather than rolling them up into an inflated item price, we have greater transparency."

Hospitality Minnesota said their advocacy work regarding this law is not over yet.

What we don’t know: How each person and/or business that falls under this mandate will comply starting on January 1st is yet to be seen, which will also affect the impact on the consumer.

Minnesota moves to eliminate junk fees

A legislative conference committee agreed to a bill Wednesday that would eliminate so-called "junk fees", those charges over and above the listed price when you go to restaurants, get delivery, or stay at a hotel.

MinnesotaPoliticsBusiness