Cracking Down on Junk Fees

Public comments to the FTC now extended until February 7, 2024

Politicians and regulators are rallying against undisclosed fees that significantly inflate the final cost of consumer purchases, such as hotel bookings, ticket purchases, car rentals, credit card usage, and loans. Their focus? Demanding transparent pricing. Proposed federal and state laws aim to compel marketers to present the complete price, inclusive of all obligatory fees and charges, and to eliminate “junk fees” that materially increase a price.

In Congress, the “Junk Fee Prevention Act” is on the table, pushing for sellers to conspicuously display the total price, encompassing mandatory fees, in every advertisement and initial consumer interaction. This legislation would also grant authority to the FTC to promulgate corresponding regulations. Acting independently, the FTC recently proposed a rule to outlaw hidden fees, barring businesses from advertising prices that obscure or omit mandatory fees. Furthermore, this rule would mandate that sellers disclose fee amounts, their purposes, and refundability upfront. Similar restrictions are being proposed by other federal regulators. Comments can be submitted to the FTC until February 7, 2024.

States are also taking action. This year, California passed Senate Bill 478, prohibiting advertising of prices that exclude mandatory fees or charges (excluding government-imposed taxes or fees), effective July 1, 2024. Recently, the Massachusetts Attorney General proposed regulations requiring pricing advertisements to prominently feature the total cost of goods or services—excluding taxes, shipping, and government fees—prior to gathering consumer information. Comments on the proposed Massachusetts regulations are due by December 20, 2024.

Expect this to be a hot regulatory item in 2024.  Marketers should carefully check their pricing disclosures to be sure that all fees are justified and properly disclosed.

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