New FTC rule would ban hidden ‘junk’ fees added to purchases

FTC junk fees overview: 

• Who: The Federal Trade Commission (FTC) announced new rules against junk fees added to consumer purchases.
• Why: The FTC rule proposal comes due to consumer complaints related to unexpected junk fees added on to purchases that artificially inflate prices and confuse price comparisons.
• Where: The FTC rule proposed on junk fees applies across the United States.

The Federal Trade Commission (FTC) filed a proposed rule to ban hidden fees from purchases, which the commission estimates cost consumers tens of billions of dollars annually.

The proposed FTC rule would specifically ban hidden fees and bogus fees. Hidden fees are defined as showing product prices that do not include mandatory fees in order to have prices appear artificially lower and prevent comparison shopping. Bogus fees are defined as fees that do not adequately show or represent what they actually are.

Businesses would be required to tell customers up front what fees are for, the full amount and if the fees are refundable.

The FTC estimates the junk fees rule could save consumers 50 million hours per year of wasted time searching through live ticket and short-term lodging websites alone, estimated to be worth more than $10 billion over the next decade.

FTC to accept public comments on proposed junk fees rule

The FTC already collected 12,000 public comments on how those fees affect personal spending and now will accept comments on the proposed rule.

A summary of the previous comments show that consumers are upset with the fees on everything from booking hotels and resorts to buying concert tickets online, renting an apartment and paying utility bills.

“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape. These junk fees now cost Americans tens of billions of dollars per year — money that corporations are extracting from working families just because they can,” FTC chair Lina M. Khan said in a statement. “By hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront. The FTC’s proposed rule to ban junk fees will save people money and time, and make our markets more fair and competitive.” 

The proposed FTC rule would allow the group to secure refunds for consumers and seek monetary penalties against companies that do not follow the junk fees rule.

The FTC proposed a new rule late in July aimed at cracking down on bogus online reviews and other types of online deception. 

Have you paid unexpected junk fees on a recent purchase? Let us know in the comments.

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