New York City is preparing to crack down on what officials call the hidden cost economy. Starting October 1, companies will face stiff penalties if they fail to make it easy for customers to cancel subscriptions or if they bury mandatory fees in fine print.
The move targets gyms, streaming services, apartment rentals, hotels and other businesses that have made billions by trapping customers in recurring charges or inflating final prices with undisclosed add-ons. Violators could face fines of $525 per user subscription, back fees, and additional penalties.
Samuel AA Levine, New York's commissioner of consumer and worker protection, called the current system broken. "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," Levine said. The new subscription rule requires companies to offer simple, straightforward cancellation methods.
The city is also targeting what it calls junk fees, proposing that any mandatory charges, including annual ones, be included upfront in advertised prices. The rule would apply to everything from apartment rentals to concert tickets to rental cars, affecting both residents and visitors.
New York would be the first U.S. city to implement such a ban on hidden subscription practices and mandatory junk fees. The move comes as the Roosevelt Institute estimates that New Yorkers alone could save $162.5 million per year through the subscription rule.
The housing market could see the biggest impact. About 70% of New Yorkers rent, and landlords routinely charge add-ons labeled as "boiler management" or "lifestyle" fees that can run hundreds of dollars higher than advertised rents. Under the new rule, those fees would have to appear in the stated monthly price.
Levine, a former Federal Trade Commission official, sees the issue as fundamental market distortion. "Companies are competing on their ability to hide the true price," he said. "That's the worst kind of incentive."
The initiative reflects a broader push by the Mamdani administration to tackle affordability. Zohran Mamdani campaigned heavily on making the city cheaper for residents, and the administration argues that decades of light regulatory touch have left consumers vulnerable.
Industry has fought similar efforts fiercely. When the Biden administration proposed a national junk fee rule in 2024, the U.S. Chamber of Commerce called it an attempt to "micromanage businesses' pricing structures." Real estate interests successfully lobbied to strip apartment fees from that federal rule. A national click-to-cancel rule introduced by Biden was struck down by a federal judge in early 2025 over procedural grounds.
Donald Trump's Federal Trade Commission has signaled it plans to pass a similar subscription rule in the coming months.
The city council is also exploring a separate ban on "surveillance pricing," where companies charge different customers different prices for identical goods based on algorithmic analysis of their spending habits and personal data. Maryland banned the practice in April. Colorado's governor vetoed a similar ban last month.
Levine said the city will take public comment on the junk fee proposal and hold a hearing before finalizing it. "I certainly hope that we can get this rule done by the end of the year," he said.
Author James Rodriguez: "Cities can do what Washington won't, and New York just proved it, but the real test is whether industry's lawyers can stop it before it saves anyone a dime."
Comments