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The Federal Trade Commission on Wednesday unveiled a proposed rule that would ban companies from charging hidden or misleading fees, which the agency says costs consumers tens of billions of dollars annually.
The junk fees, as they are called, occur when consumers buy airline tickets, book hotels or pay their utility bills, according to the FTC, which argues that adding fees to the price near the end of a purchase allows companies to get ahead of themselves to pay The prices seem artificially low. Such fees have caused frustration among fans who have recently faced astronomically high prices for performances by artists such as Beyoncé and Taylor Swift.
“All too often, Americans are plagued with unexpected and unnecessary fees that they cannot escape,” FTC Chairwoman Lina Khan said in a statement. “By concealing the overall price, these junk fees make it harder for consumers to buy the best product or service and penalize companies that are honest in the first place.”
An illustrated guide to how fees make everything more expensive
The proposed rule would require companies to include any mandatory fees upfront in the price, which the FTC said would make price comparison easier. It specifically prohibits hidden fees that are added to the total price before checkout, as well as “sham fees,” which the agency defines as fees designed to deceive.
Under the proposal, companies that charge hidden fees would have to refund consumers and pay fines. No details were given in Tuesday’s announcement about the amount of the penalties.
The proposed ban is part of a broader push by the Biden administration to eliminate the fees that are said to be a drain on Americans’ wallets. The Consumer Financial Protection Bureau issued guidance Wednesday to prevent big banks from charging their customers these fees.
In June, the Federal Communications Commission proposed a rule that would require cable companies to factor upfront fees into pricing. That same month, ticket companies including Live Nation, which owns Ticketmaster, pledged to stop charging fees at the end of a purchase.
The uproar over Ticketmaster’s collapse during the rush for Taylor Swift tickets prompted state and federal lawmakers to introduce a wave of legislation banning hidden fees, which Washington Post economists said hurt consumers.