The Federal Trade Commission (FTC) has proposed a new rule to ban junk fees, aiming to eliminate hidden costs that increase prices for consumers. The rule would apply to various industries, including event tickets, hotels, and apartment rentals. Companies that continue to charge these fees could face fines and be required to reimburse consumers. The FTC estimates that the rule could potentially save consumers “tens of billions of dollars in fees.” The proposed rule is expected to save consumers over 50 million hours per year in wasted time spent searching for the total price. The FTC has the authority to move forward with this rule without further approval from Congress.
The proposed rule seeks to promote honest pricing and fair competition by prohibiting corporations from using hidden and bogus fees to inflate bills. FTC Chair Lina Khan emphasized the importance of honest pricing, stating that the rule would compel firms to compete based on honesty rather than deception. The proposed rule is projected to save consumers more than $10 billion over the next decade, equivalent to the time savings of over 50 million hours spent searching for prices in live ticketing and short-term lodging alone. Once published in the Federal Register, there will be a 60-day public comment period to gather feedback.
As President Biden focuses on addressing everyday costs for Americans, the proposed rule presents an opportunity for him to appeal to voters with his economic message. This aligns with the president’s efforts to tackle junk fees across various sectors, including air travel and healthcare. The FTC’s authority allows them to proceed with the rule without additional approval from Congress. Additionally, the Consumer Financial Protection Bureau (CFPB) is issuing guidance to large banks and credit unions, prohibiting them from charging customers fees for basic account information. The CFPB’s crackdown on bounced check fees has already saved consumers close to $2 billion since 2021.
