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Financial Services Law Insights and Observations

FTC announces second request for public comment on rule to ban “junk fees”

Federal Issues Agency Rule-Making & Guidance FTC Junk Fees Consumer Protection Federal Register Fees

Federal Issues

On October 11, the FTC released a notice of proposed rulemaking meant to prohibit unfair and deceptive, costly fees, also known as “junk fees.” After announcing its Advance Notice of Proposed Rulemaking last year (covered by InfoBytes here), and after considering more than 12,000 public comments, the FTC determined that some businesses misrepresent overall costs by omitting mandatory fees from advertised prices until consumers are “well into completing the transaction,” and fail to adequately explain the nature and amount of fees. The Commission is seeking another round of comments for its proposed rule, which, for any entity that “offers goods or services” to consumers, would prohibit:

  • Offering, displaying, or advertising an amount a consumer may pay without “clearly and conspicuously” disclosing the “total price,” which must be displayed “more prominently than any other pricing information.”
  • Misrepresenting “the nature and purpose of any amount a consumer may pay.”
  • Disclosing “any other pricing information” besides the total price “more prominently” than disclosures of the total price in an “offer, display, or advertisement.”

The proposed rule would also grant the FTC more robust enforcement authority to seek refunds for harmed consumers and impose monetary penalties of up to $50,120 per violation. The proposed rule also requires businesses to include any mandatory costs for ancillary goods or services in their price disclosures.

The FTC is working alongside the CFPB, OCC, FCC, HUD and the Department of Transportation to develop and implement rules banning junk fees. The CFPB has also issued guidance emphasizing that large banks and credit unions are prohibited from imposing unreasonable obstacles on customers, such as charging excessive fees, for basic information about their accounts. Further, the White House has called on federal agencies “to reduce or eliminate hidden fees, charges, and add-ons for everything from banking services to cable and internet bills to airline and concert tickets.” 

The Commission is seeking public input on 37 questions, with comments due 60 days after publication in the Federal Register.