In a prior blog post, I talked about the Deceptive Pricing Practices Act, a new bill adopted by the Colorado legislature that will go into effect on January 1, 2026, unless stopped by a referendum. This Act generally requires anyone offering a good, service, or property to state the price as a single number without any separate fees, charges, or amounts. As I discussed last time, this runs quickly into problems when dealing with service contracts or deals for bespoke goods, as it is often not possible or desirable to quote an exact price. And, while there is a safe harbor in the bill for prices that “cannot reasonably be known,” that term is not clearly defined and requires that the business use magic language in its contract to qualify for the exception.
In this post, and a few that follow, I want to explore the possible implications of this Act for specific Colorado industries.
Restaurants: mandatory service charges and disclosure requirements
First, restaurants. The Act includes several rules specific to “food and beverage service establishment[s],” which appears to include most restaurants, bars, brew pubs, and the retail portion of a brewery, distillery, or winery. These businesses must include, with the price of the good or service offered, the percentage or amount of any mandatory service charge and how it is distributed.
So, for example, if your restaurant adds a mandatory gratuity to large groups, the amount of this charge might have to be on the menu alongside the entrees. The menu might also have to explain exactly how this charge is divided between the servers, kitchen, and anyone else.
“Easily noticeable and understandable” may mean more than fine print
This disclosure must, moreover, be “easily noticeable and understandable” in at least the same way as the rest of the communication. It “must be distinguishable by its size, contrast, and other location . . . and other characteristics from accompanying text or visual elements so that it is easily noticeable, readable, and understandable to ordinary persons.” Fine print at the bottom may not cut it. Large, bolded font on the top of the menu probably would.
It may not stop at the menu
In fact, placement on the menu might not even be enough. The disclosure requirements apply to all mediums offering, displaying, or advertising a good, service, or property for sale. The disclosure applies to any communication of price. Even “face-to-face communication.” I can imagine a situation in which a server explains the daily specials to a patron and ends up technically violating this Act by mentioning the price without also describing possible additional fees, and how that fee is divided among employees.
Residential landlords: fee restrictions and lease implications
Landlords, too, have additional requirements under the Act. Indeed, it seems apparent that the Act was originally designed with landlords in mind, as the sections talking about what a landlord is and is not allowed to do are more prominent than other sections.
Under the Act, “landlord” is defined by reference to a separate law, C.R.S. § 38-12-502, as the “owner, manager, lessor, sublessor, successor in interest, or agent of the owner of a residential premises.” So, the Act seems to apply only to residential leases. Yet, curiously, there is one section that talks about commercial lessees also being allowed to demand compensation for violations of the Act, for some reason. It is not immediately obvious to me how that connects with the rest of the Act.
Fees the Act appears to prohibit outright
The Act outright prohibits landlords charging certain kinds of fees to tenants. These include: upcharges on utilities actually paid beyond ten dollars or two percent, charges for property taxes, or fees for rent processing unless a free option is available. It prohibits charging any fee that increases more than 2% over the course of a rental agreement of one year or less other than for utilities, suggesting that no matter what changes over a lease year, charges must more or less remain static. It also prohibits charging a fee “related to the overdue payment of a fee, charge, or amount that is not rent.” This might prohibit interest, late fees, or similar provisions on any amounts other than rent itself.
Where disputes could get messy: “habitable living environment”
The Act also prohibits landlords from charging tenants for a “good, service, or property necessary to comply with the responsibilities of the landlord” including providing “a habitable living environment.” This seems particularly ripe for opportunistic disputes. If a lease allows a landlord to charge a tenant to repair property the tenant has damaged, but that repair is also necessary to restore the property to a habitable living environment, what happens?
Common areas: another category to watch
Finally, residential landlords are apparently forbidden from charging a fee “for the maintenance of the common areas.” So, charges for things like pools, roof repairs, and so on, probably cannot be charged to the tenants.
Likely practical effect: pressure to roll fees into base rent
It seems to me that the legislature’s goal here is to get landlords to consider all of the possible charges they may incur during the year and build them all into higher base rent rather than breaking them out into separate fees. I would anticipate the result would be that landlords would err on the side of higher rent, and thus one of the major unintended consequences of this bill will be exacerbating the already difficult housing situation in Colorado.
What to do now if the Act takes effect on January 1, 2026
In a less political view, these new requirements make it critical for landlords and restaurants to consult with a trusted attorney to help them ensure they are in compliance with this law in case it goes into effect as scheduled. Restaurants will need disclaimers for their advertisements, menus, and employee training. Landlords will need to overhaul their leases severely to ensure anything possibly defined as a price or fee complies with the Act. Moriarty Underhill can help.
If you are concerned about needing to get into compliance with this new pricing law, don’t hesitate to call.