FTC v. Junk Fees

Like the CFPB, the FTC is cracking down on “junk fees.” What are junk fees? Effectively hidden surcharges (like a temporary inflation fee).

In it’s proposed rule, the FTC “would ban businesses from running up the bills with hidden and bogus fees, ensure consumers know exactly how much they are paying and what they are getting, and help spur companies to compete on offering the lowest price.” Further, per the proposed rule, businesses would have to include all mandatory fees when telling consumers a price. It would also include an enforcement mechanism that would allow “the FTC to secure refunds for harmed consumers and seek monetary penalties against companies that do not comply with its provisions.”

According to the FTC in their proposed rule, junk fees are present in a number of different industries, including at restaurants, prepared food and grocery delivery services, and hotels. These fees take the form of “service fees,” “hospitality fees” “kitchen fees,” “equity fees,” “economic impact fees,” and so on and so forth.

Other agencies (like the CFPB referenced above) are also taking shots at companies charging junk fees. U.S. Transportation Secretary Pete Buttigieg has already stated that he has secured commitments from major U.S. airlines to provide free rebooking, meals, and hotels when they are responsible for stranding passengers and was working to working to stop airlines from forcing parents to pay to sit next to their kids and requiring them to disclose hidden fees for things like extra bags.

Expect more agencies to take aim at these fees over the next several months (as well as a final rule from the FTC).

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