Fighting Junk Fees

Together, we’re all forking over tens of billions of dollars in “junk fees,” says Federal Trade Commission chair Lina Khan, calling them “unexpected and unnecessary.” The FTC also called them “hidden and bogus.”

They may appear on bills for cable or internet service, on charges for lodging or on bank statements. (Many banks charge “inactivity” fees, for example, for no apparent reason.) Surprising fees also appear when you’re ordering food delivery or buying concert tickets, and even when you’re buying a home.

Marketing professor Jeff Galak at Carnegie Mellon University’s Tepper School of Business has referred to “feeflation,” noting, “Fees are a way to raise prices without raising prices.” Hidden fees can also make it hard for consumers to shop around for best prices.

Consumers needn’t despair, thinking that nothing can be done about excessive or junk fees. The FTC, joining with other entities – such as the Consumer Financial Protection Bureau, the Federal Communications Commission, the Department of Housing and Urban Development and the Department of Transportation – is working to prohibit many junk fees.

Indeed, the FTC recently rolled out a proposed rule to prohibit many “hidden and falsely advertised fees.” It would, in the words of the FTC, “ban businesses from running up the bills with hidden and bogus fees, ensure consumers know exactly how much they are paying and what they are getting, and help spur companies to compete on offering the lowest price. Businesses would have to include all mandatory fees when telling consumers a price, making it easier ... to comparison shop for the lowest price.”

The proposal is not yet law, and the FTC is seeking comments from consumers. If you’d like to contribute your thoughts, visit Ftc.gov and click on “Submit a public comment.” FOOLISH TRIVIA