| Entities | Biden White House (21) |
| Topics and Issues | "Junk Fees" (3) |
In October 2023, the FTC announced a proposed rule banning junk fees. The press release notes that the proposed Trade Regulation Rule (16 CFR Part 464 Unfair or Deceptive Fees) attempts to address
- Hidden Fees. Consumers told the FTC that dishonest businesses routinely engage in bait-and-switch pricing tactics that hide mandatory fees and deceive consumers about the price. This is because fees imposed later, but before the purchase is made, significantly increase the total that consumers pay. Accordingly, the proposed rule would prohibit businesses from advertising prices that hide or leave out mandatory fees; and
- Bogus Fees. Many consumers also said that they often do not know what fees are for, because dishonest businesses routinely misrepresent or fail to adequately disclose the nature or purpose of the fees. The rule would prohibit sellers from misrepresenting fees and require them to disclose upfront the amount and purpose of the fees and whether they are refundable.
The same day the FTC issued its NPR, the CFPB published several items:
- CFPB Issues Guidance to Halt Large Banks from Charging Illegal Junk Fees for Basic Customer Service
- Prepared Remarks of CFPB Director Rohit Chopra on a Press Call on Junk Fees
- CFPB Issues Guidance to Halt Large Banks from Charging Illegal Junk Fees for Basic Customer Service
- Supervisory Highlights Junk Fees Update Special Edition, Issue 31, Fall 2023
- Vast majority of NSF fees have been eliminated, saving consumers nearly $2 billion annually
- CFPB Exams Return $140 Million to Consumers Hit by Illegal Junk Fees in Banking, Auto Loans, and Remittances
The FTC press release also notes that
Other federal agencies and organizations are joining the FTC to develop and implement rules prohibiting junk fees across multiple U.S. markets and sectors 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).
“Americans are fed up with the junk fees that are creeping across the economy,” said CFPB Director Rohit Chopra. “The FTC’s proposed rule will protect families and honest businesses from race-to-the-bottom abuses that cost us billions of dollars each year. If finalized, the CFPB will enforce the rule against violators in the financial industry and ensure that these firms play fairly.”
The White House issued a release noting an Administration-wide crackdown on “junk fees.”
Additional resources:
- In 2023, California passed S.B. 478, a bill to ban junk fees in that state. That bill was sponsored by Attorney General Rob Bonta (D), and Sens. Bill Dodd (D) and Nancy Skinner (D). General Bonta issued a press release celebrating the bill signing.
- 16 C.F.R. Part 1
- Statement of Chair Lina M. Khan Regarding the Advanced Notice of Proposed Rulemaking on Unfair or Deceptive “Junk” Fees (October 2022)
- Dissenting Statement of Commissioner Wilson on Junk Fees along with her Oral Remarks from the open Commission meeting (October 2022)
- Commissioner Slaughter Oral Remarks Regarding Junk Fees (October 2022)
- Open Commission Meeting – October 20, 2022