The FTC considers to ban hidden ‘junk fees’ that increases the price of your purchases

On Thursday, the Federal Trade Commission (FTC) declared that it would ban the hidden junk fees that various companies charge as services at the time of checkout. Thanks to these extra addition on the total amounts, which have secretly made its way in the process of buying literally anything from a T-shirt online, booking tickets for a concert, booking hotel for a vacation or even ordering food. The prices that consumers are shown while browsing nowhere close to what they end up purchasing the item for.

CFTC
Image Credits: Decrypt

The United States administration is building pressure on companies such as Ticket master as well as Airbnb, to rectify their ways, and in the recent times both these companies were Crystal clear in giving more honest information about the extra charges they were levying.

Now, the FTC wants to make a further modification, and in that it altogether bans the hidden fees that is charged deceptively by these companies. The proposed law is applicable to both hidden, compulsory fees that do not specify the exact reason and appear to be deceptive “bogus fees“ that makes the consumers unsure of what they actually paid for.

These practices are deceptive, with most companies often coming up to “bait and switch pricing and misrepresenting the nature and purpose of fees,“ says FTC in its arguments in the proposal notice. The proposed rule will also cover businesses that include extra fees in their advertising prices to explain what it is for and also to let consumers know if the amount or part of it is refundable or not.

In its assessment, the Federal Trade Commission to comments from the public in 2022 to re-evaluate the effect of hidden junk fees and subsequently collected over 12,000 responses to analyse the situation. Now, it is looking into comments for 60 days so that the consumers can tell their views on the rule after its put forth. FTC chair Lina M. Khan said, “ all too often, Americans are plagued with or expected and unnecessary fees they can’t escape. These junk fees now cost Americans tens of billions of dollars per year – money that corporations are extracting from working families just because they can. 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 save people money and time, and make our markets more fair and competitive.”

Image source- thehindu.com

According to the forecast by FTC, the junk fees can amount to tens of billions of dollars annually in unexpected costs. The chair’s comment made it clear that consumers were tired of the hidden fees. Many complaints that the selling parties do not often advertise the entire amount they are asking for until the end of transaction. They also alleged that the sellers also misrepresent the nature or purpose of the money they are extracting, leading the consumers wondering if they are getting anything in return for the fee charged.

According to the FTC‘s official website, “The proposed rule will save consumers more than 50 million hours per year of wasted time spent searching for the total price in live ticketing and short-term lodging alone. This time savings is equivalent to more than $10 billion over the next decade.”

The provisions in the proposed rules which ban bogus fees and hidden junk fees will ensure that sellers can no longer attract consumers with artificially “low prices that is the day later inflate with mandatory fees“, and they won’t be able to lie about The nature and purpose of the fees they are charging all together. This would also ensure that honest businesses have a “level playing field” in the market.

Originally posted 2023-10-13 12:06:28.


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