[co-author: Stephanie Kozol]*
On February 7, a coalition of 19 state attorneys general (AG) filed a comment letter supporting the Federal Trade Commission’s (FTC) proposed Trade Regulation Rule on Unfair or Deceptive Fees (Rule). The state AGs echoed the sentiment that the proposed rule would provide much-needed safeguards for consumers against unfair or deceptive fees that are a “prevalent problem in many different types of industries.”
State AGs concurred with the FTC’s suggestion for an unambiguous strategy to counteract the fee practices, including misrepresentation of total costs by excluding mandatory fees from advertised prices and obscuring the nature and purpose of fees. Specifically, state AGs believe that businesses need to present clear and accurate total cost of a product or service at the outset of a transaction. The AGs want to prevent businesses from misleading customers with an artificially low price, only to subsequently introduce extra charges.
The letter also referenced several state enforcement actions against companies across various industries, such as financial services, hospitality, live-event ticketing, rental housing, and auto rental as examples of the ongoing effort to stop these practices.
The letter comes amidst escalating state-level legislation, regulation, and enforcement actions aimed at tackling such practices. A recent example is the Connecticut Senate Bill 15, titled “An Act Requiring Fee Disclosures.” This bill, backed by Connecticut Governor Ned Lamont and AG William Tong, proposes to mandate “all-in pricing” across all tickets, food delivery, and lodging services with the goal to ensure full cost transparency, including any ancillary or “junk” fees at the outset of a priced quote.
Why It Matters
These recent developments highlight the regulatory focus on addressing the issue of both hidden and “junk” fees. Regulators are striving toward transparency, fostering consumer trust, and shielding consumers from perceived misleading pricing practices. As these initiatives garner attention at both the federal and state levels, a nationwide momentum is building. Companies should reassess their pricing practices, especially regarding mandatory fees not disclosed in marketing materials and/or at the point of sale. By doing so, they can potentially mitigate the risk of regulatory scrutiny.
*Senior Government Relations Manager
