"shipping protection fee" providing no extra protection was plausibly misleading drip pricing

DeMarco v. DNVB, Inc. (Thursday Boot Co.), No. 25-CV-3076 (GHW) (RFT), 2025 WL 4378637 (S.D.N.Y. Dec. 5, 2025) (R&R)

Thursday Boot sells shoes, apparel, handbags, and accessories on its website, which offers “free shipping and returns in the U. S.” according to a banner at the top of the webpage. Each product on the website is listed with an “Honest Pricing Guarantee,” promising the “Best Price offered year-round.” Upon checkout, however, a “Shipping Protection” fee of $2.98 was automatically added to the customer’s cart, with an option for the customer to deselect the Fee. Customers are told that if the Fee is not paid Thursday Boot “is not responsible for damaged, lost, or stolen items during shipping.” However, defendant ships its products via UPS, which will reimburse purchasers of lost or damaged packages. Defendant also has an Amazon storefront on which it sells its products and offers free shipping, without the Fee.

Plaintiffs alleged violations of NY’s GBL (along with common law contract/unjust enrichment claims which the magistrate recommended rejecting). Although the magistrate thought there was no standing for injunctive relief, the basic deception claim was plausible.

Whether the Honest Pricing Guarantee was a deceptive practice depends on whether the Fee was misleading, which it plausibly was. Defendant argued that there was no misleadingness because (1) the Fee was clearly disclosed on the checkout page “in the same size and font as the product price, together with an adjacent option to remove the charge”; (2) shipping protection is distinct from shipping, so that a charge for shipping protection did not negate Defendant’s promise of free shipping; and (3) the shipping protection bought by the Fee provided value to buyers by allowing them to recover from Defendant for lost or damaged packages, thereby relieving buyers “of the responsibility to pursue relief” for lost or damaged packages from the shipping companies.

But it was plausible the combination of the free shipping representation and the negative option to remove the Fee was misleading to reasonable consumers and that Defendant’s behavior was made more misleading by Defendant’s last-minute inclusion of the Fee, aka “drip pricing.” Plus, the statement that Defendant was “not responsible for damaged, lost, or stolen items during shipping” could plausibly lead “a consumer to believe that they will bear all risk of loss” if they did not pay the Fee, even though buyers were already entitled to such compensation.

Full disclosure occurs when a party “is provided with all the information necessary to understand [a] practice and its consequences.” Whether the disclosure provided plaintiffs with sufficient information to understand the significance of the Fee was a question of fact that couldn’t be assessed on a motion to dismiss. While a reasonable consumer would understand the difference between shipping and shipping protection, “the website provided insufficient information to allow reasonable consumers to understand the nature of the shipping protection secured by the Fee.” A reasonable consumer likely would be unaware that the carrier would, under ordinary contract principles, bear the risk of loss or damage during transit. The check-out statement that if a customer did not pay the Fee, defendant would not be “responsible for damaged, lost, or stolen items during shipping” was “technically accurate,” but the failure to disclose that the carrier was responsible for loss or damage during transit might “undermine [the] consumer’s ability to evaluate his or her market options and to make a free and intelligent choice.”

Also, even if a reasonable consumer would have understood that the shipping fee added defendant’s commitment to bear the risk of loss or damage, it wasn’t clear that they would know that the fee was optional.  Adding the fee to customers’ carts at the very end of the transaction “added to the confusion and could plausibly have misled reasonable consumers about whether the Fee was optional.” Articles cited by the defendant in support of its motion to dismiss, which state that offering shipping protection has become commonplace, “also opine that adding fees for shipping protection at the end of the transaction is misleading to the average consumer.”