Executive Summary
The Massachusetts Attorney General has issued regulations on “junk fees” (940 CMR 38.00) that took effect in February 2024, with enforcement beginning September 2, 2025.
These regulations fundamentally change how Massachusetts businesses must disclose pricing to consumers.
Insurance agents and companies should note the regulation’s prohibitions even though the junk fee regulations may not immediately affect their operations or business practices.
Insurance industry stakeholders successfully advocated for specific accommodations, recognizing the unique nature of insurance underwriting and pricing. This article briefly summarizes the regulations, their application to insurance transactions, and how they interact with existing Division of Insurance (DOI) guidance on producer fees (DOI Bulletin 2013-09).
Understanding the Core Requirements
The Attorney General’s junk fee regulations (940 CMR 38.00) seek to combat any hidden or deceptive fees across Massachusetts businesses. Key provisions include:
- Total Price Disclosure: Businesses must clearly and conspicuously disclose the Total Price of products or services at the time of initial price presentation.
- Fee Transparency: The nature, purpose, and amount of all fees must be clearly disclosed. Optional or waivable fees must be identified as such, with instructions on how consumers can avoid them.
- Disclosure Timing: Total Price disclosure must occur before collecting personal information from consumers (with important exceptions for insurance, discussed below).
- Prominence Requirements: The Total Price must be displayed more prominently than any other pricing information, ensuring consumers aren’t misled by artificially low advertised prices.
- Negative Option Features: Businesses offering trial periods or recurring charges must provide clear terms, simple cancellation mechanisms, and advance notification before recurring charges.
Insurance Industry Accommodations
The insurance industry lobbied for and obtained modifications to the original proposed regulations. The final regulations recognize that accurate underwriting and pricing often require collecting personal information before a final price can be determined:
- Personal Information Collection Exception: Insurers may collect personal information before disclosing the Total Price if the information is specifically necessary for:
- Underwriting
- Determining product availability
- Ensuring the legality of the sale
- Computing pricing aspects previously approved by Commonwealth’s insurance or financial regulatory agencies
- Price Change Provisions: Changes to the Total Price resulting from information used to compute regulatory-approved pricing aspects won’t constitute a violation if:
- The updated Total Price will be provided as soon as feasible
- Consumers are warned about potential changes when the initial Total Price is presented
These accommodations strike a balance between consumer transparency and the practical realities of insurance pricing mechanisms, preventing unnecessary disruption to the industry while maintaining the regulations’ core transparency goals.
Relationship with DOI Bulletin 2013-09 on Producer Fees
The junk fee regulations do not create any exception for existing guidance from the Massachusetts Division of Insurance on producer fees. See Owen Gallagher’s Agency Checklists’ October 8, 2013 article “DOI Bulletin Allows Producers To Charge Fees..”
DOI Bulletin 2013-09 permits insurance producers to charge fees to insurance buyers separate from policy premiums, provided they meet specific disclosure requirements:
- The purpose and amount of the fee must be disclosed in writing to the purchaser before the sale
- The fee must not be included in the policy premium established by the insurer
- The fee must be separately itemized on policy documentation
The differences between the Attorney General regulation and the DOI bulletin appear in the following table:
| Aspect | DOI Bulletin 2013-09 | AG’s Junk Fee Regulations (940 CMR 38.00) |
| Focus | Producer-charged fees separate from premiums | Total price transparency for all mandatory fees |
| Scope | Limited to producer fees | Comprehensive coverage of all fees associated with insurance transactions |
| Timing | Written disclosure before the sale | Clear and conspicuous disclosure at the initial price presentation (with insurance-specific exceptions) |
| Itemization | Required policy documentation | Extends beyond documentation to all pricing communications |
Regulatory Authority Distinction
An important legal distinction exists between the Attorney General’s junk fee regulation and the DOI’s guidelines for producer fees.
The Attorney General’s junk fee regulations (940 CMR 38.00) have the full force of law. These regulations were formally promulgated under the Attorney General’s authority to define unfair and deceptive business practices under Massachusetts General Law Chapter 93A. Violations can result in enforcement actions, including civil penalties, restitution, and injunctive relief.
While providing regulatory guidance on producer fees, DOI Bulletin 2013-09 does not have the force of law. Bulletins represent the Division’s interpretation and guidance on existing statutory provisions but do not create new legally binding requirements. They serve as regulatory statements that inform industry practices and set expectations for compliance. See Owen Gallagher’s Agency Checklists’ August 11, 2011 article “Division of Insurance Bulletins Do Not Have the Force of Law.”
The Attorney General’s Regulation Takes Precedence Over The DOI’s Bulletin
The Attorney General and the insurance commissioner have established standards for charging fees. However, the Attorney General’s regulations establish actionable legal obligations that can have serious consequences for violations. Any insurance business charging fees must comply with the AG’s regulations terms first and the DOI guidance second.
Suppose there is a conflict between the Attorney General’s regulation terms and the DOI’s bulletin’s terms in any insurance fee transaction. In that case, the Attorney General’s regulation’s terms will apply to the transaction to the exclusion of the DOI bulletin’s terms.
