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New 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 ۱ October, promises hefty fines and aggressive enforcement for violators. Companies that do not provide a simple way to cancel could pay $۵۲۵ 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 were announced in a press conference on Friday.
The proposed fee rule could have an especially wide effect, sending ripples through New York’s expensive housing market, where about ۷۰% 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.
The moves are part of an aggressive push by Zohran Mamdani and Levine, a former head of consumer protection in the Federal Trade Commission (FTC), to rein in what they see as predatory corporate malpractice nationwide.
“In the dawn of the [Ronald] Reagan era, the FTC and others in Washington said expressly that … markets could correct themselves, regulate themselves, they were going to stop writing rules,” and allow companies to police their own behavior, Levine said. “What it has gotten us is ۴۰ years of deceptive pricing,” he said.
Bans on junk fees and subscription traps are generally popular with consumers, but have been fought aggressively by industry groups. When the Biden administration introduced a junk fee rule in ۲۰۲۴, the US Chamber of Commerce argued it was “an attempt to micromanage businesses’ pricing structures”, and apartment fees were cut from that federal rule after lobbying by the real-estate industry.
A national click-to-cancel rule introduced by the Biden administration was struck down by a federal judge in ۲۰۲۵, days before it was set to go into effect, over a procedural rule. Donald Trump’s FTC plans to pass a similar rule in coming months.
Companies make billions a year in automatic subscription renewals that consumers do not want or do not know they have. The subscription rule could save New Yorkers alone as much as $۱۶۲.۵m per year, the Roosevelt Institute thinktank estimates.
While the subscription rule would only apply to New York City residents, the proposed junk fee rule affects companies such as hotels and rental car agencies that cater to visitors. If you are staying in a hotel in the city that hits you with undisclosed fees upon check-in, “you should complain to us”, Levine said.
The new rule is the Mamdani administration’s latest attempt to address the affordability crisis after heavily campaigning on making the city cheaper for residents. Members of Mamdani’s democratic socialist group that were endorsed by the mayor won a flurry of primary elections in recent weeks, as some voters embrace leftwing populism that promises to empower working-class Americans, similar to pledges by Trump in the past three presidential elections.
The New York city council has also proposed a rule banning “surveillance pricing”, in which companies charge consumers different prices for the same good or service, based on algorithmic information from their spending and other personal habits.
Maryland banned the practice in April. Colorado’s governor vetoed a ban last month.
The city will take public comments on the junk fee rule and then hold a hearing, Levine said. “I certainly hope that we can get this rule done by the end of the year.”
