Consumer Protection Laws Require Businesses to Disclose Surcharges for Goods and Services in Advance of the Point of Sale
FRANKFORT, Ky. (December 8, 2020) – Attorney General Daniel Cameron today issued guidance to businesses on COVID-19 surcharges. Surcharges are fees added to the base price of a product or service in order to offset additional costs incurred by a business. During the COVID-19 pandemic, many Kentucky businesses have been required to make changes to their business operations. These changes have included updated cleaning procedures, personal protective equipment (PPE) requirements, new staffing procedures, and reduced occupancy limits. Such changes have led to increased expenses, and a business may choose to pass these costs along to consumers in the form of surcharges.
“Kentucky’s businesses are making an incredible effort to protect customers from COVID-19 while also trying to remain open and financially viable during these uncertain times,” said Attorney General Cameron. “If a business elects to charge a COVID-19 related fee, they must properly disclose the fee so that the consumer can make a sound financial decision based on the final costs of a good or service. Our hope is that this guidance will help businesses understand current consumer protection laws and ensure they have the tools they need to navigate this process.”
Some businesses may choose to offset new COVID-19-related expenses by adding surcharges or fees to the final costs of goods or services. However, all surcharges must comply with consumer protection laws. Businesses instituting a COVID-19 surcharge or fee must adhere to the following guidelines:
- Surcharges must be clearly and conspicuously disclosed to a customer prior to the point of sale, including in advertising or marketing materials and during the ordering or purchase authorization process;
- Surcharges must reflect a “reasonable” expense incurred by the business;
- A business may not profit from a surcharge or fee;
- A surcharge must be itemized on a bill or receipt, and it cannot be labeled as “tax.”
Kentucky’s Consumer Protection Act (KRS 367) exists to protect citizens from “unfair, false, misleading, or deceptive acts or practices in trade or commerce.” Any Kentuckian who encounters these practices should report it to the Attorney General’s Office of Consumer Protection by calling the Consumer Protection Hotline at 1-888-432-9257 or by filing a consumer complaint online at ag.ky.gov.