United States: The FTC Explores Cracking Down On Junk Fees

In a recent press release, the Federal Trade Commission ("FTC") announced that it would be exploring a rule to crack down on junk fees. A junk fee is a hidden fee that companies use to inflate costs. Junk fees can come in all shapes and sizes, including those to which consumers did not consent, those that misrepresent optional services or upgrades as mandatory, or charging for products that have little to no value. These fees can add up to tens of billions of dollars each year and leave consumers feeling like they've been scammed. The FTC is concerned that these junk fees are way too common in our current economy and is looking to put an end to these hidden fees.

The purpose behind the FTC's announcement of its proposed rulemaking is to seek comment on the harms that are associated with these junk fees and whether a new rule would help protect against them. Specifically, the FTC is seeking comment on three categories of junk fees: 1) unnecessary charges for worthless, free or fake products or services, 2) unavoidable charges imposed on captive consumers, and 3) surprise charges that secretly drive up the purchase price.

This is not the first time that the FTC has made moves to protect consumers against junk fee practices. Junk fees have been the subject of FTC investigations, enforcement actions, workshops, research and consumer and business education outreach. However, despite these efforts, the FTC lacks the general authority to obtain redress for consumers who have been harmed by fees which violate the FTC's prohibition on unfair and deceptive practices. If the FTC creates its own junk fee rule, they would be able to seek such remedies when companies violate the rule. Once this notice has been published in the Federal Register, consumers will be able to submit their comments electronically. To read more about this proposed rule, visit the Advanced Notice of Proposed Rulemaking.

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