Business Blog
FTC proposes junk fee rule to put a stop to bogus and hidden charges
Many consumers describe them as annoying, injurious, invisible, and all too common. They could be talking about pernicious pests and in some ways, junk fees – hidden or falsely advertised charges that some companies try to sneak past people in an effort to burrow their way into their wallets – bear a resemblance to their six-legged counterparts. In November 2022, the FTC published an Advance Notice of Proposed Rulemaking asking for your input about unfair or deceptive practices relating to fees. We received 12,000 comments from consumers, businesses, law enforcers, and others. Based on what you told us – as well as experience gained from decades of litigation challenging junk fees – the FTC is considering a proposed Rule on Unfair or Deceptive Fees and we’re asking for your comments again.
You can’t look through the public comments we received in response to the 2022 Advance Notice of Proposed Rulemaking without concluding that when it comes to junk fees, people are put out, fed up, and ticked off. Commenters noted the widespread prevalence of junk fees in a broad variety of consumer transactions – booking hotels, buying concert tickets, renting an apartment, getting food delivered, renting a car, and paying telecom bills, to name just a few examples cited in the just-announced Notice of Proposed Rulemaking.
What’s the best way forward to stop bogus and hidden charges? That’s the next step in the FTC’s efforts. For years, the agency has used the FTC Act’s broad prohibition of “unfair and deceptive acts or practices” to challenge junk fees, but does the widespread consumer injury caused by these misleading practices suggest that we need a new approach? The Notice of Proposed Rulemaking takes a deep dive into the economics of junk fees and outlines the FTC’s reasoning for why we think a new rule may be necessary to protect consumers.
You’ll want to read the proposed Rule for the specifics, but a central focus of the rulemaking is to prohibit hidden or falsely advertised fees by requiring advertised prices to include mandatory charges and by expressly prohibiting misrepresentations about the nature, purpose, or amount of fees. For example, the rule the FTC is proposing would state, “It is an unfair and deceptive practice and a violation of this part for any Business to offer, display, or advertise an amount a consumer may pay without Clearly and Conspicuously disclosing the Total Price.” (The capitalized words have specific definitions in the FTC’s proposal.) Is that proposed prohibition clear and understandable? Is it ambiguous in any way? What do you think?
The comment period won’t open until the proposed Rule is published in the Federal Register, so there’s time to gather your thoughts. That’s a good thing because we’ve teed up 37 questions to consider in sharing your comments with us. They deal with basic topics about hidden or misleading fees, definitional issues, industry-specific practices, and more.
Remember that we want broad participation in this process. Of course, we hope to hear from researchers, law enforcers, businesses, and academics, but we also value the no-nonsense perspective of real people with real-world suggestions about what needs to be done to put an end to hidden or bogus charges. Once the comment period opens, we’ll publish another post with more details and a link to the Federal Register site where you can file your comment online. Watch the Business Blog for updates.
We look forward to working together toward a sensible solution to the problem of junk fees. We hope you agree that America’s consumers deserve that – and more.
Another outrageous and bogus fee that has become another hidden fee is TIPS. Now companies and everyone else have forgotten what a tip is and have assumed that a tip is guaranteed and automatic and cause them to become downright rude at times when the reality is; some people can’t afford it and/or adding a tip means that the price that you advertise isn’t really the price you charge if the tip is 20% of the ticket. Things are getting ridiculously out of hand when someone can yell at me about my hard earned money that I don’t owe them.
In reply to Another outrageous and bogus… by Unhappy consumer
I agree. There is an unnamed restaurant here in sf that charges 25-dollar gratuity regardless of whether the food is eaten in the Restaurant or taken as a togo, Also regardless of the cost of the order This is gotten way out of hand. Tips stand for "To Ensure Prompt Service" NOT PAY OUR EMPLOYEES WAGES.
I just booked a couple of hours bowling at Lucky Strike Bowling (aka Bowlero Corporation) and was hit with a 10% fee at online checkout. When I emailed the company asked what justified the fee, they replied that it was the same kind of fee that Ticketmaster charges! I was flabbergasted that the "Customer Service Manager" would use Ticketmaster as an excuse.
I agree to prohibit junk fees. These fees are unnecessary and hurt competive prices.
I heartily endorse the FTC effort regarding the junk fee rulemaking. If anything, it may not be enough. If companies, whether they be a hotel, restaurant, optical shop, cable company or anyone else wants a consumer to pay an amount in exchange for a service or product, that company should be required to prominently disclose the full amount of the cost in advance and as a total purchase cost. Within the last few weeks, I've have received "final" charges that included an added on charge for employee retirement (not disclosed anywhere on a menu or elsewhere prior to the meal check), a fee for tracing a replacement lens for eyeglasses which added 30% to the cost I was told when I asked how much would the replacement "cost", and add-on charges for medical services. This type of nonsense makes it impossible to compare "prices" because i too many cases the "price" is not what it costs to obtain a product of service in a form that actually can be used by the consumer.
One thing about regulations is very clear, as many people use definitions to evade compliance as to adhere to a rule. For that reason, I urge the Commission to supplement definitions with terminology to include within a disclosed price or cost, anything a consumer must pay to an offeror irrespective of how the charge is denominated. I as a consumer want to know what something is going to cost me. If additional service is required to make the product usable that fact should also be clearly disclosed. If that service must be provided by the offeror of the product, the charge for labor and materials and travel or whatever else is typically billed must be disclosed in advance of a purchase transaction as well.
Please do your very best to stop the going and ever expanding effort by sellers of services and products to dupe consumers.
Thank you for this effort and for your consideration of these and other consumer comments.
online food delivery is especially bad about this
first it shows the price in the cart, then you get to the subtotal where it adds 3 other fees and a tip, and then when you click order it adds another 10 dollars on top of that coming out of nowhere
Our entire economy is a series of junk fees at this point, from restaurants to tickets to hotels to you name it Sick of the business class takers that feel no compunction to actually charge the amount they promise they will. Take take take take take! Suck suck suck suck suck! That's all I hear, everywhere I go. I'd live to see the FTC crack down on this, but I'm sure entitled business class takers will lobby the regulation to pieces just like they do for any consumer protection in this god-forsaken sinkhole. *Sucking sounds intensify, that's the American way!!!*
I too an tired of all these "fees" that get added on. Phone service $39.90 a month, the bill $61.06 after all the fees that I have no choice on. Internet TV $74.99 a month, bill $94.32 after adding in regional sports fee that I don't want or watch, and can't remove. Restaurants/business that add a TIP that I can't decline or remove, and sometime not told till I look at the receipt. And my new favorite fee, a surcharge of 5% for using a credit card at some placed. Not told, when asked, it's to cover processing the credit card. For years now we are pushed into using plastic as places don't want to handle cash. Now using plastic and they are going to charge more to do so? Unfortunately like most laws, businesses will find a new way of adding these fees in somehow, they always do.
VRBO & AirBnB are already addressing the near doubling on price by using very small font for the actual price. An allowed percentage change in font size or no change in font size would be a better rule for the total price.
On line purchase of $29 tickets to a local comedy show from the theater. Theater added $3.50 convenience fee. Ticket processor added another $3.50 ticket fee and then $1.37 processing fee. My $29 ticket cost me $37.37, almost 29% more than the posted performance price. After all that, we got a code that we needed to display on our phone. Fees for tickets that aren't actually anything but an image on the phone. I go by the theater a few times a week, and would have happily bought the tickets at the box office, but the box office is never open