As a law firm specializing in e-commerce law and marketing law, we recognize that pricing strategy plays a crucial role in a business’s success. At the same time, federal and state laws are being formed to regulate online pricing, subscription billing, automatic renewals, and junk fees. There are also class actions and other private actions suing companies for alleged non-compliant subscriptions or other pricing non-compliance, such as those brought by the FTC and the Illinois Attorney General against Grubhub. There are also consumer advocacy organizations that “police” the space, such as Truth in Advertising (TINA), as can be illustrated by their complaint against HelloFresh.
Understanding Key Regulations
- Federal Trade Commission’s (FTC) Final Negative Option Rule: The FTC’s updated rule, effective October 16, 2024, expands its scope to cover all negative option marketing across various media. It requires clear disclosure of material terms, obtaining express informed consent, and providing simple cancellation mechanisms.
- California’s Automatic Renewal Law (ARL): California’s ARL mandates clear disclosure of automatic renewal terms, obtaining affirmative consent, and providing an easy-to-use cancellation process. It also requires renewal reminders for longer-term subscriptions.
- New York’s Subscription Laws: Similar to California, New York requires clear disclosure of subscription terms, explicit consumer consent, and clear cancellation instructions.
- New York’s Algorithmic Pricing Disclosure Law: New York has enacted a sweeping new law requiring businesses to inform consumers when prices have been set algorithmically using their personal data. Effective July 8, 2025, the New York Algorithmic Pricing Disclosure Act mandates that any business using an algorithm to customize prices for New York consumers based on their personal information must display the prominent disclosure: “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.”
- Colorado’s Subscription Laws: Colorado’s auto-renewal law, which took effect on January 1, 2022, imposes unique requirements on subscription billing practices. The law requires businesses to send renewal notices to Colorado customers 25-40 days before any renewal that extends a contract beyond a 12-month interval, even for monthly subscriptions. This applies to the 12th, 24th, and 36th-month renewals, and so on. Additionally, the law requires businesses to provide a “simple, cost-effective, timely, easy-to-use, and readily accessible” cancellation mechanism for Colorado customers. These provisions make Colorado’s law one of the strictest in the nation regarding subscription renewals and cancellations.
- The Restore Online Shoppers’ Confidence Act (ROSCA): ROSCA is a federal law designed to protect consumers from deceptive online billing practices, particularly those involving negative option marketing. Under ROSCA, businesses must disclose all material terms of a transaction before obtaining billing information, secure express informed consent from consumers before charging them, and provide a straightforward mechanism for canceling recurring charges. The FTC enforces this law, aiming to prevent unauthorized billing and ensure transparency in subscription-based services, and reached a $2.5 billion settlement with Amazon over alleged violations of ROSCA.
- Junk Fee Prevention Act: This federal bill aims to establish requirements for fees charged by covered businesses, including those providing short-term lodging, ticketing services, and telecommunications. It prohibits excessive or deceptive mandatory fees and requires upfront disclosure of total prices.
- FTC’s Rule on Unfair and Deceptive Fees: The FTC’s rule prohibits businesses from charging hidden or bogus fees in certain sectors, including hotels and other lodging, and event tickets, ensuring that consumers know the exact price they will pay. It requires including all mandatory fees in advertised prices and prohibits misrepresenting the nature of fees.
- California Senate Bill 478: Effective July 1, 2024, this law prohibits advertising or displaying prices that do not include all required fees or charges, with limited exceptions for taxes and shipping costs.
- Dark Patterns: The FTC and other regulators have intensified their enforcement against the use of dark patterns in subscription services, with a particular focus on practices that make it difficult for consumers to cancel their subscriptions. The FTC’s “Click-to-Cancel” rule requires businesses to provide a cancellation process that is as straightforward and accessible as the sign-up process, addressing concerns over manipulative design practices that trap consumers in unwanted subscriptions. It sued Amazon in this regard for their Amazon Prime subscription cancellation flow, and an action against Adobe.
Strike-Through and Comparison Pricing: Legal Developments and Compliance Risks
Strike-through pricing, which displays a higher “original” or “regular” price crossed out next to a lower sale price, remains a popular retail marketing strategy; however, it is attracting increasing regulatory action and class action litigation. Both the Federal Trade Commission (FTC) and state regulators, particularly in California, are focused on whether advertised reference prices are truthful and meaningful in the marketplace.
Key Compliance Requirements
In California, strict laws regulate how retailers display comparison prices. California Business & Professions Code § 17501 requires that a reference price such as “regular,” “original,” or “former” genuinely reflect the prevailing market price within the past 90 days. If the price was last offered before that window, businesses must clearly disclose the date when the product was sold at that reference price. Using inflated or fictional regular prices to create the illusion of discounts can trigger state enforcement or private lawsuits.
The FTC also mandates that struck-through reference prices represent bona fide, substantial previous offerings to the public. Reference prices that are not honestly reflective of real, recent sales may be deemed deceptive advertising.
Litigation and Enforcement Trends
Strike-through pricing lawsuits have proliferated, particularly in California. Class action complaints typically allege that the crossed-out prices were never actually charged or not charged recently, leading to purportedly illusory discounts. A 2025 class action against DevaCurl, for example, alleged that consumers were misled with inflated reference prices and false markdowns.
Companies facing such claims must often defend the advertised discount and produce records showing when and how long an item was sold at the referenced price.
Best Practices for Compliance
- Maintain accurate and detailed records of all historical and current sale prices of advertised products.
- Only use comparison prices that reflect genuine, recent sales within the past 90 days, unless you clearly disclose when the reference price was last offered.
- Avoid using hypothetical, inflated, or never-offered prices to create a discount.
- Ensure all price advertising complies with both California’s and the FTC’s disclosure requirements.
- Audit advertising practices regularly, and seek legal advice for multi-state or nationwide campaigns.
Algorithmic and Surveillance Pricing: New Legal Frontiers
As pricing technologies evolve, businesses are increasingly using algorithms and consumer data to set individualized prices online. The FTC has launched a significant inquiry into “surveillance pricing”—the practice of using personal data to target prices for individual consumers, which raises important concerns regarding privacy, transparency, and competition. Businesses should be aware that using algorithmic pricing tools, especially those shared among competitors, can create antitrust risks and may be considered unlawful price-fixing, even in the absence of explicit agreements.
Additionally, recent investigations reveal that some airlines and online platforms charge higher prices to solo travelers compared to groups or families booking together. While this can be a form of bulk discounting, it may also constitute unfair price discrimination if not transparently disclosed. Businesses should ensure that all factors affecting price, including booking context and group size, are clearly communicated to consumers to maintain transparency. For examples of these practices, see Delta’s solo vs. group airfare pricing.
Our Online Pricing Compliance Services
- Regulatory Assessment: We review your current pricing models and fee structures to identify potential compliance gaps.
- Policy Development: We assist in drafting compliant terms of service, pricing policies, and consent forms.
- Training and Support: We provide training on compliance best practices and regulatory updates.
- Ongoing Monitoring: We ensure your business remains compliant with evolving legal standards.
- Proactive Approach: We help you stay ahead of regulatory changes to mitigate compliance risks.
Ensuring compliance with these critical regulations is crucial for maintaining consumer trust and avoiding legal pitfalls.
Learn how we can assist you in achieving compliance with these complex and evolving pricing laws.
Online Pricing Legal News
- New York AG Probes Instacart Over Algorithmic Price Testing: New York Attorney General Letitia James has demanded that Instacart disclose detailed information regarding its use of algorithmic pricing experiments following a report that found shoppers were charged significantly different prices for the same items. The inquiry focuses on whether the delivery giant violated the state’s new Algorithmic Pricing Disclosure Act, which requires businesses to clearly notify consumers when personal data is used to individualize prices. Although Instacart claims it has ended “item price tests” and denies using personal data for pricing, the state is seeking transparency into the company’s automated tools and retail agreements to ensure New Yorkers are not being subjected to deceptive “surveillance pricing” tactics. Read More →
- Instacart Scraps AI Pricing Tests After Backlash: Instacart has ended its controversial AI-driven pricing experiments following an investigation that revealed the practice caused some customers to pay up to 23% more for identical grocery items. The company announced it would no longer allow retailers to use its “Eversight” technology for randomized price testing after the report sparked consumer outrage and a Federal Trade Commission probe into the opaque pricing differences, which researchers estimated could cost families over $1,200 annually. Read More →
- N.Y. Law Targets ‘Personalized Surveillance’ Pricing: New York has enacted the first state law requiring businesses that use AI and personal data to individualize online prices to disclose this practice with a stark notice: “This price was set by an algorithm using your personal data.” The law aims to curb opaque algorithmic price discrimination—such as charging more to users with histories of high-end purchases—by forcing transparency, and it recently survived a First Amendment challenge from retail groups, positioning algorithmic pricing as a key new front in U.S. AI regulation. Read More →
- Staying Ahead of Enforcement: Practical Compliance with Automatic Renewal Laws: Regulators and plaintiffs’ lawyers are increasingly zeroing in on subscription and auto-renewal programs, turning them into a frequent source of investigations and class actions. The article explains that companies offering recurring services need to clearly spell out renewal terms, secure explicit agreement, follow up with a written confirmation, and make cancellation straightforward and available through the same channels used to enroll. It also urges businesses to periodically review and update their subscription journeys against changing state requirements, including those in California, New York, and Colorado, to catch and fix issues before they draw legal scrutiny. Read More →
- Algorithmic Accountability: Navigating California’s New Antitrust Frontier
California has expanded its Cartwright Act with AB 325 and SB 763, targeting the use of common pricing algorithms by multiple entities to coordinate prices or commercial terms, effective January 1, 2026. AB 325 prohibits sharing or coercing adoption of pricing algorithms that use competitor data to stabilize or influence prices, and lowers the pleading standard for antitrust claims to a “plausibility” threshold, increasing litigation risk. SB 763 raises criminal fines substantially and adds civil penalties for violations. Companies using third-party pricing tools or algorithmic pricing should review compliance closely and consult antitrust counsel as California intensifies oversight of algorithm-driven price coordination.
Read More → - Amazon Reaches Settlement with FTC Over Privacy Concerns:
Amazon has agreed to a settlement with the Federal Trade Commission addressing allegations of deceptive data privacy practices related to its smart devices and services. The FTC accused Amazon of misleading consumers about how it collects, uses, and shares personal information, including voice recordings and smart home data. As part of the agreement, Amazon will implement enhanced privacy protections, improve transparency about data practices, and allow customers greater control over their information. The settlement highlights growing regulatory scrutiny of tech giants’ data handling and underscores the importance of consumer trust in smart technology adoption.
Read More → - Ticketmaster and Live Nation Face FTC Lawsuit Over Ticket Practices:
The Federal Trade Commission (FTC) filed a lawsuit against Ticketmaster and its parent company, Live Nation, alleging unfair and deceptive practices that harm concertgoers. The complaint alleges that the companies conceal fees, employ bots to purchase tickets, and fail to adequately regulate resale markets, leading to inflated prices and restricted consumer access to tickets. The FTC seeks to require Ticketmaster and Live Nation to provide transparent pricing, better oversight of resale platforms, and to cease practices that mislead or disadvantage consumers. This legal challenge underscores growing regulatory scrutiny of dominant players in the live events ticketing industry.
Read More → - Chegg Pays $75 Million to Settle FTC Claims Its Services Were Hard to Cancel:
Chegg has agreed to pay $75 million to resolve FTC allegations that it made it unnecessarily difficult for consumers to cancel subscriptions to its educational services. The FTC accused Chegg of employing “dark patterns” by obscuring cancellation options and steering customers into prolonged subscriptions, violating consumer protection laws. In addition to the monetary settlement, Chegg must implement clear and straightforward cancellation processes, enhance transparency, and regularly report compliance to the FTC. This action underscores regulators’ focus on rooting out practices that hinder consumer choice and sets a precedent for subscription-based businesses nationwide.
Read More → - Match Group Settles with FTC for $14 Million Over Deceptive Marketing and Subscription Practices:
Match Group, owner of Match.com, OkCupid, PlentyOfFish, and The League, agreed to pay $14 million to settle FTC allegations that it engaged in deceptive advertising, unfair billing practices, and made it difficult for consumers to cancel subscriptions. The FTC complaint from 2019 cited misleading “six-month guarantee” ads with hidden conditions, suspending accounts of customers who disputed charges without providing paid services, and complex cancellation procedures. The settlement mandates clear disclosures of guarantees, bans retaliation against billing dispute filers, and requires easy cancellation mechanisms. While Match denies wrongdoing, the agreement sends a strong message against “dark patterns” in subscription services and protects roughly 1.6 million affected consumers. Read More → - New York Algorithmic Pricing Disclosure Law Goes Into Effect; Litigation Pending: On May 9, 2025, New York Governor Kathy Hochul signed Assembly Bill S3008C, the New York Algorithmic Pricing Disclosure Act, into law. This wide-ranging legislation includes new consumer transparency requirements for personalized algorithmic pricing. Read More
- AG Campbell Releases “Junk Fee” Regulations To Help Consumers Avoid Unnecessary Costs: During National Consumer Protection Week, Attorney General Andrea Joy Campbell has announced the adoption of nation-leading consumer protection regulations to prohibit “junk fees” and help consumers understand the total cost of a product or service upfront, avoid unnecessary charges, and easily cancel unwanted costs related to trial and subscription offers. Read More
- Do You Know Who You’re Paying? FTC Lawsuit Against an Online Bill Pay Platform to Proceed: A federal judge denied Doxo Inc.’s motion to dismiss an FTC complaint alleging deceptive advertising practices. The FTC claims Doxo misled consumers about its relationship with billers and failed to disclose fees and subscription terms. The case will proceed, with Doxo maintaining its business practices are legal. Read More
- F.T.C. Sues Uber Over Billing for Its Premium Subscription Service: The Federal Trade Commission sued Uber on Monday, claiming it used “deceptive billing and cancellation practices” to support Uber One, its premium subscription service. The lawsuit is the first filed by the commission against a major tech company since President Trump returned to office. Read More
- Auto-Renewal Laws: 2025 Round Up: Businesses offering subscriptions or other ongoing services continue to face a growing, and increasingly complex, patchwork of state auto-renewal laws (ARLs). 2025 brings a fresh wave of developments across the states. Read More
- Handle Autorenewal Programs with Care: Federal Trade Commission Targets Care.com for Alleged Dark Patterns and Earnings Claims
- Federal Trade Commission Announces Bipartisan Rule Banning Junk Ticket and Hotel Fees
- FTC Issues Orders to Eight Companies Seeking Information on Surveillance Pricing