Federal Trade Commission Explores Rule Cracking Down on Junk Fees
The Federal Trade Commission announced today that it is exploring a rule to crack down on junk fees proliferating throughout the economy. Junk fees are unnecessary, unavoidable, or surprise charges that inflate costs while adding little to no value. Consumers can get hit with junk fees at any stage of the purchase or payment process. Companies often harvest junk fees by imposing them on captive consumers or by deploying digital dark patterns and other tricks to hide or mask them. The agency is seeking public comment on the harms caused by junk fees and the unfair or deceptive tactics companies use to impose them.
“It’s beyond frustrating to end up spending more than you budgeted because of random, arbitrary fees,” said FTC Chair Lina M. Khan. “No one has ever felt that a ‘convenience fee’ was convenient. Companies should compete to provide the best quality at the best price, not to see who can squeeze the most added expenses out of consumers. That’s especially true at a time when families are struggling with the effects of inflation.”
Companies charge junk fees in a wide range of contexts, including cramming in hidden fees to which consumers did not consent, misrepresenting optional services or upgrades as mandatory, and charging for products or services with little or no value. For example, consumers purchasing tickets or booking a hotel room may find a surprise junk fee tacked on at checkout. These junk fees – which add up to tens of billions of dollars each year – can drive up prices, make comparison shopping difficult, and leave consumers feeling powerless and cheated.
The FTC is concerned that junk fees are common in many sectors of the U.S. economy. The advance notice of proposed rulemaking announced today seeks public comment on the harms stemming from junk fees and associated junk fee practices and on whether a new rule would better protect consumers.