The FTC announced a Notice of Proposed Rulemaking (NPRM) targeting misleading and hidden fees, commonly known as “junk fees,” and how businesses may advertise and market prices to consumers. The NPRM was drafted based on over 12,000 public comments to the FTC’s Advance Notice of Proposed Rulemaking published in November 2022.
The proposed rule would prohibit businesses from advertising prices for goods or services that hide or omit mandatory fees (“hidden fees” imposed later but before the purchase is made). Sellers also would be prohibited from misrepresenting fees and be required to disclose the amount, purpose and refundability of any fees upfront. The rule would also give the FTC enforcement powers to seek monetary penalties against businesses that do not comply with the regulations.
The FTC’s announcement identifies specific industries, such as telecommunications, live entertainment, food delivery and short-term lodging, that commonly advertise prices for goods or services without disclosing additional fees upfront, effectively putting these industries on watch.
The NPRM was approved by the Commission with a 3-0 vote. Comments are due within 60 days after the NPRM is published in the Federal Register.
Additionally, the Biden Administration is working with other federal agencies and organizations, including the Consumer Financial Protection Bureau (CFPB), the Federal Communications Commission (FCC), the Department of Housing and Urban Development (HUD), and the Department of Transportation (DOT), to implement rules requiring businesses to advertise and market full prices upfront. The Administration is also calling on Congress to pass legislation addressing these practices.