Guide to the Ban on Junk Fees in the U.S.

Guide to the Laws on Junk Fees, Surcharges and Other Hidden Fees in the U.S.

The Federal Trade Commission (FTC) recently proposed a new rule aimed at curbing deceptive and hidden fees known as junk fees. These fees can harm consumers and undermine honest businesses. The FTC’s rule is expected to be finalized some time in 2024.

What are junk fees?

Junk fees are those sneaky charges that catch consumers off guard. They often appear after a transaction is underway, leaving consumers wondering what they’re paying for or if they’re getting anything in return. Examples of junk fees include:

  • Booking Fees: When booking hotels or flights, consumers may encounter unexpected fees that weren’t clearly disclosed upfront.
  • Resort Fees: Vacationers are often surprised by resort fees added to their hotel bills, even though they thought they had paid the full price.
  • Concert Ticket Fees: Online ticket purchases can come with hidden fees that inflate the total cost.
  • Restaurant Surcharges: These are often called “health” or “wellness” surcharges as they are ostensibly earmarked to pay for worker benefits.
  • Apartment Rental Fees: Renters may face additional charges that weren’t part of the advertised rent.
  • Utility Bill Fees: Utility companies sometimes tack on extra fees without proper disclosure.

Are junk fees illegal?

The FTC has proposed a rule to ban junk fees throughout the United States. Some states are also passing their own junk fee bans (see California’s junk fee ban).

FTC’s proposed rule aims to protect consumers by:

  • Full Disclosure: Businesses would be required to include all mandatory fees when stating a price. The rule would prohibit businesses from advertising prices that hide or leave out mandatory fees. This transparency makes it easier for consumers to compare prices across different providers.
  • Banning Bogus Fees: The rule prohibits businesses from presenting consumers with bogus fees, where it is vague or unclear what the purpose of the fee is, and whether it is an optional or required fee.
  • Enforcement: The FTC would have the authority to seek refunds for harmed consumers and impose monetary penalties on non-compliant companies.

Is a junk fee ban good for business as well as consumers?

Junk fees not only drain consumers’ wallets but also hinder fair competition. By banning these fees, the FTC aims to level the playing field for honest businesses and empower consumers to make informed choices.

Further Resources

For more information, visit the FTC’s official announcement on this proposed rule.

Also see our full Guide to the Law for Consumers.

Photo credit: Image by wayhomestudio on Freepik

Share the Legal Info With Your Friends: