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FTC proposes ban on junk fees to put end to hidden charges

The proposal would require businesses to disclose all mandatory fees in the upfront price that's offered to consumers.
FTC proposes ban on junk fees to put end to hidden charges
Posted at 10:13 AM, Oct 11, 2023

The U.S. Federal Trade Commission has proposed a new rule to ban hidden junk fees on things like concerts, sporting events, hotel rooms and utility bills.

The agency has estimated that these bogus fees are costing consumers tens of billions of dollars per year in unexpected costs and said it has received more than 12,000 comments on how these fees have negatively affected Americans' spending.

"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," FTC Chair Lina M. Khan said in a statement. "The FTC’s proposed rule to ban junk fees will save people money and time, and make our markets more fair and competitive.”

SEE MORE: Why did concert tickets get so expensive?

The proposal would prohibit businesses from running up bills with hidden fees and require them to disclose all mandatory fees in the upfront price to make it easier for consumers to compare options as they shop. Under the rule, companies who do not comply with these provisions would face monetary penalties and be forced to refund customers. 

President Joe Biden has made eliminating junk fees a priority of his administration and is expected to speak Wednesday on the new rule proposal. The White House has pointed to research from the University of Duesseldorf that found that these misleading pricing practices cause customers to pay more than they otherwise would.

SEE MORE: New federal rule would eliminate cable, satellite hidden fees

The FTC proposal is being coupled with a new rule from the Consumer Financial Protection Bureau that also prohibits banks from charging junk fees for providing basic customer services. 

"For years, junk fees have been creeping across the economy, and Americans are tired and fed up," CFPB Director Rohit Chopra said on a call with reporters. "The Consumer Financial Protection Bureau, which polices the financial industry for abuses against families and honest businesses, has been focused on creating more competition, which is helping to eliminate junk fees and stop financial firms from cooking up new junk fees." 

Chopra added that the agency has uncovered "egregious, illegal junk fee practices" at several banks that are now being forced to refund $140 million back to Americans.

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