Federal Trade Commission Explores Rule Cracking Down on Junk Fees

The Federal Trade Commission (“FTC”) proposes to commence a rulemaking proceeding to address certain deceptive or unfair acts or practices relating to fees. The FTC is soliciting written comments, data, and arguments concerning the need for such a rulemaking to prevent persons, entities, and organizations from imposing such fees on consumers. The FTC 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. The agency is seeking public comment on the harms caused by junk fees and the unfair or deceptive tactics companies use to impose them. 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. The types of junk fees the FTC is seeking comment on include: Unnecessary charges for worthless, free, or fake products or services; Unavoidable charges imposed on captive consumers; and surprise charges that secretly push up the purchase price. While the agency has been active in addressing junk fees, it generally lacks the authority to seek penalties against first-time violators or the ability to obtain redress readily for consumers in instances in which fees violate the FTC’s prohibition on unfair or deceptive practices. The FTC can seek such remedies when a company violates a rule promulgated by the agency, which is why the agency is exploring a junk fee rule.