California Law Effective July 1, Minnesota Effective Jan. 1 Will Require All Listed Pricing Includes Processing Fees
Maryland, New York, New Jersey, Connecticut, Colorado, Massachusetts and US all have laws either passed or heading toward passage in the coming months.
“Beginning July 1, 2024, the “Honest Pricing Law” or “Hidden Fees Statute,” SB 478, makes it illegal for businesses to advertise or list a price for a good or service that does not include all required fees or charges other than certain government taxes and shipping costs.”
Minnesota has also passed a law which goes into effect Jan. 1, 2025, appropriately named “HF 1989” after the Taylor Swift influence that is inspiring these laws.
All RunSignup customers holding events in California will need to comply with the law on July 1. This means instead of listing a price on the front page of your website, like “$35 + $3.10 of Processing Fees”. It will need to say “$38.10 or Less”.
Variable Fees Means Final Calculation is Made on the Checkout Page
RunSignup charges a variable processing fee of $1 per transaction plus 6% as our standard price. The final price can not be calculated until the final checkout page since multiple people signing up would reduce the per registration fee. Additionally, there may be discounts during the process for joining a team, family pricing, fundraiser pricing, donation discounts, store items purchased, coupons, etc.
RunSignup Auto Price Displays
RunSignup will be making updates to all of the various places for events in California where pricing is displayed, including Event Tiles, Information pages, Registration path, Store pages, etc. We will do a maximum calculation and change the “$35 Registration Fee” to “$38.10 or Less”. This will be rolled out incrementally as there are over 100 places where prices can be displayed on our products.
We will have helper text that says something like “Fully includes the Registration fee of $35 plus the Estimated Processing Fee of $3.10 based on per transaction cost of $1 plus 6%. This fee might decline on a per item basis when registering more than one person.”
Here are several of the layouts we will be coming out with over the next month or so for display initially for California events, and later as other States or the Federal Bill is passed.
Note that this pricing will be somewhat dynamic. So that a stand alone store item includes the $1.00 base processing fee, while if a store item is displayed after tickets or registrations have been selected into the cart, it will show a fee calculation without the extra $1.00.
Note also that we will be accommodating specific partner and race pricing that might be set either higher or lower in our automated calculations.
Required July 1, 2024 in California
We will be requiring this for all events in California (we will be auto-detecting the event location) as the law makes it clear it is required. In the California Q&A Document, it states:
“Can a business comply with this law by listing or advertising one price and separately stating that an additional percentage fee will apply? No. The price listed or advertised to the consumer must be the full price that the consumer is required to pay.”
We will not allow a text override if you use our standard components since these are driven by data and will update dynamically when there are price increases.
Events Can Pay The Fees
As always, events may choose to pay the fee out of what they charge. In that case, the $35 example above would stay $35 on all of the displays.
Sales Tax and Shipping Not Included
Sales tax and shipping costs are specifically excluded from the calculation, and can be calculated and added on the checkout page like we currently implement.
What Races and Events Need to Do
RunSignup will take care of price displays for events in California that are coming from our system and database. We have a number of automated components like Event Tiles that will state the full price required by the law
However, races will need to be careful about how they post prices in content areas. For example, if you put an image, include price in a text description on your website, post online ads or include prices in emails you will need to ensure it is the maximum total. Races will need to be careful with content since there is now liability for your race and the content.
How Will This Impact Event Business?
We do not expect a major impact to event businesses. All events will be required to implement this, as there is a minimum $1,000 fine for this, with benefits going directly to consumers. So there will be consumers holding event producers liable for this pricing and other events should quickly fall in line with the new practice.
We have argued for the past several years that events have not been raising prices at the pace of inflation, yet are seeing participation numbers greater than 2019. So our analysis is that showing a higher price up front will not have any meaningful impact on registration.
In addition, RunSignup customers have a lower processing fee price than all of our major competitors including Eventbrite, Race Roster, Active, and Haku.
Events that charge more than the standard RunSignup price can continue to do so. We will include your pricing in our calculation for display.
As with pricing above, we do believe there is elasticity in event prices and in processing fees. However, some event organizers may want to scale their additional fees back some. Remember this whole set of issues have arisen mostly because of TicketMaster and Resale marketplaces like StubHub events having such very high fees and splitting those fees with the artists like Taylor Swift. Taylor indeed moves markets!
There is a great podcast from 2009 on Planet Money about how Ticketmaster makes money and shares that with artists.
Will Other States Follow?
It is somewhat likely that a Federal Law will pass this year as well. In many ways, this will be easier to administer than a state by state law where some states might require residents to see prices (California residents signing up for a New York race would need to see the full price).
The federal law has been approved by the House with strong bipartisan support, and is currently in the Senate. Read the Bill here. The federal bill is much the same, with no real wiggle room on how to display prices to minimize the display of the included processing fee as a total.
When the federal law passes, we will implement the new rules across all events across our various products.
Why Are There Processing Fees?
There are two major reasons why there are processing fees. One is the credit card processing fees. The other is for the value a vendor like RunSignup provides with the event specific software we develop and support. Features like free websites, email, marketing features like referral rewards, financial and reporting and administrative features, as well as event features like checkin app and results with photos all for “free” are actually paid via the processing fee. We feel this is a fair way of charging for our services and try to maintain a balance between giving enough value to our customers and running a long term employee owned business.
Why Aren’t Other Vendors Supporting This?
All registration and ticket vendors will need to comply with this new law (and future laws). RunSignup is well known for being perhaps a bit conservative in how we run our business and were the first vendor to support the Marketplace Sales Tax laws passed several years ago. All vendors eventually followed. Whether your vendor supports transparent pricing or not, events are liable.
We do expect a lot of confusion, which is why we are publishing this blog and will follow on with more information, especially for customers in California.
We also expect this change will expose the higher fees by vendors like Eventbrite and Race Roster who both charge high per ticket/registration fees of $1.79-$1.99 vs. the family friendly RunSignup pricing of $1.00 per transaction regardless of # of tickets. It will also force vendors to be more transparent and include credit card processing costs more visibly – for example Eventbrite sometimes hides the full 6.6% fee (in addition to their per ticket fee) behind a “+Credit Card Fees”.
Summary
Change is always hard, but this feels a little like the implementation of sales tax marketplace laws. As with that change, RunSignup will take a leadership position and work with others in the community to spread the word and assist customers and competitors in understanding the implementation of these new laws.