Advertising Law Blog

FTC Seeks Comments on “Junk Fees” – Signaling a Renewed Focus on Supplemental Fees

On October 20, 2022, the Federal Trade Commission issued an advance notice of proposed rulemaking for a rule that would seek to address so called “junk fees” – unnecessary, unavoidable, or surprise charges that inflate costs while adding little to no value to consumers.

While the Notice does not propose any particular rule, it outlines the following areas of regulatory concern:

• Misrepresenting or failing to disclose clearly and conspicuously, on any advertisement or in any marketing, the total cost of any good or service for sale; 
• Misrepresenting or failing to disclose clearly and conspicuously, on any advertisement or in any marketing, the existence of any fees, interest, charges, or other costs that are not reasonably avoidable for any good or service; 
• Misrepresenting or failing to disclose clearly and conspicuously whether fees, interest, charges, products, or services are optional or required; 
• Misrepresenting or failing to disclose clearly and conspicuously any material restriction, limitation, or condition concerning any good or service that may result in a mandatory charge in addition to the cost of the good or service or that may diminish the consumer’s use of the good or service;
• Misrepresenting that a consumer owes payments for any product or service the consumer did not agree to purchase; 
• Billing or charging consumers for fees, interest, goods, services, or programs without express and informed consent; 
• Billing or charging consumers for fees, interest, goods, services, or programs that have little or no added value to the consumer or that consumers would reasonably assume to be included within the overall advertised price; and
• Misrepresenting or failing to disclose clearly and conspicuously on an advertisement or in marketing the nature or purpose of any fees, interest, charges, or other costs.

The Notice focuses on practices in a number of industries, including travel and live events, with a particular focus on hotel resort fees and ancillary travel service charges.   The Notice promotes potentially expanding the Department of Transportation’s “full fare” rule – which requires full disclosure of airline ticket prices in the stated price – to other aspects of travel such as seat assignment fees and baggage fees.

Notably, the Notice focuses beyond mere disclosure of fees, but rather on whether the ancillary service justifies a surcharge.   This would seem to impose the government’s view, as opposed to consumers’, whether a properly disclosed option was worth the money.

The Notice itself outlines a list of specific questions for which the agency is seeking comment.  According to the FTC’s press release, the FTC is seeking comments on questions relating to the following types of “junk fees”:

• Unnecessary charges for worthless, free, or fake products or services that the agency believes should be included as part of the purchase price;
• Unavoidable charges imposed on captive consumers because consumers do not have a realistic alternative; and
• Surprise charges that secretly push up the purchase price that have not been sufficiently disclosed.

Comments are due on or before January 9, 2023.  

Takeaway:  As the Notice is a step towards proposed rulemaking, potentially impacted businesses should consider submitting comments on any areas of concern.  Indeed, the Notice appears to be in line with prior regulatory action against telephone “cramming”, which once enacted drastically impacted the ability to charge for supplemental services on telephone bills.