A Group of 19 State AGs Support the FTC’s Proposed Rule on ​“Junk Fees”

Another week, another flag on so-called junk fees.

The FTC is in the midst of a months-long rulemaking targeting ​“unfair or deceptive fees” that would fundamentally alter the way businesses can advertise their prices to consumers. Recently, a bipartisan coalition of 19 state AGs (led by General Michelle Henry of Pennsylvania and General Josh Stein of North Carolina) filed a comment letter supporting the FTC’s efforts.

What the Letter Did (and Did Not) Say

We covered the rulemaking in detail in a prior post. Here is a brief refresher: The FTC’s proposed rule would require that businesses ​“clearly and conspicuously” display the ​“total price” of goods and services and disclose the ​“nature and purpose” of other charges a consumer might see at check-out.

The AGs celebrated the FTC’s ​“straightforward approach” and commented that hidden fees are a problem ​“in many different types of industries.” The state enforcers enumerated several recent actions they have taken in their own jurisdictions, including targeting fees in financial services, hotels, live-event tickets, rental housing, auto rentals, and television and cable services. Turning to the proposed rule, the AGs specifically supported:

  • The proposed ban on ​“hidden fees,” arguing that the fees force consumers to waste ​“valuable leisure time” researching actual prices and put ​“truthful and straightforward” businesses at a competitive disadvantage.
  • The proposed ban on ​“misleading fees,” pointing to past comments from consumers claiming they were left wondering what they were actually paying for and confused over whether charges were government mandated or not.
  • A provision that would ensure the proposed rule creates a floor rather than a ceiling, meaning jurisdictions could enact more stringent protections.

Notably, the group did not weigh in on a blanket ban on ​“excessive fees” or suggest any industry specific exceptions. Businesses operating in the signatory states and beyond should take note of how AGs may be interpreting their existing UDAP statutes to prohibit hidden or misleading fees across the marketplace.

The Junk Fee Flood

While this is the latest sign that junk fees are becoming a beacon for enforcers, it is hardly the first. Connecticut recently passed a law requiring ticket sellers to disclose fees up-front, California recently banned hidden fees, and Massachusetts has issued draft regulations similarly targeting fees. Not to be outdone, despite its incomplete rulemaking the FTC just announced a settlement with student debt relief companies after alleging they charged some $8.8 million in junk fees associated with debt relief services that did not exist.

Looking Forward

The FTC’s public comment period has ended. We will keep you up-to-date on rule developments and how state AGs continue to push against ​“junk fees.”