FTC proposes rule to ban hidden and 'bogus' fees

The Federal Trade Commission on Wednesday introduced a proposed rule that would prohibit businesses from charging hidden or misleading fees, which the agency said cost consumers tens of billions of dollars a year.

The junk fees, as they are known, show up when consumers purchase airline tickets, book hotels or pay their utility bills, according to the FTC, which argues that tacking fees onto a price toward the end of a purchase allows companies to make their upfront prices appear artificially low. Such fees became a point of frustration for fans who recently faced astronomically high prices to see acts like Beyoncé and Taylor Swift.

"All too often, Americans are plagued with unexpected and unnecessary fees they can't escape," FTC Chair Lina Khan said in a statement. "By hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront."

The proposed rule would require business to include all mandatory fees in the price upfront, which the FTC says would make it easier to compare prices. It explicitly bans hidden fees, which are added to the total price before checkout, as well as "bogus fees," which the agency defines as fees whose purpose is deceiving.

Under the proposal, companies who charge hidden fees would have to refund consumers and pay monetary penalties. Tuesday's announcement did not specify penalty amounts.

The proposed ban is part of a broader push by the Biden administration to eliminate the fees that it says eat into Americans' pocketbooks. The Consumer Financial Protection Bureau on Wednesday issued guidance to halt large banks from charging the fees to their customers.

In June, the Federal Communications Commission proposed a rule that would require cable companies include fees upfront in pricing. That same month, ticketing companies including Live Nation, which owns Ticketmaster, pledged to stop adding fees at the end of a purchase.

The uproar over Ticketmaster's meltdown during a rush for Taylor Swift tickets led state and federal lawmakers to introduce a wave of legislation that included prohibitions on hidden fees, which economists have told The Washington Post hurt consumers.