FTC Cracks Down on Hidden Junk Fees

The Federal Trade Commission (FTC) is taking a bold step to protect consumers from unexpected “junk fees” by proposing a new rule that mandates upfront disclosure. This move comes after the Biden administration exerted pressure on companies like Ticketmaster and Airbnb to be more transparent about their extra charges. Both companies have committed to making changes, but the FTC aims to eliminate such deceptive practices entirely.

Under the new FTC rule, businesses would be required to include all additional fees in their advertised prices, clearly explain each fee’s purpose, and indicate whether any part is refundable. This proposal aims to put an end to “bait-and-switch” pricing strategies that not only mislead consumers but also put transparent businesses at a disadvantage.

California Governor Gavin Newsom signed Senate Bill 478 into law, effectively banning businesses from adding any undisclosed mandatory fees to the final price of a good or service. This California law takes effect on July 1, 2024.

The federal and state initiatives share the common goal of making pricing transparent and eliminating deceptive practices. The California law categorizes such fees as a form of “bait-and-switch advertising,” echoing sentiments at the federal level where the FTC termed them misleading and anti-competitive.