FTC announces proposed rule to ban 'junk fees'

The Federal Trade Commission rolled out a proposed rule Wednesday that would ban what it calls hidden and bogus fees that can cost consumers an extra $80 billion every year, officials said.

“This is real money. It really adds up for people,” FTC Chair Lina Khan said in an interview that aired Wednesday on NBC’s “TODAY” show.

The proposed rule would make it clearer when extra fees are being charged, like at hotels and at live-ticket events, the agency says.

It would bar businesses from using hidden fees, or charges that the FTC calls “bogus fees” and which are misrepresentations, the commission said in a statement.

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It would also prohibit businesses from advertising prices that leave out mandatory fees, a practice that causes consumers to expect to pay one price, only to see the actual cost soar, according to the FTC.

It wouldn’t stop a company selling tickets to a concert from adding fees, and it wouldn’t limit what they can charge.

“What the rule says is that if there’s going to be a fee, a mandatory fee, it needs to be part of the total price that consumers see up front,” a senior administration official said in a briefing.

Hidden fees are an issue that Robert Kraus, a frequent traveler who organizes conventions, knows all too well — things like getting charged $3 for a glass of water he didn’t ask for, and the price of which is not on the menu, and other extra fees, like resort fees.

“Sometimes they call it a convenience fee,” Kraus said. “Because it’s convenient for me and you to pay 20, 30, 40 dollars a night so that they can make more money and not be honest and upfront.”

President Joe Biden at his State of the Union address in February mentioned junk fees, which he described as "those hidden surcharges too many companies use to make you pay more."

"They add up to hundreds of dollars a month. They make it harder for you to pay your bills or afford that family trip," Biden said. His administration has proposed a bill that would ban surprise hotel resort fees, he said. It was introduced in the Senate in March.

In June, Biden said ticket sales giants Ticketmaster and Live Nation have pledged to provide consumers with full pricing upfront.

The proposed FTC rule will next be published in the Federal Register, and then people can comment for 60 days.

The FTC could force violators to provide refunds, and it could seek monetary penalties against companies.

Other agencies are also taking action, officials said. The Consumer Financial Protection Bureau is issuing guidance to enforce rules to prevent banks from charging fees for basic services, like balance requests or other information, it said.


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