NAMA Protects Refreshment Operators from New FTC Rule

Thanks to the leadership of the National Automatic Merchandising Association (NAMA), refreshment operators across the U.S. have avoided unintended impacts from the Federal Trade Commission’s (FTC) new pricing transparency rule. The FTC confirmed that the rule, which targets hidden fees in industries like ticketing and lodging, does not apply to the convenience services industry.

The Federal Trade Commission (FTC) recently confirmed that its new pricing transparency rule, targeting hidden fees in industries like ticketing and lodging, does not apply to the convenience services industry. This clarification comes after proactive engagement by the National Automatic Merchandising Association (NAMA), which highlighted potential challenges the rule could pose for the convenience services industry, specifically vending and unattended retail operators.

Understanding the FTC Rule

The FTC’s new rule requires businesses to clearly disclose the total price of products, including mandatory fees, in advertisements and during the purchase process. This regulatory crackdown aims to eliminate the widespread “drip pricing” tactics that have plagued consumers by obscuring true costs until the final stages of purchase. According to the FTC, these practices not only harm consumers but also undermine competition by creating an uneven playing field.

The Big Problem for Convenience Services

The convenience services industry often relies on advertising or offering of cash discounts at vending machines and micro markets. NAMA realized that the new rule’s requirements to disclose total prices upfront could have created challenges for refreshment operators. For instance, displaying both cash and card pricing on vending machines with limited display space.

In its comments to the Federal Trade Commission earlier this year, NAMA explained these challenges and highlighted the importance of maintaining flexibility for the industry:

“Unattended retail and vending machines have been integral to the retail landscape for decades, providing a convenient 24/7 solution in locations across the country,” said Matt Bisenius, Vice President of External Affairs at NAMA, in a written statement to the FTC earlier this year. “Whether it’s a student in need of a quick and nutritious breakfast, an office worker craving coffee or a snack, or a delivery driver seeking refreshments on a hot summer day, our industry is poised to meet these demands.”

The FTC later confirmed that the rule would not impact the vending sector, ensuring that operators can continue to provide clear and transparent pricing without additional regulatory burdens.

Maintaining Stability for Refreshment Operators

The convenience services industry, especially with inflation, means slimmer profit margins. Practices like cash discounts help these operators manage costs while offering competitive pricing to customers. Industry leaders emphasized that applying the rule to vending machines could have unintentionally harmed these businesses and even led to higher prices for cash-paying customers.

By excluding vending operators from the rule, the FTC has allowed the industry to maintain its current pricing practices while continuing to comply with local laws, such as “cashless retail” bans, which require businesses to accept cash payments.

Securing the Future of Convenience Services

The convenience services industry contributes $34.9 billion annually to the U.S. economy – a fact NAMA made clear to the FTC – and provides essential services to millions of consumers daily. NAMA’s engagement with the FTC played a key role in protecting the industry from unintended impacts, ensuring that operators can focus on serving their customers without unnecessary compliance challenges.

This decision provides stability for a critical sector of the marketplace. NAMA’s advocacy highlights the importance of tailoring regulations to reflect the specific needs of different industries, balancing transparency with practicality, especially since these rules were designed with other industries in mind. The FTC’s decision reflects the unique needs of different industries, avoiding unintended impacts while still further promoting transparency and fairness for consumers.