The Federal Trade Commission announced a new proposed rule to prohibit junk fees, which are hidden and bogus fees that can harm consumers and undercut honest businesses.
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The FTC has estimated that these fees can cost consumers tens of billions of dollars per year in unexpected costs.
The agency launched a proceeding last year requesting public input on whether a rule would help to eliminate these unfair and deceptive charges.
After receiving more than 12,000 comments on how fees affect their personal spending or business, the FTC is seeking a new round of comments on a proposed junk fee rule.
As the public comments made clear, consumers are fed up with hidden fees for everything from booking hotels and resort fees to buying concert tickets online, renting an apartment, and paying utility bills.
Many consumers said that sellers often do not advertise the total amount they will have to pay, and disclose fees only after they are well into completing the transaction.
They also said that sellers often misrepresent or do not adequately disclose the nature or purpose of certain fees, leaving consumers wondering what they are paying for or if they are getting anything at all for the fee charged.
The proposed rule will save consumers more than 50 million hours per year of wasted time spent searching for the total price in live-ticketing and short-term lodging alone, according to FTC estimates.
This time savings is equivalent to more than $10 billion over the next decade.
The proposed rule would ban businesses from running up the bills with hidden and bogus fees, ensure consumers know exactly how much they are paying and what they are getting, and help spur companies to compete on offering the lowest price.
Businesses would have to include all mandatory fees when telling consumers a price, making it easier for consumers to comparison shop for the lowest price.
The proposed rule would also have enforcement teeth, allowing the FTC to secure refunds for harmed consumers and seek monetary penalties against companies that do not comply with its provisions.
These provisions are aimed at ensuring businesses will no longer be able to lure consumers with artificially low prices that they later inflate with mandatory fees or to deceive consumers about the nature and purpose of fees.
In addition, the proposed rule would provide a level playing field for honest businesses by requiring all businesses to quote total prices at the start of the purchasing process and to remove false or misleading information about fees from the marketplace. ■