The FTC announces public hearings on junk fees.
Tomorrow, Federal Trade Commission Chair Lina M. Khan announced an open meeting of the Commission would be held virtually. Starting at 1 p.m. ET, it will focus on the following:
Advance Notice of Proposed Rulemaking (ANPRM) on Junk Fees. The Commission will vote on whether to issue an Advance Notice of Proposed Rulemaking to initiate a rulemaking proceeding addressing junk fees charged for goods or services with little or no added value to the consumer. The ANPRM seeks comments on the prevalence of junk fees and the consumer harms arising from junk fee practices, among other questions. These “Junk Fees” (often called drip pricing) include hotel resort fees, entertainment fees like those charged by Ticketmaster, and banking fees. They harm consumers to the tune of billions of dollars.
Travelers United, together with other consumer advocacy groups, will participate. As President of the advocacy group, I will speak at the meeting.
My comments follow:
Travelers United applauds the FTC decision to discuss launching an Advance Notice of Proposed Rulemaking on Junk Fees. We have worked with the FTC for over a decade to stop the scourge of hidden mandatory fees. The FTC studied drip pricing with fees added to the advertised rates. Drip pricing harms American consumers to the tune of billions of dollars.
Once upon a time, these fees were not even disclosed to customers until the purchase of hotel rooms, entertainment tickets, autos, banking transactions, and more. A decade ago, the FTC conducted a significant review of these fees in the lodging industry. The FTC sent a letter to hotel chains and informed them that the drip pricing practice was against the law and would prosecute them without fee disclosure.
Many hotels add a line to their website and ads after the room rates, saying, “Additional mandatory fees may be added to this room rate.” Thus, consumers are notified.
Later, after much nudging from Travelers United and significant media, the lodging industry added the actual mandatory fees after the room rates. Many consumers believe they have paid the complete overnight charges when websites run their credit cards.
Advertisements still include the room rates without mandatory fees. And now, this cruel practice has spread to vacation rentals, banking, and the entertainment industry. We are all aware of the throw-away comment, “Plus, mandatory fees and taxes.”
The DOT recently announced an NPRM about ancillary airline fees. It will require the industry to be honest in its pricing. Now, the FTC is following DOT actions to what they refer to as junk fees or drip pricing.
It is about time that America’s consumers may again enjoy truth in advertising.
Other proposed rulemaking discussions at this public FTC meeting will include the following:
Advance Notice of Proposed Rulemaking on Fake Reviews and Endorsements: The Commission will vote on whether to issue an Advance Notice of Proposed Rulemaking to initiate a rulemaking proceeding addressing fake reviews and other endorsements. This can cheat consumers and honest businesses alike. The ANPR seeks comment on the prevalence of fake and deceptive reviews. It also asks for comments on the consumer harms arising from them and other questions.
Advance Notice of Proposed Rulemaking on the Funeral Rule and Staff Report “Shopping for Funeral Services Online”: The Commission will vote on whether to retain the Funeral Industry Practices Rule. Or, the FTC will issue an Advance Notice of Proposed Rulemaking seeking comment on potential updates to modernize the rule. This will include improvements to the public accessibility of funeral home price information. The Commission will also vote on issuing a staff report that summarizes the results of their review of almost 200 funeral provider websites.
READ ALSO:
Why airline full-disclosure rules won’t solve all travelers’ fee frustration.
As hotel travel recovers, rein in mandatory hotel resort fees.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
