FTC Proposes Rule on Junk Fees

On November 8, 2022, the FTC published an advanced notice of proposed rulemaking to address certain deceptive or unfair acts or practices relating to fees. The Commission is seeking public comment, data, and argument concerning the need for such a rulemaking to prevent persons, entities, and organizations from imposing such fees on consumers.

According to the FTC, junk fees are burdening consumers, workers, and small businesses today, eroding trust, impeding comparison shopping, and facilitating inflation. In its proposed rule, the FTC defines “junk fees” as unfair or deceptive fees that are charged for goods or services that have little or no added value to the consumer. The term also includes “hidden fees,” which are fees for goods or services that are deceptive or unfair, including because they are disclosed only at a later stage in the consumer's purchasing process or not at all. As used in the ANPR, a junk fee can be a hidden fee, but not all junk fees are hidden fees.

The Commission requests input on whether and how it should use its authority under the FTC Act to address deceptive or unfair acts or practices involving junk fees and hidden fees. Specifically, the Commission proposes addressing the following practices:

  • Misrepresenting or failing to disclose clearly and conspicuously

    • on any advertisement or in any marketing, the total cost of any good or service for sale; 

    • on any advertisement or in any marketing, the existence of any fees, interest, charges, or other costs that are not reasonably avoidable for any good or service; 

    • whether fees, interest, charges, products, or services are optional or required;

    • any material restriction, limitation, or condition concerning any good or service that may result in a mandatory charge in addition to the cost of the good or service or that may diminish the consumer's use of the good or service, including the amount the consumer receives;

    • on an advertisement or in marketing the nature or purpose of any fees, interest, charges, or other costs.

  • Misrepresenting that a consumer owes payments for any product or service the consumer did not agree to purchase;

  • Billing or charging consumers for fees, interest, goods, services, or programs without express and informed consent; and

  • Billing or charging consumers for fees, interest, goods, services, or programs that have little or no added value to the consumer or that consumers would reasonably assume to be included within the overall advertised price.

The FTC seeks comment on the prevalence of the above practices, the costs and benefits of a rule that would require upfront inclusion of any mandatory fees whenever consumers are quoted a price for a good or service and other potential rule requirements to curtail unfair or deceptive fees, and alternative or additional action to such a rulemaking. The comment period was extended from January 9, 2023 to February 8, 2023.

The proposed rule can be found here.

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