FTC proposes a ban on ‘junk fees’ and says hidden charges push up prices

WASHINGTON — The Federal Trade Commission today proposed a rule to ban any hidden and bogus “junk” fees, which can mask the total cost of concert tickets, hotel rooms and utility bills.

President Joe Biden has made the removal of these fees a priority of his administration. The effort has led to a legislative push and a spate of initiatives aimed at helping consumers. Administration officials have said these additional costs can inflate prices and waste people’s time.

“The proposed rule would prohibit corporations from running up the bills with hidden and bogus fees, requiring honest pricing and spurring firms to compete on honesty rather than deception,” said FTC Chair Lina Kahn on a call with reporters. “Violators will be subject to civil penalties and be required to pay back Americans that they tricked.”

The FTC proposal is being coupled with the Consumer Financial Protection Bureau announcing that it will block large banks from charging junk fees in order to provide basic customer services.

Biden plans to speak about both plans in remarks this morning in the White House Rose Garden.

Lael Brainard, director of the White House National Economic Council, said research indicates that hidden fees can cause consumers to pay as much as 20% more than had they known the total cost upfront and comparison shopped.

The FTC estimates that consumers waste 50 million hours each year searching for the total price for tickets and lodging. The time saved in those two categories because of the rule would be equivalent to about $1 billion annually.

But some business groups are skeptical that people will realize actual savings. After Biden discussed junk fees at a February meeting with aides, the U.S. Chamber of Commerce issued a statement that the “Washington-knows-best approach” would lead to fewer choices for consumers and make the economy less competitive.