Proposed Rule2023-24234
Trade Regulation Rule on Unfair or Deceptive Fees
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 9, 2023
Issuing agencies
Federal Trade Commission
Abstract
The Federal Trade Commission commences a rulemaking to promulgate a trade regulation rule entitled "Rule on Unfair or Deceptive Fees," which would prohibit unfair or deceptive practices relating to fees for goods or services, specifically, misrepresenting the total costs of goods and services by omitting mandatory fees from advertised prices and misrepresenting the nature and purpose of fees. The Commission finds these unfair or deceptive practices relating to fees to be prevalent based on prior enforcement, the comments it received in response to an advance notice of proposed rulemaking, and other information discussed in this proposal. The Commission now solicits written comment, data, and arguments concerning the utility and scope of the trade regulation rule proposed in this notice of proposed rulemaking to prevent the identified unfair or deceptive practices.
Full Text
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[Federal Register Volume 88, Number 216 (Thursday, November 9, 2023)]
[Proposed Rules]
[Pages 77420-77485]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-24234]
[[Page 77419]]
Vol. 88
Thursday,
No. 216
November 9, 2023
Part II
Federal Trade Commission
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16 CFR Part 464
Trade Regulation Rule on Unfair or Deceptive Fees; Proposed Rule
Federal Register / Vol. 88 , No. 216 / Thursday, November 9, 2023 /
Proposed Rules
[[Page 77420]]
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FEDERAL TRADE COMMISSION
16 CFR Part 464
Trade Regulation Rule on Unfair or Deceptive Fees
AGENCY: Federal Trade Commission.
ACTION: Notice of proposed rulemaking; request for public comment.
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SUMMARY: The Federal Trade Commission commences a rulemaking to
promulgate a trade regulation rule entitled ``Rule on Unfair or
Deceptive Fees,'' which would prohibit unfair or deceptive practices
relating to fees for goods or services, specifically, misrepresenting
the total costs of goods and services by omitting mandatory fees from
advertised prices and misrepresenting the nature and purpose of fees.
The Commission finds these unfair or deceptive practices relating to
fees to be prevalent based on prior enforcement, the comments it
received in response to an advance notice of proposed rulemaking, and
other information discussed in this proposal. The Commission now
solicits written comment, data, and arguments concerning the utility
and scope of the trade regulation rule proposed in this notice of
proposed rulemaking to prevent the identified unfair or deceptive
practices.
DATES: Comments must be received on or before January 8, 2024.
ADDRESSES: Interested parties may file a comment online or on paper by
following the instructions in the Comment Submissions part of the
SUPPLEMENTARY INFORMATION section in this preamble. Write ``Unfair or
Deceptive Fees NPRM, R207011'' on your comment and file your comment
online at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. If you prefer to file your
comment on paper, mail your comment to the following address: Federal
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW,
Mail Stop H-144 (Annex J), Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Janice Kopec or Stacy Cammarano,
Division of Advertising Practices, Bureau of Consumer Protection,
Federal Trade Commission, 202-326-2550 (Kopec), 202-326-3308
(Cammarano), <a href="/cdn-cgi/l/email-protection#2e4445415e4b4d6e485a4d00494158"><span class="__cf_email__" data-cfemail="8ae0e1e5faefe9caecfee9a4ede5fc">[email protected]</span></a>, <a href="/cdn-cgi/l/email-protection#7d0e1e1c10101c0f1c13123d1b091e531a120b"><span class="__cf_email__" data-cfemail="b4c7d7d5d9d9d5c6d5dadbf4d2c0d79ad3dbc2">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The Federal Trade Commission (``FTC'' or
``Commission'') invites interested parties to submit data, views, and
arguments on the proposed Rule on Unfair or Deceptive Fees and,
specifically, on the questions set forth in Section X of this notice of
proposed rulemaking (``NPRM''). The comment period will remain open
until January 8, 2024.\1\ To the extent practicable, all comments will
be available on the public record and posted at the docket for this
rulemaking on <a href="https://www.regulations.gov">https://www.regulations.gov</a>. The Commission will provide
an opportunity for an informal hearing if an interested person requests
to present their position orally. See 15 U.S.C. 57a(c). Any person
interested in making a presentation at an informal hearing must submit
a comment requesting to make an oral submission, and the request must
identify the person's interests in the proceeding and indicate whether
there are any disputed issues of material fact that need to be resolved
during the hearing. See 16 CFR 1.11(e). The comment should also include
a statement explaining why an informal hearing is warranted and a
summary of any anticipated testimony. If the Commission schedules an
informal hearing, either on its own initiative or in response to
request by an interested party, a separate notice will issue. See id.
at 1.12(a).
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\1\ The Commission elects not to provide a separate, second
comment period for rebuttal comments. See 16 CFR 1.11(e) (``The
Commission may in its discretion provide for a separate rebuttal
period following the comment period.'').
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I. Background
The Commission published, on November 8, 2022, an Advance notice of
proposed rulemaking (``ANPR'') under the authority of Section 18 of the
Federal Trade Commission Act (``FTC Act''), 15 U.S.C. 57a(b)(2); the
provisions of Part 1, Subpart B, of the Commission's Rules of Practice,
16 CFR 1.7 through 1.20; and 5 U.S.C. 553.\2\ This authority permits
the Commission to promulgate, modify, or repeal trade regulation rules
that define with specificity acts or practices that are unfair or
deceptive in or affecting commerce within the meaning of Section
5(a)(1) of the FTC Act, 15 U.S.C. 45(a)(1).
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\2\ Fed. Trade Comm'n, ANPR: Unfair or Deceptive Fees Trade
Regulation Rule Commission Matter No. R207011, 87 FR 67413 (Nov. 8,
2022), <a href="https://www.federalregister.gov/documents/2022/11/08/2022-24326/unfair-or-deceptive-fees-trade-regulation-rule-commission-matter-no-r207011">https://www.federalregister.gov/documents/2022/11/08/2022-24326/unfair-or-deceptive-fees-trade-regulation-rule-commission-matter-no-r207011</a> or <a href="https://www.regulations.gov/document/FTC-2022-0069-0001">https://www.regulations.gov/document/FTC-2022-0069-0001</a>.
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The ANPR described the Commission's history of taking law
enforcement action against, and educating consumers about, unfair or
deceptive practices relating to fees, and it asked a series of
questions to inform the Commission about whether such practices are
prevalent and, if so, whether and how to proceed with a NPRM.\3\ The
Commission took comments for 60 days, extended the comment period,\4\
and received over 12,000 comments, which it has thoroughly considered.
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\3\ Id.
\4\ 88 FR 4796 (Jan. 25, 2023).
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Based on the substance of these comments, as well as the
Commission's history of enforcement and other information discussed in
this preamble, the Commission has reason to believe that unfair or
deceptive practices relating to fees are prevalent \5\ and that
proceeding with this rulemaking is in the public interest. After
discussing the comments and explaining its considerations in developing
the proposed rule, the Commission poses specific questions for comment
and provides the text of its proposed rule.
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\5\ See 15 U.S.C. 57a(b)(3) (``The Commission shall issue a
notice of proposed rulemaking pursuant to paragraph (1)(A) only
where it has reason to believe that the unfair or deceptive acts or
practices which are the subject of the proposed rulemaking are
prevalent.'').
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II. Summary of Comments to the ANPR
The Commission received over 12,000 comments in response to the
ANPR. Publicly posted comments are available on this rulemaking's
docket at <a href="https://www.regulations.gov/docket/FTC-2022-0069/comments">https://www.regulations.gov/docket/FTC-2022-0069/comments</a>.\6\
The majority of comments expressly supported government action or
described negative experiences relating to fees that suggested support
for such action. The comments generally supported a rulemaking to
improve pricing transparency--including requiring advertised prices to
include mandatory fees--and to prohibit misrepresentations about the
nature, purpose, or amount of fees. The Commission has carefully
considered the views expressed in the comments, and proposes the rule
described in Section XIV.
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\6\ For Docket ID FTC-2022-0069, <a href="http://Regulations.gov">Regulations.gov</a> lists the
``Number of Comments Posted to this Docket'' as 6,166 out of a total
``Number of Comments Received'' of 12,046. As noted in the responses
to Frequently Asked Questions at <a href="http://Regulations.gov">Regulations.gov</a>, ``Not every
comment is made publicly available to read. Comment counts that
refer to `comments posted' reflect the number of comments that an
agency has posted to <a href="http://Regulations.gov">Regulations.gov</a> to be publicly viewable.
Agencies may choose to redact or withhold certain submissions (or
portions thereof) such as those containing private or proprietary
information, inappropriate language, or duplicate/near duplicate
examples of a mass-mail campaign. Therefore, the number of comments
posted may be lower than the comments received.'' In connection with
this docket, over 5,700 comments were a part of a single mass-mail
campaign, which is represented in the posted comments by comment
FTC-2022-0069-5989.
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As discussed in this preamble, the comments raised concerns about
widespread deceptive practices in
[[Page 77421]]
connection with fees. In particular, they raised concerns that sellers
do not advertise the total amount consumers will have to pay and
disclose fees only after consumers are well into purchasing
transactions, harming both consumers and businesses. They also stated
sellers misrepresent or do not adequately disclose the nature or
purpose of fees, leaving consumers wondering what they are paying for
or believing fees are arbitrary, and they are getting nothing for the
fees charged.\7\
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\7\ The comments also stated in large numbers that the amounts
of fees charged are often excessive, increasing prices by large
percentages and making purchases unaffordable, particularly, in the
live-event ticketing industry. The rule proposed by the FTC does not
limit the amount that businesses may charge for goods or services.
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Commenters provided examples of these practices related to a wide
array of goods and services, such as hotels, short-term lodging, ticket
sales, rental housing, financial services, auto sales, internet service
providers, and other market sectors. Many commenters addressed multiple
sectors in a single comment. In this section, we discuss comments from
individual commenters and other stakeholders, including consumer,
policy, and industry groups, about these widespread practices. The
breadth and number of comments strongly support a rule to tackle the
harm caused to consumers and businesses from these practices across
various industries, by requiring all-in pricing and other measures to
prevent false and misleading representations about fees.
A. Overview of Prevalent Unfair or Deceptive Fee Practices Identified
in Comments
1. Comments on Bait-and-Switch Tactics: Misrepresenting Total Costs by
Omitting Mandatory Fees From Advertised Prices
Commenters stated businesses routinely engage in deceptive bait-
and-switch pricing tactics by advertising prices that fail to include
mandatory fees and that end up misrepresenting total prices because
fees imposed later increase total prices significantly.\8\ In many
comments, mandatory add-on fees omitted from an initial offer were not
disclosed until checkout,\9\ and some comments raised concerns about
advertisements that omitted key terms that required consumers to pay
more to fully use the good or service.\10\ They stated fees can inflate
advertised prices by amounts that are large percentages of the base
prices of goods or services.\11\ Commenters described this bait-and-
switch practice as misrepresenting the total costs consumers must pay
and as false advertising that is deceptive and unfair to consumers, and
asked the FTC to take action.\12\
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\8\ FTC-2022-0069-1046 (``Consumers should not have to guess
what their total outlay for a purchase will be . . . . Not revealing
the true cost of something is deceptive and anti-competitive (How
can you comparison-shop if you don't know the price?)''); FTC-2022-
0069-1481 (``the price advertised is significantly less then [sic]
the final price once convenience fees and other hidden fees with
vague justifications are added to the cost''); FTC-2022-0069-2582
(``These fees serve to mask the true price of any service.''); FTC-
2022-0069-3420 (delayed disclosures ``artificially lower prices'');
FTC-2022-0069-3498 (``[O]nline businesses . . . advertise a low cost
to attract attention, then add on a fee at checkout that eliminates
any benefit from the initial advertised price.''); FTC-2022-0069-
4064 (``In a time when information is readily available to hide it
when it comes to costs is nefarious.''); FTC-2022-0069-4120 (``If
the fees are not optional, they need to be included in the initial
price; otherwise, it's false advertising[.]''); FTC-2022-0069-4724
(``It has gotten to the point that fees mis-represent [sic] the true
cost of the product or service until after the purchase.''); FTC-
2022-0069-6104 (``Advertising low prices and tacking on various fees
is nothing more than bait and switch.'').
\9\ FTC-2022-0069-0040 (describing additional mandatory fees
disclosed at the checkout page in a live-event ticket purchase);
FTC-2022-0069-0103 (describing additional mandatory fees disclosed
at the hotel checkout); FTC-2022-0069-0120 (same); FTC-2022-0069-
0116 (describing additional mandatory fees disclosed at the rental
car checkout); FTC-2022-0069-0842 (describing late-disclosed fees in
a variety of industries); FTC-2022-0069-1437 (describing late-
disclosed fees in delivery applications and vacation rentals).
\10\ FTC-2022-0069-1622 (describing subscription models to use
features that are already part of a product); FTC-2022-0069-1915
(same); FTC-2022-0069-5913 (``We need to ban having subscription
services attached to vehicle features, requiring you to pay monthly
fees for items already installed in the vehicle.''); FTC-2022-0069-
1638 (complaining of a video subscription service with undisclosed
limitations on the shows included and requiring additional
payments); FTC-2022-0069-5434 (describing recurring fees for rental
apartments disclosed after the lease application was submitted);
FTC-2022-0069-5419 (describing a gym membership with a late-
disclosed policy of add-on fees, including extra charges to access
classes); FTC-2022-0069-5353 (describing a security camera that
requires additional purchases to use).
\11\ FTC-2022-0069-0048 (``I've seen situations where the resort
fee can be 2-3 times the `room rate.' ''); FTC-2022-0069-1862
(``Norwegian Cruise Line recently increased their service charge to
$20 per person per day. That's $560 for a week-long cruise for a
family of four and accounts for 17% of the total cost of a cruise.
It's clear that cruise lines have been increasing these fees to pay
their workers more without increasing the base fare they
advertise.''); FTC-2022-0069-2154 (``Often times these fees are a
considerable percentage of the advertised price, and there is no
obvious rationale for how they quantify these massive and varying
amounts.''); FTC-2022-0069-3434 (``[C]ompanies should not be allowed
to advertise one price and then tack on enough fees to almost double
the cost to consumers.''); FTC-2022-0069-5892 (``a `Processing fee'
of $299.11, which is more than the total quoted price for a year's
supply of contact lenses, is added to the order, increasing the
total purchase price from $271.92 to $579.98. This clearly shows how
these deceptive junk fees more than double the advertised price of a
year's supply of contact lenses.'').
\12\ FTC-2022-0069-3415 (``false advertising at best''); FTC-
2022-0069-0111 (``a way to falsely advertise a lower price''); FTC-
2022-0069-3435 (``Advertising one price when you know there is more
to it, or more that you as a business will have to pay, is deceptive
and unfair to the consumer[.]''); FTC-2022-0069-6167 (``Please put a
STOP to this deceptive, dishonest practice'').
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[[Page 77422]]
2. Comments on Misrepresenting the Nature and Purpose of Fees
Commenters stated consumers often do not know what fees are for
because businesses routinely do not clearly or conspicuously disclose
the nature or purpose of fees, including the identity of the goods or
services for which the fees are charged.\13\ Commenters explained that
businesses employ vague names like convenience fees, economic impact
fees, or improvement fees that do not adequately disclose to consumers
what they are paying for.\14\ Commenters also noted prices are
sometimes advertised as ``free,'' but are not in fact free when fees
are added.\15\
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\13\ FTC-2022-0069-0489 (``it is unclear what purpose they
serve''); FTC-2022-0069-0493 (``fee system'' is ``clouded in
secrecy''); FTC-2022-0069-0603 (``what are they for?''); FTC-2022-
0069-1301 (``These fees are terrible, they're an added cost with no
apparent purpose or meaning.''); FTC-2022-0069-1748 (``Besides
ticketing sites, utilities have service fees, banks have statement
fees, retail stores may have convenience fees, ride sharing apps
have service fees, food delivery apps have service fees, and many
other business types have fees that the consumer is expected to pay
for without clarity to their purpose.''); FTC-2022-0069-1794
(``[h]aving a name for a fee [that] doesn't really describe what it
does or why I have to pay it''); FTC-2022-0069-2187 (``[I]t seems
too easy for companies across the spectrum to both `hide' fees from
the consumer in the initial pricing, but then also avoid explain
[sic] to the purchaser what those fees are actually for.''); FTC-
2022-0069-2189 (``it's often unclear what these fees are for'');
FTC-2022-0069-2346 (``A reasonable person can't fathom what these
`fees' are for and most times these fees are not explicit in their
purpose.''); FTC-2022-0069-3784 (``Not only are the fees added
later, their [sic] is no insight as to what these fees are.''); FTC-
2022-0069-2566 (``it has never been clear what they are actually
for''); FTC-2022-0069-3148 (``Fees are going up and up and it's
never clear what, exactly, they're being charged for.''); FTC-2022-
0069-3686 (``organizations do not make the knowledge of what the
fees are used for public, or at least accessible/obvious''); FTC-
2022-0069-4067 (``It would be better also if an explanation of the
fees and what their purpose is was present.'').
\14\ FTC-2022-0069-1477 (``some secret convenience fee pushing
the actual cost up''); FTC-2022-0069-1612 (``The fees are vague and
there's not [sic] reason for them to not be included in the
advertised price, unless the company is utilizing a marketing
strategy with the intention of deceiving the customer.''); FTC-2022-
0069-1947 (``Why are companies allowed to charge an abstract
`convenience fee' with no further explanation of what the fee is
for?''); FTC-2022-0069-3766 (``restaurant . . . deceptively adds a
20% `equity fee' to every bill instead of fairly displaying a
price''); FTC-2022-0069-3880 (commenter wrote about a fluctuating
``Economic Impact Fee''); FTC-2022-0069-4405 (``From hotels to
online delivery companies to service providers, it seems that nearly
all companies are tackling [sic] on additional costs without
explaining why they are necessary to provide the service.'').
\15\ FTC-2022-0069-1676 (``Turbo tax. Waiting until I've done
all of my paperwork to tell me that I need to upgrade my package to
file.''); FTC-2022-0069-2986 (``the cruise line included room
service at no charge,'' but ``they added a $9,95 [sic] plus 18%
gratuity charge to all room service services''); FTC-2022-0069-0688
(``During on-line Christmas shopping, one company offered `Free
Shipping' as a promotion. At checkout, even though there was a $0
charge for `Shipping', I was charged $2.99 for `Shipping Service
Fees'. How is this considered FREE shipping?'').
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Commenters stated that, even when businesses purport to disclose
the nature or purpose of fees, the disclosures may not be truthful.
Commenters described fees as arbitrary and not bearing any reasonable
relationship to the costs of goods or services provided.\16\ Commenters
stated fees provided them with little or no value, were not for goods
or services they received, and were merely revenue sources for
businesses.\17\
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\16\ FTC-2022-0069-2433 (``These fees are not representative of
any actual cost of processing an electronic payment or other
transaction and without regulation any price can be set arbitrarily
resulting in extra cost to the consumer for no reason at all.'');
FTC-2022-0069-2558 (``whatever fees they decide to make up''); FTC-
2022-0069-3492 (Consumers are under the impression that ``fees do
not cover any actual costs'').
\17\ FTC-2022-0069-0605 (``just an unfair profit markup, there
is not benefit or service for the ticket transaction''); FTC-2022-
0069-0443 (``Pure income generation scams''); FTC-2022-0069-3664
(``fee is used merely to generate profit rather than cover a
cost'').
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B. The Comments Show the Identified Deceptive Practices Are Widespread
The FTC received comments regarding a wide range of industries from
individual commenters and consumer, policy, and industry groups.
Individual commenters frequently raised concerns about these practices
in connection with more than one industry in a single comment, with
some describing the existence of mandatory, hidden, or misrepresented
fees across the economy.\18\ Although many individual commenters wrote
about online purchases, they also noted that stores with physical
locations also engage in advertising prices that do not include
mandatory fees, and only later disclose fees using names that do not
clearly inform consumers of the nature or purpose of fees.\19\
Individual commenters noted that businesses also face undisclosed fees
for which the nature or purpose is not clear.\20\
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\18\ FTC-2022-0069-0450 (``As a consumer, I despise being duped
with advertised pricing only to be alarmingly surprised at checkout
that there are ancillary fees, convenience charges, special handling
charges, resort fees, extended warranty charges, restocking fees,
waste disposal fees, entry fees, exit fees, toll charges, health
mandate fees, CRV fees, upgrade fees, downgrade fees, overweight
baggage fees, extra baggage fees, additional BBQ sauce fees, monthly
service fees if your balance falls below $xxx, overdraft fees,
mystery gasoline tax for winter blends and/or summer blends, to-go
bag and container fees, delivery fees, etc.''); FTC-2022-0069-0688
(``These fees in various forms, are appearing everywhere: through
entertainment ticket sales, hotels and resorts, banks, credit card
companies, car dealerships, on-line retail companies, etc.''); FTC-
2022-0069-1634 (``Unduly forcing frivolous and intentionally vague
monetary fees on anything, whether necessary (utility payments,
rent, phone bills, etc.) or recreational (concerts, hotels, short-
term rental properties, etc.) is unethical); FTC-2022-0069-1940
(``This is everything from Ticketmaster, ticket processing fees,
doordash/food delivery, convenience fees, bank fees, landlords
charging admin fees, restaurants charging a service surcharge, and
many more. These hidden fees that are not upfront greatly affect
consumers and do not give them the proper knowledge of the true cost
upfront.''); FTC-2022-0069-3323 (``Hidden fees just feel way too
common nowadays. Credit cards, software, subscriptions, travel, and
the vast majority of other industries are making it too difficult
for consumers to find the right business to work with.''); FTC-2022-
0069-3374 (``Lately most companies are using hidden fees to falsely
advertise low prices. Delivery companies, Ticketmaster,
telecommunications companies, car dealerships, airbnb, rentals,
hotels, credit card companies, banks, convenience fees for payment
types, airlines, and others.''); FTC-2022-0069-3932 (``Consumers
across so many industries are increasingly subject to fees that are
not conveyed at the time of the purchase . . . surprise service fees
in hospitality, surprise interest fees in financial services,
surprise charges in healthcare that even insurance providers cannot
explain''); FTC-2022-0069-5743 (``The FTC needs to regulate the
transparency of prices for EVERYTHING, online and in person.'').
\19\ FTC-2022-0069-0427 (Pottery shop ``receipt said C19
surcharge. What? I had to look it up. Never heard of it before now.
. . . There was no signage about this extra surcharge. The sales
clerk didn't say there would be extra fees.''); FTC-2022-0069-2242
(Grocery ``store charges a .5% `improvement fee' that no employee
can give me a straight answer as to why it exists.''); FTC-2022-
0069-5616 (``there are some areas that have a `Public improvement
fee.' These are nice areas that I have no issue shopping at, but why
do I not know what the fee is or where it is applied? These fees and
taxes should be included in the listing price. Stores have price
guns, so I know they can set the price on each item in the
store.'').
\20\ For example, individual commenters noted that merchant
account payment processors charged previously undisclosed fees for
no clear purpose. See, e.g., FTC-2022-0069-1922 (``without warning
or justification, we have been charged $149 for an `annual
compliance fee' and $169 for an `annual member fee.' I assure you
that these fees were not part of our original contract.''); FTC-
2022-0069-6159 (``These, often bogus, fees go by many names and in
some cases there are `duplicate' fees for the same purpose only
under different names on the same monthly statements.'').
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Consumer groups--the Consumer Federation of America, Consumer
Reports, Truth in Advertising, UnidosUS, and the Institute for Policy
Integrity--expressed support for rulemaking.\21\ Although the U.S.
Chamber of Commerce and the Association of National Advertisers
[[Page 77423]]
(``ANA'') argued the FTC has not presented evidence that unfair or
deceptive practices related to fees are prevalent, and opposed
rulemaking,\22\ consumer groups raised concerns shared by individual
commenters and provided information about existing regulations and
legislation,\23\ enforcement actions,\24\ and studies and surveys,\25\
demonstrating (along with other evidence described in this NPRM) that
it is a prevalent practice for businesses to advertise prices that fail
to disclose mandatory fees.\26\
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\21\ FTC-2022-0069-6077 (The Institute for Policy Integrity at
New York University School of Law (``Policy Integrity'') submitted a
comment in support of rulemaking); FTC-2022-0069-6095 (The Consumer
Federation of America (``CFA'') submitted comments from 42 national
and State consumer advocates, supporting FTC rulemaking); FTC-2022-
0069-6042 (Truth in Advertising, Inc. (``<a href="http://TINA.org">TINA.org</a>'') supports FTC
rulemaking); FTC-2022-0069-6099 (Consumer Reports (``CR'') supports
FTC rulemaking relating to junk fees, and joins the comment of CFA);
FTC-2022-0069-6113 (UnidosUS, the nation's largest Hispanic civil
rights and advocacy organization, submitted a comment in support of
rulemaking, and endorsing the comment of the CFA.).
\22\ FTC-2022-0069-6047 (The U.S. Chamber of Commerce (``the
Chamber'') did not support rulemaking, argued that fees rulemaking
should be based on whether practices are unfair or deceptive under
Section 5 of the FTC, not on a lack of remedies, such as monetary
relief after AMG, and recommended that the FTC withdraw from
rulemaking); FTC-2022-0069-6093 (ANA also did not support
rulemaking.).
\23\ Consumer groups noted that the Consumer Financial
Protection Bureau, the Department of Transportation, and the Federal
Communications Commission are tackling junk fees through regulation,
and that the States are also tackling deceptive junk fees through
legislation. See, e.g., FTC-2022-0069-6095 (CFA discussed efforts by
other Federal agencies (e.g., CFPB, DOT, FCC) and New York
legislation related to junk fees.).
\24\ FTC-2022-0069-6095 (CFA cited enforcement actions that
addressed deceptive practices relating to junk fees); FTC-2022-0069-
6042 (<a href="http://TINA.org">TINA.org</a> has tracked and published information about class-
action lawsuits related to fees in various industries in its Class
Action Tracker); FTC-2022-0069-6113 (UnidosUS cited enforcement
actions regarding auto-dealer fees and subprime installment lending
fees as evidence of problematic fees and unfair or deceptive
practices.).
\25\ FTC-2022-0069-6099 (CR discussed its WTFee?! Survey, 2018
Nationally-Representative Multi-Mode Survey of hidden fees in
multiple sectors of the economy and the prevalence of unfair or
deceptive fees practices in specific ``priority economic sectors,''
including telecommunications, travel, banking and financial
services, automotive sales and services, utilities, retail sales and
e-commerce, and live entertainment and sporting events.); FTC-2022-
0069-6095 (CFA noted that the Washington Attorney General's Hidden
Fee Survey showed that consumers experienced unexpected fees in a
wide range of industries.); FTC-2022-0069-6113 (UnidosUS cited
surveys or studies by UnidosUS, the Financial Health Network, and
the Center for Responsible Lending that documented the impact of
fees related to financial services products.).
\26\ FTC-2022-0069-6095 (CFA provided information relating to
the prevalence of unfair or deceptive practices relating to junk
fees); FTC-2022-0069-6042 (<a href="http://TINA.org">TINA.org</a> stated its ``work tracking and
exposing junk and hidden fees makes clear that it is a pervasive
problem that causes real financial harm to consumers''); FTC-2022-
0069-6113 (UnidosUS endorsed the comment by the Consumer Federation
of America in connection with that comment's discussion of evidence
of how junk fees in connection with financial products and
transactions, such as overdraft, auto-buying fees, mortgage
delinquency-related fees, education tuition and loan fees, and
installment loan fees, disproportionally harm low-income consumers,
consumers of color, and those who are limited English proficient.).
---------------------------------------------------------------------------
The information presented by consumer groups shows that false
advertising of total prices occurs across industries. Consumer Reports'
2018 WTFee?! Survey ``found that at least 85% of Americans have
experienced a hidden or unexpected fee for a service in the previous
two years, and 96% found them highly annoying'' and that ``[n]early
two-thirds of those surveyed by [Consumer Reports] said they were
paying more now in surprise charges than they did five years ago.''
\27\ Truth in Advertising noted that hidden fees are a prevalent
problem related to internet apps, automobile rentals, communications
companies, event ticket sellers, carpet cleaners, auto dealers, dietary
supplement sellers, restaurants, airlines, moving companies, credit
unions and banks, payday lenders, gyms, hotel and travel companies,
outlet stores, sports betting, and online auctions.\28\ Some of the
market sectors about which the FTC received comments are discussed in
this section of the preamble.\29\
---------------------------------------------------------------------------
\27\ FTC-2022-0069-6099 (CR submitted its WTFee?! Survey, a
related 2019 article, Protect Yourself from Hidden Fees, and
``consumer stories collected by CR in January 2023'' detailing many
personal experiences with hidden fees). Another survey was published
after the close of the comment period showed that a significant
percentage of consumers encountered unexpected or hidden fees across
a variety of industries, including telecommunications, utilities,
auto loans and purchases, financial services, college tuition,
hotels, rental cars, and live entertainment. Consumer Reports,
American Experiences Survey: A Nationally Representative Multi-Mode
Survey (April 2023), available at <a href="https://article.images.consumerreports.org/image/upload/v1682544745/prod/content/dam/surveys/April_2023_AES_Toplines.pdf">https://article.images.consumerreports.org/image/upload/v1682544745/prod/content/dam/surveys/April_2023_AES_Toplines.pdf</a>.
\28\ FTC-2022-0069-6042 (<a href="http://TINA.org">TINA.org</a>).
\29\ In addition to these market sectors, the FTC also received
comments about many other market sectors, such as healthcare,
subscriptions, electronic payment services, and utilities, and from
other industry groups. For example, one industry commenter reported
that remittance fees are often hidden in artificially inflated
exchange rates and that the nature of these fees is not disclosed to
consumers who do not have an adequate opportunity to comparison shop
among different methods to transfer money. FTC-2022-0069-2523 (Wise
supported rulemaking and recommended that any rule address pricing
practices in cross-border payments (remittances)). Another industry
commenter stated chain Fixed-Base Operators (``FBOs''), which are
businesses or organizations which provide commercial aeronautical
services, ``might disclose pricing for their services only after an
aircraft has arrived at the Chain FBO or, even more troubling, after
rendering the services[,]'' and therefore supported enhancing
pricing transparency by requiring chain FBOs, to disclose pricing
for their services before aircrafts arrive at airports. FTC-2022-
0069-2615 (The Aircraft Owners and Pilots Association (``AOPA'')
also stated some chain FBOs may also charge fees that ``often offer
little or no added value or discernable benefit[.]'').
---------------------------------------------------------------------------
1. Hotel and Short-Term Lodging Fees
Individual commenters stated hotels, online travel agencies
(``OTAs''), and vacation rental providers often do not include fees,
such as hotel resort fees and vacation rental fees such as cleaning
fees, in advertised nightly rates, artificially lowering the true cost
of hotel rooms and rentals vis-a-vis competitors.\30\ Other comments
stated fees may be misrepresented, for example, fees charged as
vacation rental cleaning fees when hosts require renters to clean
accommodations.\31\ Consumer Reports commented that hotels and OTAs
have continued to charge hidden resort fees after the FTC issued
warning letters in 2012.\32\
---------------------------------------------------------------------------
\30\ FTC-2022-0069-0084 (``[Y]ou have hotels around the country
that are now adding in destination fees, resort fees, etc. Not only
are these fees hidden, they also add these fees to `free' night
stays.''); FTC-2022-0069-2350 (``Vacation accommodation platforms
are becoming increasingly misleading with the listed price on the
initial search nearly doubling by the time you reach checkout for
fees that, by explanation, dont [sic] seem to differ from what you
are already paying for; `destination fee' and `property service
fee'. This practice seems to be common with most booking sites but I
specifically use <a href="http://Booking.com">Booking.com</a> so I will keep my complaint specific to
their hidden fees. . . . [O]nce I reach checkout, the price has been
increased by 78% to $853.10. This makes it impossible to search by
cost on this site because these final hidden fees differ between
accommodations and are not clearly explained why they exist in the
first place. . . . I have called and discussed this with <a href="http://Booking.com">Booking.com</a>
and lodged a formal complaint but their response was that they have
no control over this. I believe all of these fees should be listed
up front as the final price when conducting a search comparing
cost.''); FTC-2022-0069-3459 (``Lodging: Both hotels (including
travel agencies) and short term private lodging (like AirBnB)
falsely advertise low `nightly rates' to appear better on upfront/
initial comparison screens than alternatives. However, once you
select them the fees can be 2x what the base rate is. This is
blatant misrepresentation; they know the total cost and are hiding
it.''); FTC-2022-0069-3469 (``Hotel `Resort Fees' = When comparing
prices online, calling, etc--If a hotel subtracts a fraction of the
true cost and hides it in the back end (fees), it suddenly looks a
lot more affordable in reservations searches.''); FTC-2022-0069-3484
(``Hotel hidden fees are insidious. They allow hotels to `compete'
with seemingly low rates, then use fees to increase the actual
amount paid after you've already booked. . . . This results in
significant increase in consumer burden to avoid fees or eat the
additional cost, and stifles competition and innovation.'').
\31\ FTC-2022-0069-1759 (commenter complained about ``mandatory
charges that are not initially disclosed in listed pricing, cleaning
fees for vacation home rentals after mandatory cleaning by the
renter''); FTC-2022-0069-2131 (``Cleaning Fees for Airbnb; these
fees significantly increase the price of the room, and it often
involves hosts essentially charging guests to clean the room they
stayed in.''); FTC-2022-0069-3470 (``Homes often ask you to clean
before you go but then add several hundred dollars in cleaning
fees.'').
\32\ FTC-2022-0069-6099 (CR).
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Comments from the lodging industry generally argued further
regulation is not necessary because resort fees provide value to
consumers \33\ and the
[[Page 77424]]
industry already engages in pricing transparency.\34\ However, these
comments do not dispute that resort fee disclosures routinely occur
after base room rates are advertised.\35\ Some industry members
cautioned that requiring all-in pricing may have unintended
consequences,\36\ and recommended that, if the FTC decides to proceed
with a rulemaking, any rule apply across the board, online and offline,
to all short-term lodging providers to provide a level playing
field.\37\
---------------------------------------------------------------------------
\33\ FTC-2022-0069-6037 (American Hotel and Lodging Association
(``AHLA'') stated resort fees at hotel properties provide guests
with value that includes various goods and services); FTC-2022-0069-
6057 (American Gaming Association (``AGA'') contended that resort
fees provide value to consumers). The AHLA stated some of the data
about resort fees that the FTC provided in the ANPR were incorrect.
AHLA stated ``only 6% of hotels nationwide charge a mandatory
resort/destination/amenity fee, at an average of $26 per night[,]''
and that ``80% of hotel-goers are willing to pay additional fees if
doing so will provide access to certain amenities or better
service.'' FTC-2022-0069-6037.
\34\ FTC-2022-0069-6037 (AHLA stated ``[t]he hotel industry
embraces a competitive business model that is driven by transparency
and customer satisfaction'' and that hotels ``disclose resort and
amenity fees at or before the time of booking.''); FTC-2022-0069-
6111 (Travel Technology Association (Travel Tech) stated its members
``publish, disclose and share . . . rates, terms, and fees''
provided to them by accommodation suppliers and other travel service
providers ``in a clear and conspicuous manner . . . prior to
consumers completing their bookings.''); FTC-2022-0069-6057 (AGA
stated businesses properly disclose ``how much and what the resort
fee pays for'').
\35\ FTC-2022-0069-6057 (AGA stated the disclosures occur after
the base room rate is advertised (i.e., ``typically no more than one
screen following the base room rate, and at least one web page
before consumers commit to the room and before any payment is
required or made.'').
\36\ FTC-2022-0069-6057 (AGA stated companies may roll resort
fees into base room rates and not itemize fees to the detriment of
consumers' ability to review amenities and services on offer and
compare them with competitors and to the detriment of businesses'
ability to distinguish themselves from competitors, for example,
through loyalty programs that waive resort fees, a practice that the
comment claimed would be difficult if itemized pricing were
eliminated or limited).
\37\ FTC-2022-0069-6037 (AHLA urged that any rule requirements
proposed by the FTC apply to all industry participants, including
``the short-term rental market, metasearch sites, and online travel
agencies (`OTAs')''); FTC-2022-0069-6111 (Travel Tech recommends
that any regulation adopted by the FTC ``apply to any entity that
supplies or advertises travel pricing information to consumers,
including, for example, travel provider direct sites, metasearch,
and both online and offline advertisements.'').
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2. Live-Event Ticket Fees
In connection with tickets for live entertainment, individual
commenters noted that it is nearly impossible to obtain tickets at
advertised prices because ticket sellers inflate these prices with
fees.\38\ Consumer Reports noted that hidden fees can increase the
price of tickets by as much as 30% to 40%.\39\ Individual commenters
questioned the meaning of fees that are vaguely identified, such as
``convenience'' fees,\40\ and the stated purposes of ticket fees. For
example, individual commenters questioned whether processing fees
really pay for ticket processing and whether delivery fees really pay
for delivery expenses.\41\ The comments opined that fees appear to be
arbitrary.\42\
---------------------------------------------------------------------------
\38\ FTC-2022-0069-0448 (``My wife and I regularly attend metal
and punk concerts, and sometimes we cannot justify attending a show
we thought we were going to attend because, rather than pay the
amount we expected to pay, we are sometimes looking at $50 or more
of additional costs and fees.''); FTC-2022-0069-0530 (``They wait
until a buyer has waited in queues for long, stressful delays and
spring substantial (nonsense) fees on them last minute knowing they
are more likely to pay them than if they had been upfront with the
cost of the purchase to begin with.''); FTC-2022-0069-1323 (``I
personally am always very frustrated when I go to buy so something,
like a concert ticket, and try to get the advertised price. It has
never, in my entire life, been as simple as handing over $100 for a
$100 ticket. It always ends up costing much more, whether through a
fee to hand them the money, soem [sic] contrived surcharge, or
simply outright undisclosed and wholly newly made up miscellaneous
charges.''); FTC-2022-0069-2086 (``Time and time again, as a
consumer I and many I know have been discouraged from purchasing
things we like or going to events we wanted to, simply because the
amount we had allocated based on the cost was not enough in the end
due to hidden fees.''); FTC-2022-0069-2144 (``I also feel that it is
deception to say a ticket is price X. Then when all the fees
collapse on top of you that the total price is now $80-$100 more
than price X PER ticket.''); FTC-2022-0069-2154 (``It is incredibly
deceptive that a company can advertise a particular price for a
ticket but then stack substantial fees at the end of the check-out
process onto the consumer. Often times these fees are a considerable
percentage of the advertised price, and there is no obvious
rationale for how they quantify these massive and varying
amounts.''); FTC-2022-0069-3128 (``A face value ticket can have fees
that nearly equal the original price, making the end consumer cost
nearly double the advertised price. This is unfair and deceptive
practice.''); FTC-2022-0069-3595 (``It is uncommon to find tickets
at advertised prices as [sic] Ticketmaster''); FTC-2022-0069-5435
(``Ticketmaster, StubHub, & other ticket retailers: These companies
abuse the fact that there's limited competition in their industry,
and tack on predatory fees during check out that can double or
triple the originally advertised price of the ticket.''); FTC-2022-
0069-5886 (``It is very disheartening to be told that the price of a
ticket is one thing and then be met by service fees, convenience
fees, and additional unknown fees that bring the price up to almost
2 times what the original price was listed at.''); FTC-2022-0069-
5971 (``Ticketmaster routinely and repeatedly pulls a bait-and-
switch with ticket pricing--and the size of their final price
inflations are egregious, reaching 50%.'').
\39\ FTC-2022-0069-6099 (CR).
\40\ FTC-2022-0069-0226 (``The `convenience' fees and processing
fees charged by Ticketmaster and others, are not only inconvenient
but excessive and provide no benefit.''); FTC-2022-0069-2281
(``These fees are often labeled as `convenience fees', however they
serve no real purpose and the consumer is often left with no other
option.'').
\41\ FTC-2022-0069-0603 (``How much money does it take for a
computer to process a ticket order?''); FTC-2022-0069-2123
(``Ticketmaster is not printing physical tickets, yet charges a
significant delivery fee''); FTC-2022-0069-2665 (`` `order
processing fee' . . . . fine. Whatever. Even though this is an
automated software system that requires no additional time or effort
for a human to process''); FTC-2022-0069-3500 (``ensure the scam of
`processing fees' is ended, because its [sic] all digital, there are
no fees on their end''); FTC-2022-0069-3592 (``there is no reason
for it to cost more to process a more expensive ticket'').
\42\ FTC-2022-0069-1972 (``Something has to be done to protect
consumers from runaway ticket prices and these unbelievable fees
with no discernable or knowable purpose.''); FTC-2022-0069-2970
(``fees were added with no detail of why or for what purpose'');
FTC-2022-0069-3571 (``fees often feel completely arbitrary . . . .
the fees vary wildly depending on what show I'm purchasing tickets
for''); FTC-2022-0069-0489 (``Although the fees are disclosed, it is
unclear what purpose they serve.'').
---------------------------------------------------------------------------
One ticket seller argued that State and Federal laws prohibiting
unfair or deceptive trade practices already adequately address any
problems with unfair or deceptive fees,\43\ but most comments received
from ticket sellers or entities representing them,\44\ and from
entities representing the interests of musicians, artists, managers,
agents; \45\ independent venues, promoters, festivals; \46\ and
audience groups; \47\ expressed concerns about deceptive practices and
supported a rulemaking with some conditions. Some of these comments
noted that ticket sellers routinely do not disclose the total cost of
tickets in advertising,\48\ and that the
[[Page 77425]]
nature and purpose of fees is not always clear.\49\ The comments
emphasized that ticket fees raise competition issues separate from the
deceptive advertising practices and recommended that the FTC address
alleged anticompetitive practices that result in fees consumers
consider excessive.\50\
---------------------------------------------------------------------------
\43\ FTC-2022-0069-3347 (AXS opposed all-in pricing, arguing
that it would be less transparent to consumers, and recommended that
any rule require sellers to disclose to consumers whether the ticket
is being sold ``from the artist/venue's official ticket seller, at
the face price set by the artist or venue, or, alternatively, from a
ticket broker or resale marketplace where ticket prices are set by
the reseller.'').
\44\ The following ticket sellers support rulemaking: FTC-2022-
0069-6089 (National Association of Ticket Brokers (``NATB''); FTC-
2022-0069-6078 (TickPick, LLC); FTC-2022-0069-6079 (StubHub). AXS
Group LLC does not support a rulemaking. FTC-2022-0069-3347.
\45\ FTC-2022-0069-6162 (Recording Academy recommends that any
rule include strong protections for artists); FTC-2022-0069-6048
(Future of Music Coalition (``FMC'')); FTC-2022-0069-6041 (National
Independent Talent Organization (``NITO'')).
\46\ FTC-2022-0069-6046 (National Independent Venue
Association); FTC-2022-0069-0501 (Annual International Ballet
Festival of Miami and Cuban Classical Ballet of Miami).
\47\ FTC-2022-0069-6110 (Sports Fans Coalition described harm to
consumers from drip pricing); FTC-2022-0069-2581 (Dunsmoor Law,
P.C.).
\48\ FTC-2022-0069-6162 (The Recording Academy believes that the
majority of concerts listed for sale in the United States do not
disclose the total cost or mandatory fees in advertising, but that
some sellers advertise a base cost ``plus fees''); FTC-2022-0069-
6048 (FMC noted that ``pervasive problems currently exist where
ticketing fees are not disclosed''); FTC-2022-0069-6078 (TickPick
stated other jurisdictions have taken action against drip-pricing,
including Canada which enacted a law providing that ``the making of
a representation of a price that is not attainable due to fixed
obligatory charges or fees constitutes a false or misleading
representation, unless the obligatory charges or fees'' are imposed
by the Canadian federal government or a provincial government (e.g.,
taxes).'').
\49\ FTC-2022-0069-6048 (FMC stated it ``can be challenging to
distinguish between a fee that can reasonably be connected to an
actual expense, and what is just tacked on to the ticket base price
to provide a venue or ticketing company with an additional revenue
stream.'')
\50\ FTC-2022-0069-6065 (The Break Up Ticketmaster Coalition
argued that Ticketmaster's market dominance, including in secondary
markets, has resulted in excessive fees that consumers cannot
reasonably avoid.); FTC-2022-0069-6162 (The Recording Academy
recommended strong enforcement and improved regulation of the
secondary ticket market, including requiring disclosure by resellers
that tickets are resale tickets and that fees do not go to artists);
FTC-2022-0069-6041 (NITO raised concerns that ticket fees are
excessive, often as a result of the secondary market, and asked the
FTC to take all measures within its authority to stop the growth of
ticket fees for live events); FTC-2022-0069-6048 (FMC noted that it
is a part of the Break Up Ticketmaster coalition and that it also
broadly shares the concerns expressed in the comments by NITO and
the Recording Academy, relating to problems stemming from secondary
ticketing companies, and the importance of considering cultural
diversity and community health, including the music community); FTC-
2022-0069-0501 (Annual International Ballet Festival of Miami and
Cuban Classical Ballet of Miami commented that Ticketmaster adds
``exorbitant fees . . . in some cases more than 20%'' to its ticket
prices, resulting in many people not being able to afford tickets,
``particularly those with children or elderly'' and reducing ticket
sales and profits); FTC-2022-0069-6110 (SFC noted a lack of
competition among ticket sellers and problematic behavior in the
secondary ticket marketplace, including transferability
restrictions, disclosures of holdbacks, speculative ticket
disclosures, and the use of bots, and recommended that the FTC
conduct a 6(b) study of Ticketmaster/Live Nation's business conduct,
and that the FTC support Federal and State legislation to address
harm to consumers in ticket sales); FTC-2022-0069-2581 (Dunsmoor Law
stated Ticketmaster's practices are harmful to artists and
consumers, including dynamic pricing which ``makes it nearly
impossible to comparison shop,'' and recommended that the FTC
consider limiting fees and addressing Ticketmaster's monopolistic
behavior.); FTC-2022-0069-6046 (NIVA stated apart from practices
related to fees, secondary markets use predatory and deceptive
practices in connection with ticket resales); FTC-2022-0069-6089
(NATB described the practice of holding back tickets or ``slow
ticketing'' to be a deceptive marketing tactic that distorts the
market and urged the FTC to require disclosures of how many tickets
are available for sale, but argued that the transferability of
tickets should be protected in any rulemaking.); FTC-2022-0069-6079
(StubHub expressed concerns regarding the lack of competition in the
live events industry, and requested that the FTC investigate
anticompetitive and anti-consumer behaviors in the industry brought
about by the merger of Live Nation and Ticketmaster.).
---------------------------------------------------------------------------
Although entities in the ticketing sector argued that ticket fees
are not ``junk'' fees, but provide value to consumers \51\ and are
already adequately disclosed,\52\ a ticket seller in the secondary
market, TickPick, disagreed. TickPick stated other members of the
secondary market, including all of TickPick's larger peers, have gained
a competitive advantage by omitting mandatory fees from the total cost
of tickets in advertising and luring consumers with deceptively low
prices only to impose substantial back-end fees, sometimes after
customers provide payment information.\53\ TickPick also noted that
ticket sellers misrepresent the nature or purpose of their mandatory
fees when fees do not provide anything of value to consumers and are
used only to generate additional profit.\54\
---------------------------------------------------------------------------
\51\ FTC-2022-0069-6046 (NIVA stated many fees add value, such
as facilities fees charged by independent venues and promoters to
pay for overhead costs such as staffing, rent, insurance, heating
and cooling, repairs and maintenance, and property taxes, but notes
that there are differences between facilities fees charged by
independent venues and promoters and fees charged on secondary
resale exchanges that do not support venues); FTC-2022-0069-6089
(NATB recommended that any rule differentiate between types of
ticket fees, arguing that fees imposed by secondary ticket brokers
account for a valuable service, while fees imposed by the original
ticket sellers may not); FTC-2022-0069-6079 (StubHub objected to the
characterization of fees it charges as ``junk'' or ``hidden'' fees
because its service fees enable it to provide valuable services to
StubHub users and partners); FTC-2022-0069-3347 (AXS argues that its
fees provide value to consumers).
\52\ FTC-2022-0069-6079 (StubHub stated its fees are transparent
and fully disclosed before it collects payment information and
before consumers complete transactions); FTC-2022-0069-3347 (AXS
argued that its fees are adequately disclosed).
\53\ FTC-2022-0069-6078 (TickPick).
\54\ Id.
---------------------------------------------------------------------------
Comments related to ticket sales supported greater pricing
transparency with most supporting all-in pricing that specifies the
full final cost to consumers including mandatory, but not optional,
fees.\55\ Most comments from ticket sellers supported all-in pricing if
the requirement would apply to all ticket sellers to establish a level
playing field.\56\ They argued that, without a level playing field,
businesses that display all-in pricing would be at a competitive
disadvantage.\57\ Many of these comments recommended that itemization
of fees should also be required so consumers see a breakdown of the
fees charged,\58\ but one comment argued that itemization of fees harms
consumers.\59\ Some of these comments recommended an industry-neutral
rule while others did not express an opinion.\60\ The comments also
noted the importance of FTC guidance and enforcement action relating to
fees.\61\
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\55\ FTC-2022-0069-6110 (Sports Fans Coalition); FTC-2022-0069-
6041 (NITO): FTC-2022-0069-6046 (NIVA); FTC-2022-0069-6089 (NATB);
FTC-2022-0069-6078 (TickPick); FTC-2022-0069-2581-A2 (Dunsmoor Law
recommended that the FTC ``evaluate all possible legal outcomes from
the disclosing of fees.''); FTC-2022-0069-6078 (TickPick supported
model rule language proposed by the Institute for Policy Integrity
with minor modifications, and proposed definitions for ``all-in
price,'' ``unavoidable fee or charge,'' and ``avoidable fee or
charge.''); FTC-2022-0069-6048 (FMC described music royalty fees
that are a part of a subscription music service as an example of
unavoidable or mandatory fees); FTC-2022-0069-6079 (StubHub
supported Policy Integrity's recommendation to exclude fees for
optional add-on purchases that are fully disclosed to consumers
prior to payment).
\56\ FTC-2022-0069-6089 (NATB commented that it will only be
effective if applicable to all ticket sellers); FTC-2022-0069-6078
(TickPick); FTC-2022-0069-6079 (StubHub).
\57\ FTC-2022-0069-6078 (TickPick stated its all-in pricing has
not caused competitors to engage in the practice, that a competitor
temporarily adopted all-in pricing but abandoned the practice after
losing market share, and that regulatory intervention is necessary
to establish an even playing field); FTC-2022-0069-6079 (StubHub
stated that in 2014 it voluntarily began displaying all-in pricing
to buyers, but this practice put StubHub at a disadvantage in
comparison to competitors who did not display all-in pricing,
causing StubHub to discontinue the practice).
\58\ FTC-2022-0069-6162 (The Recording Academy recommended that
any rule require the disclosure of the face value of tickets to
avoid consumer misperception that artists are responsible for any
increase in total cost that results from the rule); FTC-2022-0069-
6048 (FMC recommended requiring full fee itemization so consumers
can still see the base price so artists are not blamed for fees and
can identify increases in fees); FTC-2022-0069-6041 (NITO's support
for rulemaking is conditioned on requiring that ticket fees are
clearly separated and itemized from the face value of the ticket);
FTC-2022-0069-6046 (NIVA recommends requiring itemization of the
face value of tickets and all fees so that consumers know what they
are paying for); FTC-2022-0069-3347 (AXS recommended, if the FTC
determines that a new rule is necessary, that instead of all-in
pricing, the FTC require sellers to disclose all components of the
ticket price).
\59\ FTC-2022-0069-6078 (TickPick opposed itemization of fees
and recommends that the all-in price be the only price a consumer
sees in all advertising and marketing materials; itemization of fees
is not helpful to consumers because the fees are contrived and only
serve to mislead consumers and inhibit competition).
\60\ FTC-2022-0069-6079 (StubHub supported an industry-neutral
rule establishing price transparency across market sectors. StubHub
supported a Federal solution, consistent enforcement of a rule with
sufficient specificity to avoid varying interpretations.); FTC-2022-
0069-6078 (TickPick reserved judgment on whether the rule should be
industry-neutral or specific to the ticketing industry).
\61\ FTC-2022-0069-6078 (TickPick recommended that the FTC
create a procedure to provide staff interpretations and guidance
regarding what constitutes an unavoidable fee); FTC-2022-0069-6048
(FMC recommended that the FTC take enforcement action in connection
with live-event ticketing, and other instances of problematic fee
practices); FTC-2022-0069-6089 (NATB commented that a rule will only
be effective if the FTC undertakes rigorous enforcement).
---------------------------------------------------------------------------
3. Fees Related to Restaurants and Prepared Food and Grocery Delivery
Apps
Individual commenters submitted many observations about restaurants
and prepared food and grocery delivery services. They noted that
restaurants routinely add fees to bills that were not
[[Page 77426]]
previously disclosed, using various names (e.g., ``service fee,''
``hospitality fee,'' ``kitchen fee,'' ``equity fee,'' ``economic impact
fee,'' ``temporary inflation fee'') that do not clearly or
conspicuously identify their nature or purpose.\62\ Commenters
expressed particular concern about the true purpose of restaurant
``service'' charges, which they expected would go entirely to wait
staff.\63\ As these comments imply, while a restaurant's management may
not keep tips received by its employees for any purposes,\64\ no such
prohibition exists for service fees imposed by a restaurant.\65\ In
connection with food delivery, individual commenters similarly stated
delivery apps charge fees that are not reflected in advertised food
prices,\66\ and that the nature or purpose of these fees is not always
clear or is misrepresented, for example, when fees identified as
delivery fees do not go to delivery personnel.\67\ The Consumer
Federation of America noted that prepared food and grocery delivery
apps have been the subject of law enforcement actions challenging
misrepresentations relating to fees.\68\
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\62\ FTC-2022-0069-3423 (``I don't know what the ``HOSPITALITY
FE'' [sic] is for, but it doesn't appear anywhere on the menu of
this restaurant we attended.''); FTC-2022-0069-3459 (restaurants
``started adding a `kitchen fee' in the small foot notes of the
menu. Why not just include this in the cost of the food. Otherwise
all menu items can be misrepresented as very low and high fees added
in the foot notes.''); FTC-2022-0069-3766 (restaurant ``deceptively
adds a 20% `equity fee' to every bill instead of fairly displaying a
price.''); FTC-2022-0069-3880 (restaurant ``started putting an
undisclosed `Economic Impact Fee' on their bills''); FTC-2022-0069-
3885 (``local businesses have been tacking on `service fees' when
ringing up at the register. This is most noticeable at restaurants,
for dine-in, takeout, and delivery. The fees are not disclosed on
the menu or anywhere at the physical establishments or on their
websites before placing an order.''); FTC-2022-0069-4428 (``I would
like to add that lately, I've seen the restaurant industry adding-on
junk fees to post-meal restaurant bills named `temporary inflation
fee' or similar which are not disclaimed prior to eating. It's
difficult to un-eat a meal if you disagree with these fees.''); FTC-
2022-0069-5999 (``And restaurants that charge a surcharge fee for
various things at the final bill which ate [sic] not disclosed on
the menu or stated by the wait staff or posted at the door!'').
\63\ FTC-2022-0069-0244 (``Another, more recent, development has
been the addition of a `service charge' on a restaurant check,
calculated as a percent of the check total. Is this in place of a
tip? Who receives it?''); FTC-2022-0069-1988 (``I visited a bar that
had a sign which stated `we add on a 20% service fee to all
transactions which goes directly to the staff as a tip.' Then, on
the payment screen, I was prompted AGAIN to tip for 15%, 20%, or 25%
by the software.''); FTC-2022-0069-2131 (``Service Charges at
restaurants. I am fine with these when 100% of the charge goes to
the waiter, but it's not always clear and I've heard that many
restaurants hold it for themselves.'').
\64\ 29 CFR 531.52(b).
\65\ See 29 CFR 531.52(a) (distinguishing tips--which are
entirely at the discretion of the customer--from the payment of a
charge made for service).
\66\ FTC-2022-0069-2089 (``Many food delivery services, are
deceptive in their pricing. . . . They are advertising a price much
lower than it truly is''); FTC-2022-0069-2997 (``these companies add
multiple different fees and charges to the final bill that are not
seen until check-out''); FTC-2022-0069-4617 (``Doordash, Ubereats,
Postmates, and every other food delivery app uses hidden fees to
somehow make a $10 order double in price through several different
fees that have no explanation as to what they are and there is no
transparency on how much they will be when the customer is building
their order.'').
\67\ FTC-2022-0069-0581 (``Delivery app services similarly
charge fees which are not clearly related to a service or function
of the business''); FTC-2022-0069-1545 (``it isn't plainly clear
that the fees are non refundable even when the company fails to
properly provide the service they are charging you a fee to
perform''); FTC-2022-0069-1672 (``why am I being charged a delivery
fee for my food, when the fee doesn't go to the driver?''); FTC-
2022-0069-2190 (``Charges extra fees without explanation. How are
there 2 delivery fees?''); FTC-2022-0069-2316 (``The delivery fee I
pay to the national pizza chain that doesn't go to the delivery
person, instead I still have to tip the delivery driver because the
fee doesn't go to him/her''); FTC-2022-0069-4400 (``I have to pay
unexplained additional fees for delivery services that don't seem to
have a good explanation when there is already a base fee and travel
fee.'').
\68\ FTC-2022-0069-6095 (CFA).
---------------------------------------------------------------------------
4. Transportation Fees
Individual commenters made similar observations about
transportation-related goods and services. They noted that airlines
fail to include mandatory fees in advertised prices and misrepresent
fees.\69\ They also described advertising for car rentals \70\ and car
sales \71\ that misrepresented total costs to consumers by delaying the
disclosure of mandatory fees that inflated amounts consumers had to
pay. The Consumer Federation of America noted that rental car companies
impose fees that are not always clearly disclosed up front,\72\ and
that ``[d]ishonest auto dealers have an established history of failing
to clearly disclose mandatory fees in their advertised prices.'' It
noted that numerous State attorneys general have taken related
enforcement action.\73\
---------------------------------------------------------------------------
\69\ FTC-2022-0069-0084 (``Airlines, if they are offering a
`free' flight, should ONLY charge you the fees charged by
governments or airports. They shouldn't be taking on junk fees, fuel
surcharges, etc.''); FTC-2022-0069-1676 (``Airline fees for bags,
seats etc. Its [sic] not transparent until you get to the last page.
Last minute fees for changes.''); FTC-2022-0069-3724 (``Airlines
obscure the true price of tickets until the very end of the purchase
process wasting customer's time in a cynical effort to leverage sunk
cost biases so we just buy the misleading ticket price because we've
spent the last 30 minutes filling in every detail.''); FTC-2022-
0069-2055 (``I recently paid a `plane usage' fee on plane ticket,
purchased directly from the airline's website. This fee implies
there's a possible travel option I could have booked that didn't
involve flying, which is deceptive.'').
\70\ FTC-2022-0069-0013 (``I recently reserved a rental car with
a `total' of $856. When I got to the final booking page, the total
was $600 more. `Total' should mean exactly that, all-in, no further
charges.''); FTC-2022-0069-3459 (``Renting either a car or a moving
van; they advertise $10/day. After all the fees which are standard
and they are already aware of (nothing dependent on your choices)
the actual cost is $40/day.''); FTC-2022-0069-3785 ``(For my rental
car, I got charged a tourism commission fee, county bus license fee,
customer facility charge, airport tram fee, vehicle license recovery
fee, and concession recovery fee in addition to the base rate.
Prices jump up to 30% higher when fee after fee is added''.).
\71\ FTC-2022-0069-0688 (``It wasn't until we sat down to fill
out the contract, that we were informed of an additional mandatory
fee of $3,000 for a clear-coat finish.''); FTC-2022-0069-5435 (auto
dealers ``tack on a number of fees during the contract process such
as `dealer fees' and `transportation fees' that were not included in
price discussions'').
\72\ FTC-2022-0069-6095 (CFA).
\73\ Id.
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Industry comments related to auto sales, including ancillary goods
and services, did not support a rulemaking.\74\ These comments stated
that the definition of junk fees is too vague,\75\ and questioned
whether fees that are not mandatory because they relate to voluntary
ancillary products offered as part of auto sales transactions (e.g.,
voluntary protection products) would be covered by the ANPR definition
of ``junk'' fees.\76\ The comments stated that fees for ancillary
[[Page 77427]]
goods and services provide value to consumers.\77\
---------------------------------------------------------------------------
\74\ FTC-2022-0069 6043 (The National Automobile Dealers
Association (NADA) stated rulemaking is not necessary, and
recommended advertising guidance and business education); FTC-2022-
0069-6106 (American Property Casualty Insurance Association (APCIA)
stated fees rulemaking would impact several industries and business
activities, and suggested that the FTC engage in more stakeholder
engagement and analysis of the marketplace before moving forward);
FTC-2022-0069-6058 (The Service Contract Industry Council (SCIC),
the Motor Vehicle Protection Products Association (MVPPA), and the
Guaranteed Asset Protection Alliance (GAPA)); FTC-2022-0069-5983
(The Motorcycle Industry Council (MIC), the Specialty Vehicle
Institute of America (SVIA), and the Recreational Off-Highway
Vehicle Association (ROHVA)); FTC-2022-0069-0124 (The National
Association of Mutual Insurance Companies (NAMIC) objected that the
ANPR created a false impression that junk fees are a problem in the
property casualty insurance market, including automobile insurance,
and argued that the FTC may not have the jurisdiction to regulate
fees in insurance). All of these commenters, except NAMIC,
referenced comments they previously submitted in connection with the
Motor Vehicle Dealers Trade Regulation Rule matter.
\75\ FTC-2022-0069-6043 (NADA stated the scope of the ANPR
requires clarification regarding the definition of ``junk'' fees,
and proposed defining a ``junk'' fee as one that ``is mandatory and
yet provides no additional benefit of any kind beyond that included
in the advertised price of the specific good or service and does not
have any other business justifications.''); FTC-2022-0069-6058
(SCIC, MVPPA, and GAPA argued that the definition of junk fees is
too vague to provide any notice as to what the FTC may seek to
regulate.).
\76\ FTC-2022-0069-6106 (APCIA expressed concern that the
definition of ``junk fees'' in the ANPR could unintentionally
include products such as voluntary protection products (i.e., VPPs)
that have proven to be beneficial to consumers and are sold in a
transparent manner); FTC-2022-0069-6058 (SCIC, MVPPA, and GAPA
argued that fees for VPPs in auto sales do not meet the definition
of junk fees.)
\77\ FTC-2022-0069-6106 (APCIA stated VPPs that motor vehicle
dealers make available at the time of auto sales provide valuable
services and benefits to consumers); FTC-2022-0069-6058 (SCIC,
MVPPA, and GAPA argued that VPPs provide value to consumers by
facilitating the filing of product claims and providing financial
security). See also supra nn. 33, 51.
---------------------------------------------------------------------------
The comments from auto industry representatives stated the law
already prohibits failing to disclose mandatory fees, and that fees are
adequately disclosed.\78\ Commenters stated ``total cost'' often varies
in negotiated sales transactions and there is no clear reason why the
disclosure of fees later in purchasing transactions should be deemed
categorically deceptive or unfair because there are often good reasons
why certain fees cannot be disclosed earlier in sales transactions.\79\
---------------------------------------------------------------------------
\78\ FTC-2022-0069-6043 (NADA stated failing to disclose
mandatory fees is already prohibited and opined that the FTC's
desire to obtain authority for monetary relief is not a legally
adequate basis for rulemaking.
\79\ FTC-2022-0069-6043 (NADA); FTC-2022-0069-5983 (MIC, SVIA,
and ROHVA argued that it would be burdensome for smaller powersports
dealers to implement disclosure requirements); FTC-2022-0069-6058
(SCIC, MVPPA, and GAPA argued that the disclosure of all-in prices
at the beginning of auto sale transactions is impracticable and
likely impossible).
---------------------------------------------------------------------------
Comments noted that a fees rule could overlap or conflict with
State and Federal laws and regulations.\80\ Commenters recommended
excluding auto dealers from a rule on unfair or deceptive fees because
fees related to auto sales transactions are already the subject of the
FTC's rulemaking in the Motor Vehicle Dealers Trade Regulation Rule
(``proposed Motor Vehicle Dealers Rule'') matter.\81\
---------------------------------------------------------------------------
\80\ FTC-2022-0069-6106 (APCIA noted that VPPs are subject to
Truth in Lending Act Regulation Z as well as state lending laws
similar to other voluntary products sold in connection with vehicle
loans, and that an Unfair or Deceptive Fees rule would be
duplicative and conflict with existing Federal and State laws and
regulations); FTC-2022-0069-0124 (NAMIC noted that casualty
insurance payments are strictly regulated by state insurance codes).
\81\ FTC-2022-0069-6043 (NADA recommended that auto dealers be
exempt from any fees rule ``given that the Proposed Vehicle Shopping
Rule addresses this type of disclosure in a more comprehensive, and
vastly different, manner.''); FTC-2022-0069-5983 (MIC, SVIA, and
ROHVA recommended exempting powersports vehicle dealerships,
including motorcycles, ATVs, and ROVs, from the rule and adopting an
incremental response to regulation).
---------------------------------------------------------------------------
One commenter, the National Automobile Dealers Association
(``NADA''), urged that, if the FTC proceeds with rulemaking, such a
rulemaking should have ``a strict focus with clear rules on how to
adequately disclose so as to avoid consumer harm.'' Any rule should not
go beyond addressing the failure to disclose mandatory costs.\82\
---------------------------------------------------------------------------
\82\ FTC-2022-0069-6043 (NADA).
---------------------------------------------------------------------------
5. Telecommunications Fees
Individual comments about telecommunications, including internet,
television, and telephone services, noted that consumers are confronted
with advertised rates that do not include mandatory fees, which are
only disclosed after consumers contract for services and in ways that
consumers find difficult to understand.\83\
---------------------------------------------------------------------------
\83\ FTC-2022-0069-0138 (cable ``fees do not appear on their
advertised rates . . . to appear cheaper than they really are. In
actuality it is impossible to subscribe at advertised rates.'');
FTC-2022-0069-2124 (``Cell phone companies, advertise $69 dollars
unlimited, my bill has never been under $100, carrier fees, service
fees, premium data charges. If its [sic] impossible to access the
$69 dollar charge then thats [sic] false advertising.''); FTC-2022-
0069-2892 (``The advertised price from my cable package is $99.99 a
month, so why am I paying $160 a month? I can understand the
equipment rental fees, but the broadcasting and regional fees make
no sense and seem to go up every time I turn around.''); FTC-2022-
0069-2382 (``Often, consumers are not aware that their cable or
internet bill includes a monthly `rental' fee for the hardware modem
that is provided by the cable or telephone company.''); FTC-2022-
0069-5435 (``Spectrum, Comcast, Verizon, & other internet/cable/
phone providers: The advertised price becomes bloated with
unnecessary surcharges such as `economic adjustment' fees and
recurring charges to use their mandated hardware.''); FTC-2022-0069-
5631 (telecommunication company ``charged a mandatory $9.95
`Technology Service Fee' and a $4.95 `Billing Fee' on top of their
normal rates. It is absolutely a ploy to artificially advertise a
lower monthly payment for service even though it's guaranteed to be
no less than $14.90 higher every month than they say it's going to
be.'').
---------------------------------------------------------------------------
Citing a Consumer Reports study and its own research, New America's
Open Technology Institute (``OTI'') stated internet service providers
routinely do not include internet service fees, such as installation
and activation fees, equipment fees, penalties for exceeding data caps,
and early termination fees, in advertised prices, and that these fees
should be considered as part of the true monthly cost of internet
service that should be incorporated into advertised prices or
prohibited when they are arbitrary or do not reflect added value.\84\
OTI supported a rulemaking to increase price transparency and eliminate
junk fees that provide no value to consumers, particularly in
connection with wireless and wired internet connections, and urged the
FTC to consider standardized price disclosures across industries.\85\
The Consumer Federation of America cited a review of internet bills by
Consumer Reports that showed providers using terminology such as
``network enhancement fee,'' ``internet infrastructure fee,''
``deregulated administration fee,'' and ``technology service fee,''
that made fees look like government-imposed, mandatory fees.\86\
---------------------------------------------------------------------------
\84\ FTC-2022-0069-6087 (New America's Open Technology Institute
(``OTI'')).
\85\ Id.
\86\ FTC-2022-0069-6095 (CFA).
---------------------------------------------------------------------------
The Rural Broadband Association (``NTCA'') noted that many internet
service provider fees are related to mandatory government programs that
provide value to consumers.\87\ It argued that the FTC does not have
jurisdiction over common carriers, and that broadband internet
providers, while not common carriers, are already regulated by the FCC,
and should be exempt from a fees rule.\88\ NTCA acknowledged, however,
that certain types of retransmission fees that are opaque to consumers
because broadcasters' confidentiality terms preclude transparent
explanation of the fees could be examined to determine whether greater
transparency can be achieved without imposing burdens in the generation
of invoices.\89\
---------------------------------------------------------------------------
\87\ FTC-2022-0069-3393 (NTCA--The Rural Broadband Association
(``NTCA'')).
\88\ Id.
\89\ Id.
---------------------------------------------------------------------------
6. Rental Housing Fees
Comments from individual consumers about rental housing fees stated
leasing companies advertise monthly rents that do not include fees for
mandatory ancillary services that unexpectedly and significantly
increase renters' monthly expenditures.\90\ The comments stated leasing
companies do not always identify the purpose of these fees.\91\
---------------------------------------------------------------------------
\90\ FTC-2022-0069-1391 (landlord ``charges for extra programs
that I was not informed about nor able to opt out easily''); FTC-
2022-0069-1677 (``In the realm of rental housing, any and all fees
should be included into advertised rental prices.''); FTC-2022-0069-
1717 (``when looking for apartment rentals, they are never honest
about upfront costs until you sign a lease and get your first
bill.''); FTC-2022-0069-1782 (``When we started getting the bills,
we were being charged electric, common area, utility admin, and pest
fees that were not disclosed upfront.''); FTC-2022-0069-2242 (``When
renting my unit we were told the cost was $1500 utilities included
and were completely strong armed at lease signing with the new cost
of $1650 `to cover the utilities', and given 0 wiggle room or time
to work out an alternate place to live.''); FTC-2022-0069-2858
(``Property management companies include excessive hidden fees that
are not included in base rent and can make the cost of rent several
hundred dollars more than what is advertised.''); FTC-2022-0069-4455
(``I am writing about the practice of apartment companies
advertising misleading prices and including hidden fees for renters.
. . . It is extremely widespread. I looked for a new apartment
around north Dallas twice in the past year, and every single one I
visited had mandatory monthly fees not included in the monthly rate
and not listed at all on their website (at least not anywhere I
saw).'').
\91\ FTC-2022-0069-3129 (``Junk fees have become fundamentally
ridiculous, especially as these companies cannot even describe what
the fee is for. In my monthly rent, I have a $34 service fee (that
the . . . rental management company . . . has not been able to
identify the reason for)'').
---------------------------------------------------------------------------
[[Page 77428]]
Consumer and policy groups noted that landlords do not adequately
disclose many unavoidable fees or fail to explain the purpose of
fees,\92\ and supported a rulemaking pertaining to fees in connection
with rental housing, including apartments, house rentals, and
manufactured housing communities (``MHCs'').\93\ The National Consumer
Law Center (``NCLC'') conducted a survey of legal services and
nonprofit attorneys that identified many unavoidable fees faced by
tenants,\94\ and recommended that the FTC require that online platforms
for rental advertisements disclose all fees, including fees charged
before and after signing rental leases.\95\ Private Equity Stakeholder
Project supported enhanced fee disclosure requirements and upfront
disclosure of the costs of goods and services to protect consumers and
the economy at large.\96\ The comments also recommended that the FTC
investigate unfair or deceptive practices related to housing fees \97\
and provide guidance on fees.\98\
---------------------------------------------------------------------------
\92\ FTC-2022-0069-6091 (NCLC argues that landlords fail to
explain the purpose of fees.).
\93\ FTC-2022-0069-6085 (Michigan Law School endorses NCLC's
recommendations in connection with the rental housing market
generally and recommends that the FTC investigate and regulate junk
fees in the manufactured housing industry.)
\94\ FTC-2022-0069-6091 (NCLC noted that the survey was
conducted between November and December of 2022, and showed that
tenants face an array of unavoidable fees, including rental
application fees, sometimes charged even if landlords know
applications will never be approved, excessive late fees, utilities-
related fees, processing or administrative fees, convenience fees,
insurance fees, notice fees, trash fees, pest control fees,
technology fees, common area and amenity-related fees, inspection
fees, and mail sorting fees.).
\95\ FTC-2022-0069-6091 (NCLC).
\96\ FTC-2022-0069-6094 (Private Equity Stakeholder Project
(``PESP'')).
\97\ FTC-2022-0069-6091 (NCLC recommends that the FTC
investigate deceptive or unconscionable practices by corporate and
large landlords that impose unavoidable and exploitative fees).
\98\ FTC-2022-0069-6091 (NCLC recommends that the FTC develop
guidance).
---------------------------------------------------------------------------
The comments also recommended that a rule prohibit certain rental-
related fees as invalid per se because they are exploitative \99\ and
target captive renters who often come from vulnerable groups.\100\ The
comments stated fees make rental housing even more unaffordable and
jeopardize access to future housing and financial stability.\101\
---------------------------------------------------------------------------
\99\ FTC-2022-0069-6091 (NCLC stated corporate and large
landlords often impose fees that are excessive in amount or greater
than the cost to the landlord of providing a service, that are for
services not provided, that are for services that landlords are
legally obligated to provide as part of renting habitable premises,
or that prevent competition); FTC-2022-0069-6094 (PESP recommended
that the FTC identify specific fees charged by landlords that would
be invalid per se and take strong enforcement action, and referred
to the comment of the NCLC (FTC-2022-0069-6091) in identifying fees
that should be invalid, including fees that are excessive in amount
or greater than the cost to the landlord of a service, fees for
services not provided, and fees for services that landlords are
legally obligated to provide as part of renting habitable premises);
FTC-2022-0069-6085 (Michigan Law School stated additional fees faced
by tenants of MHCs include application fees that may violate or
attempt to circumvent state laws that prohibit MHCs from imposing
entrance fees, community rule violation fees, and unilateral
increases in lot rent.).
\100\ FTC-2022-0069-6085 (Michigan Law School notes that tenants
in manufactured housing communities (MHC) are disproportionately
low-income, disabled, and elderly, and are a captive audience of the
owners of the land on which mobile homes sit.).
\101\ FTC-2022-0069-6091 (NCLC).
---------------------------------------------------------------------------
7. Education Fees
The comments further noted that institutions of higher learning
often charge mandatory fees that are not included in advertised tuition
fees.\102\ The Consumer Federation of America noted that the rate of
fees is increasing faster than the cost of tuition and non-transparent
tuition and fee pricing models particularly affect Black and Indigenous
communities and other communities of color.\103\
---------------------------------------------------------------------------
\102\ FTC-2022-0069-2288 (``This rule should apply to `non-
profit' institutions such as colleges and universities as they use
them [fees] in the same predatory ways as for profit companies but
have the advantage of exploiting a captive consumer population that
is younger and naive.''); FTC-2022-0069-2616 (``Tuition bills for
higher education have also added increasing amounts of charges with
no opt-out's.''); FTC-2022-0069-4375 (University charged
``miscellaneous' fees that aren't included in the tuition cost. When
looking at the price of tuition it is not included and is only seen
on the final bill. When confronted they couldn't give an itemized
list for the charge.'').
\103\ FTC-2022-0069-6095 (CFA). See also FTC-2022-0069-6113
(UnidosUS endorsing the comment of the CFA).
---------------------------------------------------------------------------
[[Page 77429]]
8. Financial Services Fees
Individual commenters argued that fees charged in connection with
bank accounts, credit cards, and other financial products are excessive
and not adequately disclosed.\104\ Consumer Reports noted that
``[a]ccording to the 2018 Consumer Reports national survey, 37% of
consumers said they had received a hidden fee for personal banking in
the previous two years, while 36% had received a hidden fee for credit
cards and 24% for investment services.'' \105\ Consumer groups noted
that financial services fees are particularly burdensome to vulnerable,
low-income, Black, and Latino consumers.\106\
---------------------------------------------------------------------------
\104\ FTC-2022-0069-0450 (``monthly service fees if your balance
falls below $xxx, overdraft fees''); FTC-2022-0069-0488 (``Then
there are the account fees, service fees, and atm fees at banks,
which are ridiculous considering they loan out your money and pay a
half a percent interest to you.''); FTC-2022-0069-0550 (``Junk fees
manifest in markets ranging from auto financing to international
calling cards and payday loans.''); FTC-2022-0069-1676 (``Banks
charging overdraft fees and then when you link a credit card to
cover the overdraft, the credit card charges you a fee. This can be
for every single overdraft! Ridiculous!''); FTC-2022-0069-1974 (``I
also am charged $12 anytime my savings account goes below 1500
dollars by chase bank.''); FTC-2022-0069-2131 (`` `Convenience' fees
for paying bills online. A literal scam. It's more convenient for
businesses to take electronic payments.''); FTC-2022-0069-5995
(``Fees to pay with a credit card when the fee wasn't posted or
disclosed anywhere. Usually at least 3 to 5% of the total
transaction and that would include taxes. It's insane. Prices not
posted. Fees added. Consumers are being robbed at will.''); FTC-
2022-0069-2262 (``Convenience fees in general are outrageous. It's
2023, credit cards and online payments aren't novel, they're the
norm. Cable/internet companies do it (xfinity/Comcast and Cox). Cell
phone companies do it, Verizon. It's outrageous.''); FTC-2022-0069-
2312 (``Fees should also be collected in one place and easy to read.
Some places like banks list fees but they're usually not collected
in one place. You have to go looking for them. This feels a little
hidden and anti-consumer.''); FTC-2022-0069-2729 (``When I opened a
bank account at a small local bank they charged a monthly fee for
even opening a savings account. They claimed this fee for
`maintenance' of the account.''); FTC-2022-0069-3052 (``My employer
opened an HSA account for me at First Financial Bank. I started
receiving statements in the mail that they took a monthly $3 paper
statement fee out of my account, which I had not consented to. When
I went online to change it to email statements, the first thing they
made me do is accept an agreement saying that I acknowledge the
validity of paper statement fees.''); FTC-2022-0069-3675 (``You know
how sometimes you get those visa style gift cards that work as debit
cards with the pre-loaded amounts? Some of those companies will
charge you a monthly fee on those types of cards that isn't
mentioned literally anywhere and that you won't know about until you
go to check the balance and find out that they've literally been
robbing you of your own money.''); FTC-2022-0069-3681 (``Some
examples of companies that include hidden fees at significant cost
to the consumer include: . . . USBank/Wells Fargo/BoA/WaFD Bank--
Monthly maintenance fees/overdraft fees (These also
disproportionately impact the poor).''); FTC-2022-0069-3932
(``Consumers across so many industries are increasingly subject to
fees that are not conveyed at the time of the purchase . . .
surprise service fees in hospitality, surprise interest fees in
financial services, surprise charges in healthcare that even
insurance providers cannot explain and are unwilling to pay
themselves. Consumers should simply not be required to pay fees that
were not agreed to and understood in advance.''); FTC-2022-0069-5652
(``Banks disclose their fees for `overdraft protection' or
`insufficient funds fees' buried in a massive packet of information
and on their websites. Meanwhile advertisements excitedly talk about
interest rates or joining bonuses. Most banking customers find out
about these fees when they are the most vulnerable: low on funds.
They then have to pay nearly $30 for being poor.''); FTC-2022-0069-
5896 (``Fees should be disclosed. Misleading ads that lure consumers
in. Hidden disclosures that change to benefit financial is [sic]
institutes and further burden consumers should be disclosed in
larger print, and announced more than advertisements.'');
\105\ FTC-2022-0069-6099 (CR also noted that, in March 2022, it
asked its member to share experiences regarding junk financial fees,
and collected over 1,800 comments identifying hidden financial fees,
including overdraft and insufficient fund fees, account maintenance
fees, late fees, dormancy and inactivity fees, check cashing fees,
fees for minimum purchase transactions, fees for paper statements,
and fees to pay bills).
\106\ FTC-2022-0069-6095 (CFA noted that fees represent a
disproportionately high cost to low-income consumers and may
destabilize household budgets and ``ultimately push consumers out of
mainstream financial products and into fringe financial services and
predatory financial products.''); FTC-2022-0069-6113 (UnidosUS
referenced a comment it submitted to the Consumer Financial Products
Bureau, highlighting ways that junk fees in the financial system
disproportionately impact Latinos and lower-income people.)
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Some comments from the consumer financial services industry
supported a rulemaking to create a more transparent financial services
sector and to address bad actors who mislead consumers about fees.\107\
Other comments opposed a rulemaking.\108\
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\107\ FTC-2022-0069-6044 (The American Fintech Council (``AFC'')
acknowledged and supported the FTC's jurisdiction over the issues
raised in the ANPR and supported regulation that will create a
fairer and more transparent financial services ecosystem to provide
for sustainable access to credit and to foster responsible practices
and fair lending in consumer financial markets); FTC-2022-0069-2623
(The American Land Title Association (``ALTA'') supported the FTC
rulemaking to address bad actors who mislead consumers about fees).
Some commenters framed their comments within the context of previous
comments they submitted in connection with Motor Vehicle Trade
Regulation Rule--Rulemaking, No. P204800. See FTC-2022-0069-6045
(The Credit Union National Association (``CUNA'') submitted a
comment that referred to and incorporated its comment to Motor
Vehicle Trade Regulation Rule--Rulemaking, No. P204800, in which it
stated it supports ``the FTC's effort to develop a rule that
addresses bad actors in the auto dealer market''); FTC-2022-0069-
6114 (The Consumer Credit Industry Association (``CCIA'') similarly
referred the FTC to its comments submitted in response to the Motor
Vehicle Dealers Trade Regulation Proposed Rule).
\108\ FTC-2022-0069-6090 (The American Financial Services
Association (``AFSA'') opposed rulemaking and argued that the unfair
or deceptive practices on which the FTC sought comment in the ANPR
are not widespread in the consumer financial services market.).
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Industry comments recommended that the FTC clearly define or
clarify the meaning of ``junk fees,'' \109\ and objected that fees in
the consumer financial sector are for legitimate services that add
value to consumers \110\ and are already adequately regulated by State
and Federal laws.\111\ For example, AFSA argued that there is already
sufficient regulation of fees in the financial services sector,
including through the Truth in Lending Act (``TILA''), the Real Estate
Settlement Procedures Act (``RESPA''), the Truth in Savings Act
(``TISA''), and the Consumer Financial Protection Act of 2010
(``CFPA'')).\112\ Comments also stated competitive pressures within the
industry tend to reduce fees.\113\
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\109\ FTC-2022-0069-2623 (ALTA recommended that the FTC clearly
define what ``junk'' fees are because the definition in the ANPRM is
too broad); FTC-2022-0069-6114 (CCIA suggested that there is no
objective standard for identifying junk fees for goods or services
that have little or no added value to consumers); FTC-2022-0069-6045
(CUNA strongly urged the Commission to further clarify the
definition of the term ``junk fee.'').
\110\ FTC-2022-0069-2623 (ALTA noted that title insurance and
settlement services fees commonly charged in real estate
transactions are for legitimate services); FTC-2022-0069-6090 (AFSA
argued that junk fees are misnamed because they provide value to
consumers who are in the best position to determine whether fees add
value to them through their purchasing decisions, and that such fees
compensate financial services providers, including when they are
placed in a worse position as a result of subsequent consumer
action); FTC-2022-0069-6114 (CCIA commented that ancillary products
offered in conjunction with auto financing loans provide value to
consumers by protecting auto financing loans and consumer credit);
FTC-2022-0069-6040 (Online Lenders Alliance (``OLA'') argued that
three types of fees, mandatory fees, misconduct fees, and
enhancement fees, have been mislabeled as junk fees by the Consumer
Financial Protection Bureau); FTC-2022-0069-6045 (CUNA argued that
describing fees as ``junk fees'' does a disservice to responsible
actors like credit unions and their partners that charge well-
disclosed fees to recoup costs and encourage positive behavior.).
\111\ FTC-2022-0069-2623 (ALTA noted that title insurance and
settlement services fees are highly regulated to provide protection
for consumers and ensure that fees are adequately disclosed); FTC-
2022-0069-6045 (CUNA); FTC-2022-0069-6114 (CCIA commented that
Federal and State regulations adequately protect consumers by
ensuring that their purchase of ancillary products is voluntary and
express); FTC-2022-0069-6040 (OLA noted that the financial services
sector is already heavily regulated and numerous types of fee
disclosures are already required.).
\112\ FTC-2022-0069-6090 (AFSA).
\113\ FTC-2022-0069-6044 (AFC).
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The comments stated fees in the consumer financial services market
cannot be equated with fees charged in other markets, such as live
event or resort fees.\114\ They stated there may be
[[Page 77430]]
legitimate reasons for disclosing fees other than at the beginning of
sales transactions.\115\ The comments noted that regulating fees in the
consumer financial services sector could have negative consequences
such as limiting services and raising prices.\116\ The comments stated
the FTC should coordinate with other agencies to harmonize rules.\117\
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\114\ FTC-2022-0069-6045 (CUNA stated fees in the heavily
regulated consumer financial services market cannot be equated with
opaque fees for live-event tickets or hotel resorts); FTC-2022-0069-
6040 (OLA criticized oft-cited studies on fees, particularly, ``The
Impact of Price Frames on Consumer Decision Making Experimental
Evidence'' and ``The Competition Initiative And Hidden Fees,''
arguing that they are not applicable to fees in the financial
services industry.).
\115\ FTC-2022-0069-6114 (CCIA objected that fees are not hidden
or deceptive if they are offered to consumers at different steps of
the sales process because disclosing fees later in the process may
be necessitated by the fact that consumers must first be approved
for loans); FTC-2022-0069-6045 (CUNA noted that late fees are
disclosed on fee schedules and only levied if payments are not
rendered by their due dates.); FTC-2022-0069-6090 (AFSA argued that
the FTC should not seek comments about how widespread certain unfair
or deceptive practice are but should instead identify such
widespread problems on its own.).
\116\ FTC-2022-0069-6090 (AFSA claimed that limiting fees in the
financial services sector would cool competition, raise prices, and
harm consumers who do not use services but may be required to pay
fees that are built into overall costs.); FTC-2022-0069-6045 (CUNA
urged the FTC to avoid adopting regulatory changes that will
negatively impact the ability of credit unions or their system
partners from serving members.).
\117\ FTC-2022-0069-6044 (AFC noted that the CFPB has
jurisdiction over several topics addressed in the ANPR, as reflected
in the CFPB's ``Request for Information Regarding Fees Imposed by
Providers of Consumer Financial Products or Services,'' and
recommended that the FTC coordinate with the CFPB and other relevant
agencies to ensure that any rule fit within the FTC's jurisdictional
authority and is not duplicative or contradictory of CFPB rules.).
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9. Correctional Services Fees
Consumer and policy groups also commented on a number of unfair or
deceptive practices regarding fees imposed on incarcerated people and
supported rulemaking.\118\ These comments stated that incarcerated
people are a captive audience who are forced to pay excessive fees by
monopolistic or oligopolistic service providers in connection with
private correctional services.\119\ Commenters stated these fees are
often deceptive because service providers fail to comply with Federal
disclosure requirements, omit fee information, and present pricing
information in confusing ways that are likely to mislead consumers, for
example, by bundling services that make identifying fees
difficult.\120\ Commenters also stated these fees are often unfair
because they cause substantial harm to incarcerated people who are the
least able to afford them, cannot reasonably be avoided because the
consumers are captive to private companies with exclusive contracts,
provide little or no added value to consumers, and do not benefit
competition.\121\
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\118\ FTC-2022-0069-6088 (National Consumer Law Center submitted
a comment on behalf of a group of civil rights, consumer rights,
faith-based, criminal justice, and reentry organizations supporting
rulemaking.); FTC-2022-0069-6082 (Fines and Fees Justice Center
(``FFJC''), ``a national center for advocacy, policy, information,
and collaboration on effective solutions to the unjust and harmful
imposition and enforcement of fine and fees in the criminal legal
system,'' submitted a comment in support of rulemaking, and noted
that the CFPB and FCC are considering fees imposed on incarcerated
persons.).
\119\ FTC-2022-0069-6088 (NCLC noted that these services include
money-transfer services, release cards, and various technology
services, including technologies incarcerated people use to
communicate with loved ones, such as electronic messaging
services.); FTC-2022-0069-6082 (FFJC noted that these correctional
services include money transfers, release cards, and technology
services, such as phone calls, emails, tablets, and music and e-book
subscriptions, and that providers often charge fees far in excess of
the cost of the services to the companies providing them.).
\120\ FTC-2022-0069-6088 (NCLC); FTC-2022-0069-6082 (FFJC).
\121\ Id.
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C. Comment Recommendations
Many commenters argued that the prevalence of hidden fees cannot be
effectively addressed by tools currently available to the FTC without a
rulemaking.\122\ The Consumer Federation of America argued that a
rulemaking is necessary to address ``the root cause of the `junk fee'
problem--rampant deceptive advertising and impaired competition.''
\123\
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\122\ FTC-2022-0069-6095 (CFA noted that AMG prevents the FTC
from seeking monetary relief under Section 13(b) of the FTC Act, and
that consumer contracts requiring arbitration would not deter
misconduct or provide appropriate remedies for unfair and deceptive
junk fee conduct.); FTC-2022-0069-6042 (<a href="http://TINA.org">TINA.org</a> stated the
prevalence of junk and hidden fees cannot be effectively addressed
by tools currently available to the FTC, particularly in the wake of
the AMG decision, and that a junk fees rule would be in the public's
best interest.).
\123\ FTC-2022-0069-6095 (CFA noted that advertising deceptively
low prices then tacking on mandatory fees harms honest businesses
and consumers, and disproportionately impacts vulnerable consumers,
limited English-speaking consumers, and consumers with
disabilities.).
\124\ FTC-2022-0069-0032 (``I agree with the proposed rule and
requiring all unavoidable fees, including taxes, be included in the
published price.''); FTC-2022-0069-0117 (``I wholeheartedly support
the FTC's proposal to force companies to show ALL mandatory fees and
charges in the initial price search or quote.''); FTC-2022-0069-0457
(``Forcing all fees to appear in any advertised price would be a
help. Prohibition of those fees would be even better''); FTC-2022-
0069-1087 (``Except with respect to taxes and voluntary add-ons
which exceed normal expectations, no one should be able to legally
charge more than the price they advertise.''); FTC-2022-0069-2144
(``Not just for ticket master but for all companies. Put the real
price up front and don't hide behind other fees you earmark 2/3rds
of the way down the page.''); FTC-2022-0069-2178 (``All fees and
charges should always be clear and upfront in the price. Nothing
should be hidden. It is deceptive to state otherwise.''); FTC-2022-
0069-3017 (``[T]he rule should require all-in pricing, because that
is the simplest and most honest way to disclose the actual cost to
the consumer.''); FTC-2022-0069-3083 (``MAKE ALL BUSINESSES SHOW THE
REAL TRUE PRICE (TAX INCLUDED) ON THE LABEL AT EVERY STORE AND
BUSINESS IN THE UNITED STATES.''); FTC-2022-0069-3423 (``I urge the
FTC to act to bring these business practices in line with the
customary way business has been conducted in our society in stores
for a very long time by banning the practice and requiring listed
and/or advertised prices to include all costs, beginning with the
first time the price is presented to customers.''); FTC-2022-0069-
3459 (`` Please move towards upfront pricing, for all taxes, service
charges and other charges that are standard should be included in
the first price you see.''); FTC-2022-0069-3469 (``The only way, in
my opinion, to solve this problem is to implement a rule/law where
the ONLY additional charges allowed for an invoice or service is
GOVERNMENT fees and taxes. . . . There would be no additional costs
incurred by a business/service to change to this rule, just a change
forcing them to advertise the TRUE COST for using their service or
business.''); FTC-2022-0069-3659 (``Please have merchants show the
actual final cost of a product or service as opposed to providing a
sale price and then adding additional charges.''); FTC-2022-0069-
3708 (``Companies should be required to show the TOTAL price,
including all applicable fees, on any advertisements or listings on
their website.''); FTC-2022-0069-3746 (``The total cost of an e-
commerce purchase should be required to be displayed alongside the
listing for the item.''); FTC-2022-0069-3859 (``Corporations should
be mandated to advertise full-prices including fees.''); FTC-2022-
0069-4151 (``Every company in every scenario possible should be
forced to advertise only the true combined total cost.''); FTC-2022-
0069-4176 (``Please step up and make retailera [sic] at all levels
advertise the real true cost of their goods and services so
consumers can make reasonable choices without being lured or baited
and switched.''); FTC-2022-0069-4252 (``Everyday, I am lured into a
transaction, told I am going to pay one price, only to have it
raised by a large percentage at checkout due to fees that are non-
negotiable or part of processing. If these are standard fees, they
need to be added to the price of the item, service etc. These are a
bait and switch tactic that I don't know how became legal.''); FTC-
2022-0069-4253 (``What's the point of a price if that's not the
price? Advertised price should be the finial [sic] price. Nothing
more nothing less.''); FTC-2022-0069-4255 (``Fees should be
transparent and included in advertised prices. This should go for
everything from airbnb rentals, to airfare, to concert tickets, to
retail, to grocery stores. The price you see advertised should be
the price you pay.''); FTC-2022-0069-5144 (``All business should be
legally required to post the all-in or `total' price of goods,
including taxes and fees. Many other countries practice this,
promoting transparency and allowing the consumer to shop with clear
pricing.''); FTC-2022-0069-5332 (``[T]he advertised/shown price
should be the price.''); FTC-2022-0069-5517 (``We need price
transparency for the services we buy. I advocate for requiring all
services to be forced to advertise and display FINAL prices, after
all fees.''); FTC-2022-0069-5692 (``Taxes and fees should be
included in the listed price every time. This is for every service
and every good everywhere in the country. This should be for every
label, advertisement, coupon, and other reasonable statement of
price.'').
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The comments broadly supported FTC action to address the identified
deceptive practices by requiring price transparency. Many individual
commenters,\124\ consumer groups,\125\
[[Page 77431]]
and industry members \126\ recommended an industry-neutral rule
requiring the disclosure of all-in pricing that includes all mandatory
fees.
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\125\ FTC-2022-0069-6095 (CFA supports an industry-neutral rule
requiring disclosure of all-in pricing, including all fees that are
unavoidable or mandatory, at the beginning of transactions to allow
consumers to comparison shop and foster competition); FTC-2022-0069-
6099 (CR recommended, as an alternative to prohibiting fees,
requiring the clear, upfront disclosure of fees, stated consumers
``would greatly benefit from a comprehensive national rule to ban
hidden and surprise junk fees and improve the transparency and
comparability of any truly optional add-on services,'' and advocated
for a ``strong economy-wide initiative'' to create ``marketplace
standards and ethical norms . . . in all or most economic
sectors''); FTC-2022-0069-6113 (UnidosUS endorsed the recommendation
of the CFA for a rule that requires ``all-in'' pricing for goods and
services at the beginning of purchase transactions, and that the
rule identify prohibited unfair and deceptive conduct relating to
junk and hidden fees).
\126\ See Section II.B.
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Many individual commenters and consumer groups, concerned with the
cumulative impact of fees, also recommended that the FTC prohibit or
limit fees, such as fees that are of little to no value to
consumers,\127\ or require that fees bear a reasonable relationship to
the cost of the services provided.\128\ Some consumer groups
recommended that the rule incorporate a reasonable consumer standard
and that the FTC develop model fee disclosures.\129\
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\127\ FTC-2022-0069-6095 (CFA recommended that fees that provide
little or no value to consumers or which consumers reasonably
believe would be included in advertised prices should be
prohibited); FTC-2022-0069-6099 (CR commented that junk fees that
add little or no value or would reasonably be included in the base
price of goods or services should be reduced or banned).
\128\ FTC-2022-0069-6099 (CR recommended, as an alternative to
prohibiting fees, that fees ``bear a reasonable and proportionate
relationship to the underlying costs of providing the particular
service for which they are charged.'').
\129\ FTC-2022-0069-6095 (CFA recommended that the FTC develop
model fee disclosures); FTC-2022-0069-6113 (UnidosUS recommended
that a rule require disclosures that take into account consumers'
language proficiency, include model fees disclosures, and
incorporate a reasonable consumer standard).
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The U.S. Chamber of Commerce and the Association of National
Advertisers argued that Congress has not authorized comprehensive
unfair or deceptive fees rulemaking, and that the ANPR is too broad to
comply with rulemaking procedures.\130\ They acknowledged that existing
FTC rules include disclosure requirements related to pricing, citing
the Telemarketing Sales Rule, the Restore Online Shoppers' Confidence
Act, and the Funeral Rule, but objected that the FTC has not shown that
existing rules are insufficient to protect consumers or explained how a
proposed rule would work with other rules.\131\ They also objected to
an economy-wide rule because it would overlap with industry-specific
rules and recommended that the FTC narrowly tailor rulemaking to
specific industries engaging in unfair or deceptive practices.\132\ ANA
recommended alternatives to rulemaking, such as industry-specific
workshops, consumer and business education, and individual enforcement
actions.\133\
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\130\ FTC-2022-0069-6047 (The Chamber stated the proposed
rulemaking implicates the Major Questions Doctrine, Congress has not
clearly authorized comprehensive unfair and deceptive fees
rulemaking, and the proposed rulemaking does not meet the
requirements of the FTC Act and would constitute unauthorized
competition rulemaking to the extent it relates to concerns about
monopoly and anticompetitive behavior. The Chamber also stated the
FTC has not shown practices related to fees are unfair because
requiring extensive fee disclosures upfront would harm businesses
without countervailing benefits to consumers.).
\131\ FTC-2022-0069-6047 (The Chamber stated the FTC has not
explained how existing rules are ``insufficient from a deterrence or
consumer-protection standpoint.''); FTC-2022-0069-6093 (ANA stated
the ANPR fails to discuss how the proposed rulemaking will apply
when it overlaps with existing regulations related to advertising
and disclosures.). The Commission addresses and seeks comment on
other rules with disclosure requirements related to pricing
information in Sections IX.C and X.
\132\ FTC-2022-0069-6047 (The Chamber stated an economy-wide
rule would likely overlap with existing sectoral rules); FTC-2022-
0069-6093 (ANA urged the FTC to identify specific industries
engaging in unfair or deceptive practices and narrowly tailor
rulemaking to those industries.).
\133\ FTC-2022-0069-6093 (ANA).
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Other commenters disagreed. For example, Policy Integrity argued
that the FTC has clear congressional authority to tackle deceptive or
unfair practices through rulemaking, and that doing so would not
supersede that authority.\134\ Policy Integrity pointed out that FTC
rulemaking relating to all-in pricing would be in keeping with other
FTC rules that relate to unfair or deceptive fee disclosure practices,
such as the Unavailability Rule or Raincheck Rule, the Funeral Rule,
the Negative Option Rule, the Mail, internet, or Telephone Order
Merchandise Rule, and the Cooling-Off Rule.\135\ Policy Integrity
pointed out that these FTC rules ``imposed disclosure requirements
targeting unfair and deceptive fee-disclosure practices that apply to a
vast number of entities across numerous industries, similar to its
present effort to regulate junk fees and hidden fees.'' \136\
---------------------------------------------------------------------------
\134\ FTC-2022-0069-6077 (Policy Integrity argued that the FTC
has clear congressional authorization in the FTC Act to tackle
deceptive practices related to fees under Section 5(a) and unfair
practices under Section 5(n), and that regulating junk fees, hidden
fees, and related practices would not implicate the Major Questions
Doctrine because FTC regulatory and enforcement antecedents
demonstrate that FTC action in this area would not be ``unheralded''
and would not represent a ``transformative'' change in the FTC's
authority, under West Virginia v. EPA.).
\135\ FTC-2022-0069-6077 (Policy Integrity argued that FTC
rulemaking related to all-in pricing would not be ``unheralded''
under West Virginia v. EPA given prior rulemaking related to pricing
disclosures.).
\136\ FTC-2022-0069-6077 (Policy Integrity).
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III. Prevalence of Unfair and Deceptive Fee Practices
This proposed rule addresses prevalent fee practices that are
unlawful under Section 5 of the FTC Act, 15 U.S.C. 45, because they are
unfair or deceptive to consumers. The Commission has identified two
practices that, for the reasons described herein, are unfair or
deceptive practices under Section 5 of the FTC Act: (1) practices that
misrepresent the total costs by omitting mandatory fees from advertised
prices, and (2) practices that misrepresent the nature and purpose of
fees or charges. The comments received in response to the ANPR and the
Commission's history of enforcement actions and other complementary
work, discussed in Section III.C, demonstrate the prevalence of these
practices.\137\
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\137\ The Commission can support a finding that practices are
prevalent by showing that it has issued cease and desist orders or
by providing information that indicates a widespread pattern of
unfair or deceptive acts or practices. 15 U.S.C. 57a(b)(3).
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As shown in the comments received, advertising misrepresentations
and unlawful practices related to pricing and added fees are chronic
problems confronting consumers. These problems are prolific and occur
across industries affecting a large majority of the population.\138\
The FTC uses its authority under Section 5 to stop deceptive or unfair
acts or practices. A representation, omission, or practice is deceptive
if it is likely to mislead consumers acting reasonably under the
circumstances and is material to consumers--that is, it would likely
affect the consumer's conduct or decisions with regard to a product or
service.\139\ False and misleading statements are unlawful regardless
of an intent to deceive.\140\ Some deception cases involve omission of
material information, the disclosure of which is necessary to prevent
the claim, practice, or sale from being misleading.\141\ A practice is
considered unfair under Section 5 if: (1) it causes, or is likely to
[[Page 77432]]
cause, substantial injury; (2) the injury is not reasonably avoidable
by consumers; and, (3) the injury is not outweighed by benefits to
consumers or competition.\142\
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\138\ FTC-2022-0069-6095 (describing a survey in which 85% of
respondents encountered fees that were not initially disclosed and
listing a range of industries in which the fees occurred); supra
Section II.B.
\139\ See Fed. Trade Comm'n, FTC Policy Statement on Deception,
103 F.T.C. 174, 175 (1984) (appended to In re Cliffdale Assocs.,
Inc., 103 F.T.C. 110, 183 (1984)), (hereinafter ``Deception Policy
Statement''), <a href="https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstmt.pdf">https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstmt.pdf</a>.
\140\ In re Sears, Roebuck & Co., 95 F.T.C. 406, 517 n. 9 (1980)
(citing Regina Corp. v. FTC, 322 F.2d 765, 768 (3d Cir. 1963)).
\141\ Id. at 175 & 175 n. 4, 176-77.
\142\ 15 U.S.C. 45(n).
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A. Bait-and-Switch Tactics: Misrepresenting Total Costs by Omitting
Mandatory Fees From Advertised Prices
The comment record supports a finding that bait-and-switch pricing
practices are prevalent. Specifically, commenters identified pricing
structures that do not disclose the total price for goods or services,
but instead advertise a lower cost to consumers that is ultimately
inflated by mandatory charges.\143\ These pricing structures take a
variety of forms, including pure misrepresentations through initial
advertisements displaying a lower price, advertisements that
inadequately disclose mandatory add-on charges,\144\ tactics that
disclose mandatory add-on charges late in the purchasing process, and
sales that omit material terms such as requiring an additional purchase
to make full use of the good or service.\145\ All of these practices
render the quoted price misleading because they lead consumers to
believe that the cost for the good or service is lower than it actually
is--put another way, the advertised good or service is not actually
attainable for the quoted price.
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\143\ See discussion, supra Section II.A.1.
\144\ This practice would include advertisements where
additional charges are not disclosed clearly and conspicuously--for
example, they appear only in fine print--and advertisements that
partition the total cost into various components without displaying
the total price most prominently.
\145\ See discussion, supra Section II.A.1. & nn. 9-10.
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Pricing structures that do not initially disclose the total cost of
a good or service are deceptive even if the total cost is disclosed at
some point during the transaction. It has long been the FTC's position
that misleading door openers are deceptive.\146\ Further, numerous
courts have recognized that it is a violation of the FTC Act if a
consumer's first contact is induced through deception, even if the
truth is clarified prior to purchase.\147\ Thus, when the initial
contact with a consumer shows a lower or partial price without
disclosing the total cost, it violates the FTC Act even if the total
cost is later disclosed.
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\146\ Fed. Trade Comm'n, Enforcement Policy Statement on
Deceptively Formatted Advertisements at 7 (2015), <a href="https://www.ftc.gov/system/files/documents/public_statements/896923/151222deceptiveenforcement.pdf">https://www.ftc.gov/system/files/documents/public_statements/896923/151222deceptiveenforcement.pdf</a> (hereinafter ``Policy Statement on
Deceptive Ad Formats'') (describing the FTC's enforcement actions
against misleading door openers since at least 1976). See also,
Intuit, Inc., Docket No. 9408 (FTC Initial Decision Sept. 6, 2023)
(finding that Respondent's advertisements employed a deceptive door
opener claiming that consumers can file their taxes for free with
TurboTax and that Respondent's later disclosures did not clearly and
conspicuously disclose material facts explaining the limitations on
the free offer).
\147\ Policy Statement on Deceptive Ad Formats at 7 & n. 25
(collecting cases before 2015); FTC v. FleetCor Techs., Inc., 620 F.
Supp. 3d 1268, 1298-99 (N.D. Ga. 2022); FTC v. Elegant Sols., Inc.,
No. SACV 19-1333 JVS (KESx), 2020 WL 4390381, at *9-10 (C.D. Cal.
July 6, 2020), aff'd, No. 20-55766, 2022 WL 2072735 (9th Cir. June
9, 2022); FTC v. Am. Fin. Benefits Ctr., No. C 18-00806 SBA, 2018 WL
11354861, at *9 (N.D. Cal. Nov. 29, 2018); FTC v. All. Document
Preparation, 296 F. Supp. 3d 1197, 1209 (C.D. Cal. 2017); FTC v.
OMICS Grp. Inc., 302 F. Supp. 3d 1184, 1190 (D. Nev. 2017).
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It is also well established that it is deceptive to sell a product
that is not fit for the purpose for which it is sold.\148\ By offering
a good or service, a seller impliedly represents that it is fit for the
purpose for which it is sold.\149\ As a result, it is deceptive when a
good or service cannot be used for its intended purpose without an
additional purchase.
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\148\ Deception Policy Statement, 103 F.T.C. at 175 n.4, 177; In
re Int'l Harvester Co., 104 F.T.C. 949, 1058 & n.35 (1984);
Tomasella v. Nestle USA, Inc., 962 F.3d 60, 72 & n.11 (1st Cir.
2020).
\149\ Deception Policy Statement, 103 F.T.C. at 175 n.4, 177; In
re Int'l Harvester Co., 104 F.T.C. at 1058 & n.35; Tomasella, 962
F.3d at 72, 72 n.11.
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The pricing structures described in this section are material where
they are likely to affect consumers' choices or conduct regarding the
goods or services at issue. Material facts are those that are important
to consumers' choices or conduct regarding a product, and certain
categories of information are presumptively material.\150\ The
Commission has previously recognized that price is a material
term,\151\ and that it is a deceptive practice to misrepresent the
price of a product.\152\
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\150\ Deception Policy Statement, 103 F.T.C. at 182.
\151\ Id. at 182 & 182 n.55 (listing claims or omissions
involving cost among those that are presumptively material); see
also FleetCor Techs., 620 F. Supp. 3d at 1303-04 (finding that
representations about transaction fees and discounts were material).
\152\ Deception Policy Statement, 103 F.T.C. at 175 (listing
``misleading price claims'' among those claims that the FTC has
found to be deceptive); see, e.g., Resort Car Rental Sys., Inc. v.
Fed. Trade Comm'n, 518 F.2d 962, 964 (9th Cir. 1975) (upholding the
Commission's order finding that using the name ``Dollar-A-Day''
misrepresented the price of car rentals in violation of Section 5 of
the FTC Act).
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Pricing structures that do not clearly and conspicuously disclose
the total price are also unfair under Section 5 because they are likely
to cause substantial injury, they are not reasonably avoidable by
consumers, and the injury is not outweighed by benefits to consumers or
competition. Unfair or deceptive fee practices can cause significant
consumer harm and reduce competition.\153\ When sellers advertise
prices that are artificially low because they do not include mandatory
fees that are disclosed only later in the purchasing transaction,
consumers end up transacting with those sellers under false pretenses.
Injury to consumers can occur even when all fees are disclosed up
front, but separately from the base price.\154\ Businesses that
accurately represent the total amount consumers will pay up front are
at a competitive disadvantage to those that do not.\155\
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\153\ See, e.g., Mary Sullivan, Fed. Trade Comm'n, Economic
Analysis of Hotel Resort Fees 4 (2017) <a href="https://www.ftc.gov/system/files/documents/reports/economic-analysis-hotel-resort-fees/p115503_hotel_resort_fees_economic_issues_paper.pdf">https://www.ftc.gov/system/files/documents/reports/economic-analysis-hotel-resort-fees/p115503_hotel_resort_fees_economic_issues_paper.pdf</a>; Alexander Rasch
et al., Drip Pricing and its Regulation: Experimental Evidence, 176
J. Econ. Behav. & Org., 353, 362-63 (2020) (``[E]xperimental
evidence suggests that consumers indeed strongly and systematically
underestimate the total price under drip pricing and make mistakes
when searching.''); Shelle Santana et al., Consumer Reactions to
Drip Pricing, 39 Mktg. Sci. 1, 188 (2020), <a href="https://doi.org/10.1287/mksc.2019.1207">https://doi.org/10.1287/mksc.2019.1207</a> (``Across six studies, we find that when optional
surcharges are dripped (versus revealed up front) consumers are more
likely to initially select a lower base priced option which, after
surcharges are included, is often more expensive than the
alternative.''); Howard A. Shelanski et al., Economics at the FTC:
Drug and PBM Mergers and Drip Pricing, 41 Rev. Indus. Org., 314-16
(2012). <a href="https://doi.org/10.1007/s11151-012-9360-x">https://doi.org/10.1007/s11151-012-9360-x</a>; Tom Blake et al.,
Price Salience and Product Choice, 40 Marketing Science 4, 619-36
(2021), <a href="https://doi.org/10.1287/mksc2020.1261">https://doi.org/10.1287/mksc2020.1261</a>; Steffen Huck et al.,
The Impact of Price Frames on Consumer Decision Making: Experimental
Evidence, at 4 (2015), https://www.ucl.ac.uk/~uctpbwa/papers/price-
framing.pdf; Ellison & Ellison, Search and Obfuscation in a
Technologically Changing Retail Environment: Some Thoughts on
Implications and Policy, 6 NBER Innovation Pol'y & Econ. 18, 2-6
(2018); Busse, M., & Silva-Risso, J., ``One Discriminatory Rent'' or
``Double Jeopardy'': Multi-component Negotiation for New Car
Purchases, 100 Am. Econ. Rev. 2, 470-74 (2010).
\154\ E.g., Sullivan, supra n. 153, at 22, 24-25 (describing
empirical studies on partitioned pricing); Vicki G. Morowitz et al.,
Divide and Prosper: Consumers' Reactions to Partitioned Prices, 35
J. Mktg. Rsch., 455 (1998) (on average, subjects shown partitioned
pricing underestimated the total price relative to subjects who
received the total price up front); Bertini, M., & Wathieu, L.,
Attention Arousal through Price Partitioning, 27 Mktg. Sci. 2, 236,
239-41 (2008) (showing that when prices are partitioned, subjects
give outsized attention to attributes associated with mandatory
surcharges rather than the primary product).
\155\ See, e.g., FTC-2022-0069-6095 (describing harm to
competition and honest businesses through price obfuscation).
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Often, these harms disproportionately impact consumers who are
already targets of discrimination. The Consumer Federation of America,
along with ten other organizations, submitted a comment that compiled
examples of how unfair or deceptive fees uniquely harm low-income,
Black, Latino, limited English-speaking, and disabled consumers.\156\
For example, unfair or deceptive fees represent a
[[Page 77433]]
disproportionately high cost for low-income consumers and can have
cascading effects that destabilize their budgets and push them to rely
on predatory financial products.\157\ Black and Latino consumers often
pay a disproportionate amount of junk fees in banking,\158\ have been
targeted with junk fees in auto-lending, and because of inequities in
generational wealth are more likely to be harmed more severely by
foreclosure.\159\ Fees that are not clearly and conspicuously
disclosed, such as those that are obscured in fine print, while
affecting all consumers, can be especially difficult to spot for
consumers whose English proficiency is limited.\160\ Finally, the
comment provided examples of disabled consumers being charged extra
fees to accommodate the consumers' disabilities while providing the
agreed upon services.\161\
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\156\ FTC-2022-0069-6095 at 7-11.
\157\ Id. at 7, 9.
\158\ Although the Commission generally does not have
jurisdiction over banks and Federal credit unions for purposes of
Section 5(a), 15 U.S.C. 45(a), other financial services entities are
covered under its authority. See generally, e.g., FTC v. FleetCor
Techs., Inc., 620 F. Supp. 3d 1268 (N.D. Ga. 2022); Stipulated
Order, FTC v. Beam Financial Inc., No. 3:20-cv-08119-AGT (N.D. Ca.
Mar. 30, 2021); Compl., FTC v. LendingClub Corp., No. 3:18-cv-02454
(N.D. Cal. filed Apr. 25, 2018); Stipulated Order, FTC v. Avant,
LLC, No. 19-cv-2517 (N.D. Ill. May 19, 2019); Stipulated Order, FTC
v. Western Union Co., No. 1:17-cv-0110 (M.D. Pa. Jan. 20, 2017).
\159\ FTC-2022-0069-6095 at 7-8.
\160\ Id. at 9.
\161\ Id. at 10-11 (describing wait time fees for disabled
passengers who needed more time to get to rideshare vehicles, and
paper statement fee for a consumer with cognitive disabilities).
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Injury to consumers comes in the form of higher prices and search
costs. Several studies have shown that consumers spend more money on
the same goods when they are not shown the total price up front.\162\
For example, a study by the live-event ticket seller StubHub found that
consumers spent more money--they purchased more tickets and upgraded to
more expensive seats--when the total price was not displayed at the
beginning of the transaction.\163\ One laboratory experiment examined,
among other things, how consumers reacted when the total price was
divided into three parts, with each part being revealed at different
points in the transaction.\164\ This experiment found that a
measurement of consumer savings was reduced by 22%.\165\ Further, the
monetary cost to consumers is significant. For example, in 2018 resort
fees generated an estimated $2.9 billion in revenue for the hotel
industry,\166\ and in the most recent fiscal year, ``service'' fees for
Live Nation Entertainment, the largest business in the live-event
ticket market, accounted for over $2.2 billion in revenue.\167\ Many
consumer comments in response to the ANPR stated they paid more as a
result of businesses failing to disclose the total price up front.\168\
---------------------------------------------------------------------------
\162\ Rasch, supra n. 153, at 6-8, 20-22, 30-31; Santana, supra
n. 153, at 197; Blake, supra n. 153, at 16; Huck & Wallace, supra n.
153, at 2; Busse & Risso, supra n. 153, at 474.
\163\ Blake, supra n. 153, at 16.
\164\ Huck & Wallace, supra n. 153, at 2.
\165\ Id. Specifically, the experiment examined ``consumer
surplus,'' which is the difference between the highest price a
consumer is willing to pay and the price they ultimately pay.
\166\ Beth Braverman, Avoid Sneaky Hotel Fees on Your Next
Vacation, Consumer Reports (May 29, 2019), <a href="https://www.consumerreports.org/fees-billing/how-to-avoid-sneaky-hotel-fees/">https://www.consumerreports.org/fees-billing/how-to-avoid-sneaky-hotel-fees/</a>.
\167\ LYC 10K at 37, 60 (showing $2,238,618,000 in Ticketing
Operations revenue and explaining that such revenue ``primarily
consists of service fees . . . .''). The scale of such fees is not
new. In 2015, resort fees reportedly accounted for $2.04 billion in
revenue while ticket service fees accounted for more than $1.6
billion. Nat'l Econ. Council, The Competition Initiative and Hidden
Fees (Dec. 2016), <a href="https://obamawhitehouse.archives.gov/sites/whitehouse.gov/files/documents/hiddenfeesreport_12282016.pdf">https://obamawhitehouse.archives.gov/sites/whitehouse.gov/files/documents/hiddenfeesreport_12282016.pdf</a>.
\168\ FTC-2022-0069-3260 (``It's just extremely frustrating and
I always end up spending more than I would like because of these
practices''); FTC-2022-0069-6168 (``By the time I've done my
research and chosen a product or service and I'm checking out, if a
fee comes up, it's often too late to make a different choice.'');
FTC-2022-0069-3631(``Fans have no choice but to pay these fees if
they want to see their favorite performers and acts.''); FTC-2022-
0069-4056 (``Hidden additional fees cost me over four HUNDRED
dollars for just a three-night stay, about 38% of the total cost.'')
---------------------------------------------------------------------------
In addition, consumers who wish to compare prices incur additional
search costs to make direct comparisons of products when the full price
is not disclosed up front.\169\ For example, in an online transaction,
consumers cannot simply view the first price displayed on each website,
but instead need to navigate to subsequent pages or even enter all
their payment information and reach the checkout page for each website
to determine the total price.\170\ Such search costs that result from
unfair or deceptive practices are legally cognizable injuries under the
FTC Act.\171\ Consumer comments also describe harms in the form of
search costs.\172\
---------------------------------------------------------------------------
\169\ Sullivan, supra n. 153, at 4; Fed. Trade Comm'n, ``That's
the Ticket'' Workshop: Staff Perspective, 4 (May 2020), <a href="https://www.ftc.gov/reports/thats-ticket-workshop-staff-perspective">https://www.ftc.gov/reports/thats-ticket-workshop-staff-perspective</a>; see
also Hong, H. & Shum, M. Using Price Distributions to Estimate
Search Costs, RAND J. Econ. 37:2 (2006) (describing methods of
estimating search costs); Huck & Wallace, supra n. 153, at 13
(applying search costs in economic models); and discussion, infra,
Section VII.
\170\ E.g., FTC-2022-0069-2005 (``The number of times I have
wanted to go to a concert or book an Airbnb only to get to the last
page before entering in my payment details, only to find out that
the expected price is suddenly up to 50% higher due to various fees
tacked on at the last second is absolutely ridiculous.''); FTC-2022-
0069-6099 at 424 (including a complaint from a consumer who went
through various ``fill-in forms, adding my name, address, credit
card number,'' and chose a printed ticket for delivery, but was
charged an $8.95 ``delivery fee'' and a $231.88 ``Service Fee'' on
the last page of the transaction); FTC-2022-0069-1331 (``Turbo tax
has a lot of hidden fees that make you spend hours of time to fill
out information and then if you don't pay you lose hours of input
data.''); FTC-2022-0069-6095 at 20 (``Consumers are required to fill
out forms, provide personal information, click through unrelated and
difficult to understand links, and sometimes spend several hours at
a dealership or loan store to obtain sufficient information to
enable comparison shopping.'').
\171\ See, e.g., FTC v. <a href="http://Amazon.com">Amazon.com</a>, Inc., No. C14-1038-JCC, 2016
U.S. Dist. LEXIS 55569, at *17 (W.D. Wash. Apr. 26, 2016) (finding
consumer injury included ``time spent pursuing those refunds''); In
re LCA-Vision, No. C-4789 (Decision & Order entered Mar. 13, 2023)
(settling allegations that deceptive practices caused consumers to
``waste[ ] 90 minutes to two hours of their time,'' Compl. at 17),
<a href="https://www.ftc.gov/system/files/ftc_gov/pdf/1923157-lca-vision-consent-package.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/1923157-lca-vision-consent-package.pdf</a>.
\172\ E.g., FTC-2022-0069-0032 (``In some markets, this makes it
nearly impossible to find the actual hotels within my price range
since I have to go through the process of attempting to book each
hotel to find the actual, final cost. What should be a 5 minutes
search can turn into hours or days.''); FTC-2022-0069-6095
(describing, on behalf of constituent consumers, the difficulty of
searching for prices and incorporating fees into price comparisons);
FTC-2022-0069-6082 at 12 (describing the difficulty of comparing
price for electronic messaging services in prisons); FTC-2022-0069-
4424 (``The consumer is left vulnerable and with two options.
Proceed with the transaction and pay a higher cost than originally
anticipated. Or decline the transaction and have wasted time and
effort.''); FTC-2022-0069-4773 (``It is impossible to compare prices
online for so many things now.'').
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Where mandatory fees are disclosed at the same time as but
separately from the base price, consumers are nevertheless harmed. The
practice of dividing the price into multiple components without
disclosing the total, generally referred to as partitioned pricing,
distorts consumer choice.\173\ Consumers confronted with partitioned
pricing, on average, underestimate the total cost of the good or
service, likely because they use mental shortcuts to estimate the price
that do not fully account for each component.\174\ Partitioned pricing
also leads consumers to pay disproportionate attention to secondary
features of a product associated with ancillary fees, which impedes
consumers' ability to accurately compare products.\175\
---------------------------------------------------------------------------
\173\ Sullivan, supra n. 153, at 21-25;
\174\ Id. at 22-24; Morwitz, supra n. 154 at 455.
\175\ Bertini & Wathieu, supra n. 154 at 239-41.
---------------------------------------------------------------------------
Consumers cannot reasonably avoid these injuries. First, as
explained in this section, the search costs necessary to avoid the harm
of paying higher prices are themselves a harm to consumers. As the
Institute for Policy Integrity explained in its petition for a
rulemaking on these practices, also
[[Page 77434]]
called drip pricing, ``either the consumer must spend additional time
searching for full pricing information to engage in comparison
shopping, or must make an uninformed decision.'' \176\ Moreover,
studies suggest that cognitive biases may exist that prevent consumers
from avoiding injury. Several psychological theories explain why
consumers make errors when the total price is not revealed up front:
(1) under the anchoring theory, consumers who first learn of a lower
price do not properly adjust their calculations when additional fees
are added, thereby underestimating the total cost; \177\ (2) under the
endowment theory, consumers attach value to things they perceive to be
theirs and when consumers begin the purchase process their perception
shifts so that stopping the transaction feels like a loss; \178\ and
(3) under the sunk cost fallacy, consumers who have already invested in
an endeavor, such as by taking time to make selections on a website or
travel to a store, continue that endeavor even if it would benefit them
more to begin again elsewhere.\179\ In addition, the market cannot
correct for these injuries because the practice of displaying
incomplete initial prices is so prevalent that honest businesses cannot
compete.\180\ For example, after StubHub unilaterally adopted an all-in
pricing model in 2014, it soon reverted back to its original model
after it lost significant market share when customers incorrectly
perceived StubHub's prices to be higher.\181\
---------------------------------------------------------------------------
\176\ Inst. for Policy Integrity, Pet. for Rulemaking Concerning
Drip Pricing at 17 (2021), <a href="https://www.regulations.gov/docket/FTC-2021-0074/document">https://www.regulations.gov/docket/FTC-2021-0074/document</a>.
\177\ Id. at 18.
\178\ Huck & Wallace, supra n. 153, at 32.
\179\ David A. Friedman, Regulating Drip Pricing, 31 Stan. L. &
Pol'y Rev. 51, 55 n.13 (2020).
\180\ FTC-2022-0069-6088 at 13; FTC-2022-0069-6095 at 3, 6; FTC-
2022-0069-6082 at 12.
\181\ Fed. Trade Comm'n, ``That's the Ticket'' Workshop: Staff
Perspective, supra n. 163, at 4 & n.15.
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Finally, consumer injury is not outweighed by benefits to consumers
or competition. The practice of advertising prices that are not the
full price does not benefit consumers or competition. Consumers do not
receive any benefit from the misleading price presentation.\182\ Even
where the undisclosed fees are used to pay for something of value to
consumers, omitting that fee from the initial price does not benefit
consumers. Nor does this practice benefit competition, as it acts as a
hindrance to businesses that opt to disclose the true price, as
illustrated by real-world examples.\183\ This price obfuscation, in
turn, undermines the ability of businesses to compete on price and
inhibits the market from driving down prices overall.
---------------------------------------------------------------------------
\182\ Inst. for Policy Integrity, Pet. for Rulemaking Concerning
Drip Pricing at 20 (2021), <a href="https://policyintegrity.org/documents/Petition_for_Rulemaking_Concerning_Drip_Pricing.pdf">https://policyintegrity.org/documents/Petition_for_Rulemaking_Concerning_Drip_Pricing.pdf</a>.
\183\ Friedman, supra n. 179, at 65-66; U.K. Off. Fair Trading,
Advertising of Prices at 25 (2010), <a href="https://webarchive.nationalarchives.gov.uk/20140402173016/http://oft.gov.uk/shared_oft/market-studies/AoP/OFT1291.pdf">https://webarchive.nationalarchives.gov.uk/20140402173016/http://oft.gov.uk/shared_oft/market-studies/AoP/OFT1291.pdf</a>.
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B. Misrepresenting the Nature and Purpose of Charges
The comment record supports a finding that practices that
misrepresent the nature and purpose of fees are prevalent.
Specifically, commenters identified pricing structures that
misrepresented information about the nature and purpose of fees and
charges.\184\ These complaints included instances in which consumers
were misled about the identity of the good or service for which a fee
was charged, such as a ``cleaning fee'' for a vacation rental where the
consumer was also required to conduct extensive cleaning,\185\ or a
``convenience fee'' to purchase a ticket when the purchasing method is
not more convenient to the consumer than any alternative.\186\ They
also included instances in which consumers were misled about other
material aspects of the fee or charge. For example, consumers
complained that businesses led them to believe a charge was a mandatory
tax on consumers imposed by the government when it was actually a
charge the business chose to impose to offset increased costs to the
business.\187\ Consumers also commented that they were misled about the
amount of fees, particularly when a service was advertised as ``free''
but nevertheless incurred a fee.\188\ Consumers also complained that
they believed certain charges for goods or services were refundable and
discovered only after the purchase that they were either not refundable
at all or that a portion of the fees was not refundable.\189\
---------------------------------------------------------------------------
\184\ More than 250 comments identified misrepresentations
across many industries about the nature and purpose of fees.
\185\ E.g., FTC-2022-0069-2389; FTC-2022-0069-0874; FTC-2022-
0069-1571; FTC-2022-0069-2359; FTC-2022-0069-5078; see also FTC-
2022-0069-5665 (describing a daily cleaning fee for cleaning
services that were not provided until the end of the stay).
\186\ E.g., FTC-2022-0069-6166; see also FTC-2022-0069-0634
(describing misleading fees for ``maintenance'' that do not
correspond to the actual maintenance of a product); FTC-2022-0069-
0700 (describing a ``service'' fee that a business claimed covered
water and other services but the consumer was not provided water);
FTC-2022-0069-0729 (describing ``amenity'' fees for amenities that
were not available because of COVID-19); FTC-2022-0069-5991
(describing resort fees to cover services that were already provided
through a consumer loyalty plan); FTC-2022-0069-1746 (describing an
apartment rental fee for valet trash services that were not usually
provided).
\187\ FTC-2022-0069-6095 at 14; FTC-2022-0069-0138; FTC-2022-
0069-0765; FTC-2022-0069-1600; FTC-2022-0069-2387; FTC-2022-0069-
0637; FTC-2022-0069-2338; FTC-2022-0069-3036.
\188\ FTC-2022-0069-1676 (``Turbo tax. Waiting until I've done
all of my paperwork to tell me that I need to upgrade my package to
file.''); FTC-2022-0069-2986 (``the cruise line included room
service at no charge,'' but ``they added a $9,95 [sic] plus 18%
gratuity charge to all room service services''); FTC-2022-0069-0688
(``During on-line Christmas shopping, one company offered `Free
Shipping' as a promotion. At checkout, even though there was a $0
charge for `Shipping', I was charged $2.99 for `Shipping Service
Fees'. How is this considered FREE shipping?'').
\189\ E.g., FTC-2022-0069-0556; FTC-2022-0069-1545; FTC-2022-
0069-2096; FTC-2022-0069-2190.
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Charges that misrepresent their nature and purpose are deceptive
because they mislead reasonable consumers. False claims and those that
lack a reasonable basis are inherently likely to mislead
consumers.\190\ Further, the nature and purpose of charges are core
characteristics that affect the value to consumers of the goods or
services being offered. A representation is material if it conveys
information `` `that is important to consumers and, hence, likely to
affect their choice of, or conduct regarding, a product.' '' \191\
Whether a consumer is required to pay a charge, and what goods or
services they will receive in exchange for the charge, necessarily
affect a consumer's choice whether to pay a charge.\192\ Other
characteristics included in the nature and purpose of a charge, such as
the amount of the charge and whether it is refundable, are also
material.\193\
---------------------------------------------------------------------------
\190\ Deception Policy Statement, 103 F.T.C. at 175 n.5; FTC v.
Direct Mktg. Concepts, Inc., No. 04-11136-GAO, 2004 U.S. Dist. Lexis
11628, *13 (D. Mass. June 23, 2004) (citing In re Thompson Med. Co.,
104 F.T.C. 648, 788, 818-19 (1984)).
\191\ FTC v. <a href="http://Cyberspace.com">Cyberspace.com</a>, 453 F.3d 1196, 1201 (9th Cir. 2006)
(quoting Cliffdale Assocs., Inc., 103 F.T.C. 110, 165 (1984)).
\192\ See, e.g., FleetCor Techs., 620 F. Supp. at 1310 (finding
it was deceptive to charge fees with different names that were
functionally transaction fees after stating that consumers would not
be charged transaction fees).
\193\ See FTC v. Windward Mktg., Ltd., No. Civ. A. 1:96-CV-615F,
1997 WL 33642380, at *10 (N.D. Ga. Sept. 30, 1997) (``[A]ny
representations concerning the price of a product or service are
presumptively material.''); see, e.g., FTC v. MOBE Ltd., No. 6:18-
cv-862-Orl-37DCI, 2020 WL 3250220, at *4 (M.D. Fla. Mar. 26, 2020),
adopted by, 2020 WL 1847354 (M.D. Fla. Apr. 13, 2020) (finding that
representations about the availability of refunds and money-back
guarantees were presumptively material); FTC v. Ewing, No. 2:14-cv-
00683-RFB-VCF, 2017 WL 4797516, at *6 (D. Nev. Oct. 24, 2017)
(finding that ``100% no strings-attached refund policy'' was
presumptively material); FTC v. Lead Express, Inc., No. 2:20-cv-
00840-JAD-NJK, 2020 WL 2615685, at *7 (D. Nev. May 19, 2020)
(prohibiting misrepresentations about material terms, including fees
and payment amounts); FTC v. BlueHippo Funding, LLC, 762 F.3d 238,
246 (2d Cir. 2014) (stating that refund information would have
influenced consumer purchasing decisions and remanding to the
district court to determine whether to apply a presumption of
reliance in calculating damages); FTC v. Lucaslaw Ctr. Inc., No.
SACV 09-0770 DOC (ANx), 2010 WL 11506885, at *6 (C.D. Cal. June 3,
2010) (finding that the representations that a large up-front fee
was refundable if a loan modification was not approved were
material), aff'd sub nom. FTC. v. Lucas, No. 10-56985, 483 F. App'x
378 (9th Cir. 2012).
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[[Page 77435]]
Moreover, it is unfair for businesses to misrepresent the nature
and purpose of charges. Charging consumers under false pretenses causes
substantial injury, including where the injury is a ``small harm to a
large number of people'' or ``where it raises a significant risk of
concrete harm.'' \194\ Where businesses obscure information about the
nature and purpose of fees or provide false information to consumers,
injury from the misrepresentations is not reasonably avoidable.\195\
Such practices have no countervailing benefits to consumers and
competition--they simply make it more difficult for consumers to
comparison shop and for truthful businesses to compete on price.
---------------------------------------------------------------------------
\194\ Am. Fin. Servs. Ass'n v. FTC, 767 F.2d 957, 972 (D.C. Cir.
1985); Orkin Exterminating Co. v. FTC, 849 F.2d 1354, 1365 (11th
Cir. 1988).
\195\ E.g., FleetCor Techs., 620 F. Supp. 3d at 1334 (N.D. Ga.
2022) (finding that fees that were not listed, ``obscured by vague
language and tiny print'' in the terms and conditions, or described
vaguely in billing statements, were not unavoidable).
---------------------------------------------------------------------------
To prevent the misrepresentations described in this section, it is
necessary for businesses to clearly and conspicuously disclose the
nature and purpose of any amount a consumer may pay that is excluded
from the total price. Where charges are excluded from the total price,
disclosures of the nature and purpose of such charges are necessary to
determine whether such fees are truly optional and properly excluded
from the total price, and for the consumer to decide whether to accept
the optional charge.
The FTC has brought many cases concerning misrepresentations of the
total price of goods or services and the nature and purpose of charges,
which are described in greater detail in Section III.C.
C. Law Enforcement Actions and Other Responses
The Commission's prior work, and complementary actions by State and
private actors, further support a finding that the unfair or deceptive
practices identified in Sections III.A. and III.B. are prevalent. To
address these unfair or deceptive practices, the Commission has brought
enforcement actions and engaged in other efforts to address unfair or
deceptive fee practices. The Commission has brought numerous cases
alleging businesses have misrepresented the total costs of goods and
services because their prices do not include all mandatory fees.\196\
Among the challenged fees were undisclosed fees that increased the
total cost to consumers \197\ and fees that diminished the value of the
good or service the consumer received.\198\ For example, in United
States v. Funeral & Cremation Group of North America, LLC, the
Department of Justice brought suit on behalf of the Commission alleging
the defendants misrepresented the price of funeral services by listing
low prices on websites that were later inflated with various fees.\199\
The case resulted in a settlement requiring, among other things, that
the defendants provide accurate price lists during or immediately after
their first interaction with consumers and pay a civil penalty.\200\
Similarly, in FTC v. FleetCor Technologies, Inc., the FTC alleged the
defendant misrepresented the cost of its fuel cards when it ``charged
customers at least hundreds of millions of dollars in unexpected
fees.'' \201\ In FTC v. LendingClub Corp., the FTC charged that the
loan company offered loan applicants specific loan amounts with ``no
hidden fees,'' but actually deducted hundreds or even thousands of
dollars of hidden upfront fees from consumers' loan disbursements.\202\
And in FTC v. Millennium Telecard, Inc., the Commission alleged the
defendants advertised prepaid calling cards, including a specified
dollar value for a certain number of minutes, but failed to disclose
numerous fees that reduced the number of available minutes.\203\
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\196\ Compl. ]] 42-44, 50, United States v. Funeral Cremation
Grp. of N. Am., LLC (``Legacy Cremation Servs.''), No. 0:22-cv-60779
(S.D. Fla. filed Apr. 22, 2022) (alleging defendants advertised
artificially low prices for cremation services which ultimately
included undisclosed additional charges and, in some cases where
consumers contested these charges, defendants refused to return
remains); Compl. ] 9, FTC v. Liberty Chevrolet, Inc. (``Bronx
Honda''), No. 1:20-cv-03945 (S.D.N.Y. filed May 21, 2020) (alleging
defendants advertised low sales prices but later told consumers they
were required to pay additional charges including certification
charges); Compl. ] 13, FTC v. NetSpend Corp., No. 1:16-cv-04203
(N.D. Ga. filed Apr. 11, 2017) (alleging in part that defendant
charged maintenance and usage fees to consumers who were unable to
use all, or even a portion of, the funds of their prepaid debit
cards); see also Compl. ]] 24-25, 40-42, FTC v. AT&T Mobility LLC,
No. 3:14-cv-04785 (N.D. Cal. filed Oct. 28, 2014) (alleging
defendant did not adequately disclose the limitations of defendant's
data plan offerings and subsequently charged high cancellation fees
for consumers who chose to end their contracts); Compl. ]] 1, 26,
39-40, FTC v. Millennium Telecard, Inc., No. 2:11-cv-02479 (D.N.J.
filed May 2, 2011) (alleging defendants deceptively marketed prepaid
credit calling cards by failing to adequately disclose fees that
substantially limited the number of minutes consumers had
purchased); Compl. ] 15, FTC v. CompuCredit Corp., No. 1:08-cv-01976
(N.D. Ga. filed June 10, 2008) (alleging in part that defendants
misrepresented the credit limits on various credit cards and failed
to disclose fees charged upfront); Compl. ]] 15-17, FTC v.
Nationwide Connections, Inc., No. 06-cv-80180 (S.D. Fla. filed Feb.
27, 2006) (alleging in part that defendants crammed unauthorized
charges for long distance service onto consumers' phone bills).
\197\ E.g., Compl. ]] 42-44, 50, Funeral & Cremation Grp. of N.
Am., No. 0:22-cv-60779, supra n. 196; Compl. ]] 39-46, FTC v. Vonage
Holdings Corp., No. 3:22-cv-6435 (D.N.J. filed Nov. 3, 2022).
\198\ E.g., Compl. ] 13, NetSpend Corp., No. 1:16-cv-04203,
supra n. 196 (N.D. Ga. filed Apr. 11, 2017); Compl. ]] 1, 26, 39-40,
Millennium Telecard, No. 2:11-cv-02479, supra n. 196.
\199\ Compl. ]] 42-57, Funeral & Cremation Grp. of N. Am., LLC,
No. 0:22-cv-60779, supra n. 196.
\200\ Stipulated Order at 7-10, U.S. v. Funeral & Cremation Grp.
of N. Am., LLC, No. 0:22-cv-60779 (S.D. Fla. Apr. 6, 2023).
\201\ Compl. ]] 10, 29-31, 36, 96-98, 102-04, FTC v. FleetCor
Techs., Inc., No. 1:19-cv-05727, 2019 WL 13081514 (N.D. Ga. filed
Dec. 20, 2019). The Court granted summary judgment on the FTC's
claims, among others, that FleetCor falsely represented that
customers would not pay transaction fees. FleetCor Techs., 620 F.
Supp. 3d at 1307-10.
\202\ Compl. ]] 9, 10, 12-16, 22-25, FTC v. LendingClub Corp.,
No. 3:18-cv-02454 (N.D. Cal. filed Apr. 25, 2018).
\203\ Compl. ]] 1, 26, 39-40, Millennium Telecard, No. 2:11-cv-
02479, supra n. 196.
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The Commission has similarly brought numerous cases alleging
businesses have mispresented the nature and purpose of fees.\204\ For
[[Page 77436]]
example, in The Matter of <a href="http://Amazon.com">Amazon.com</a>, the Commission alleged Amazon
made unlawful misrepresentations in violation of Section 5 of the FTC
Act when it claimed that it would give to Amazon Flex drivers, in
addition to their regular pay, 100% of tips consumers elected to
leave.\205\ Instead, the FTC alleged, Amazon used the tips to subsidize
its own pay to drivers.\206\ The case, which was brought under the
FTC's Section 19 administrative procedure, resulted in a settlement
through which the FTC returned nearly $60 million to Amazon Flex
drivers.\207\ The Commission similarly addressed misrepresentations
about what charges were for in FTC v. Benefytt Technologies Inc.,
alleging in part that the defendants misled consumers about whether
ancillary products were included in the price of an insurance plan,
using dark patterns in the enrollment process and a single bill to
obscure the boundaries of each separate product.\208\ The parties
agreed to a settlement, providing $100 million in redress to consumers
and prohibiting defendants from misrepresenting the nature of their
products, among other terms.\209\
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\204\ Compl. ]] 39-46, Vonage Holdings, No. 3:22-cv-6435, supra
n. 197 (alleging in part that defendant charged undisclosed large
cancellation fees); Compl. ]] 61-63, FTC v. Benefytt Techs., Inc.,
No. 8:22-cv-1794 (M.D. Fla. filed Aug. 8, 2022) (alleging in part
that defendants bundled and charged fees for unwanted products with
sham health insurance plans); Compl. ]] 17-20, FTC v. Passport Auto
Grp., Inc., No. 8:22-cv-02670 (D. Md. filed Oct. 18, 2022) (alleging
in part that defendants advertised vehicle prices that did not
include redundant fees ranging from hundreds to thousands of dollars
for inspection, reconditioning, preparation, and certification);
Compl. ]] 3, 33, 41, FTC v. N. Am. Auto. Serv., Inc. (``Napleton
Auto''), No. 1:22-cv-01690 (E.D. Ill. filed Mar. 31, 2022) (alleging
defendants charged consumers for additional products and services
without their consent and misrepresented the fees as mandatory,
resulting in artificially low advertised prices); Final Compl. ]]
50-51, In re <a href="http://Amazon.com">Amazon.com</a>, Inc. (``Amazon Flex''), No C-4746 (F.T.C.
filed June 10, 2021) (alleging respondents falsely represented that
100% of tips would go to the driver in addition to the pay
respondents offered drivers); Compl. ]] 37-39, FTC v. Lead Express,
Inc., No. 2:20-cv-00840 (D. Nev. filed May 11, 2020) (alleging in
part that defendants did not clearly and conspicuously disclose
material information related to the total amount of payments related
to loans and also withdrew significantly more than the stated total
cost of the loan from consumers' accounts); Compl. ]] 9-10, FleetCor
Tech., No. 1:19-cv-05727, 2019 WL 13081514 (alleging defendants
charged consumers arbitrary and unexpected fees related to pre-paid
fuel cards without consumers' consent); Compl. ]] 4, 30-32, 36-37,
FTC v. BCO Consulting Servs., Inc., No. 8:23-cv-00699 (C.D. Cal.
filed Apr. 24, 2023) (alleging defendants enticed consumers with
false promises to alleviate student loan debt despite not applying
any payments to the student loan balances and collecting illegal
advance fees without providing any services); Compl. ]] 31-36, FTC
v. OMICS Grp. Inc., No. 2:16-cv-02022 (D. Nev. filed Aug. 25, 2016)
(alleging in part defendants misrepresented the publishing process
of academic papers and only disclosed large publishing fees after
notifying consumers that their papers had been approved for
publication); Compl. ]] 12, 23-25, FTC v. LendingClub Corp., No.
3:18-cv-02454 (N.D. Cal. filed Apr. 25, 2018) (alleging defendant
charged consumers an upfront fee based on a percentage of the loan
requested that was not clearly and conspicuously disclosed; this
hidden fee caused loans received to be substantially smaller than
advertised); Compl. ] 37, FTC v. T-Mobile USA, Inc., No. 2:14-cv-
00967 (W.D. Wash. filed July 1, 2014) (alleging defendant added
unauthorized third-party charges to the telephone bills of
consumers); Am. Compl. ]] 21-22, FTC v. Websource Media, LLC, No.
4:06-cv-01980 (S.D. Tex. filed June 21, 2006) (alleging defendants
placed charges on consumer telephone bills despite representations
that there would be no charges or obligations); FTC v. Mercury Mktg.
of Del., Inc., No. 00-cv-3281, 2004 WL 2677177, *1 (E.D. Pa. Nov.
22, 2004) (finding defendants billed consumers without their consent
after misleading consumers about introductory internet packages);
Compl. ]] 25-27, FTC v. Stewart Fin. Co., No. 1:03-cv-02648 (N.D.
Ga. filed Sept. 4, 2003) (alleging in part that defendants package
undisclosed add-on products with consumer loans and in some cases
describe those add-on products as mandatory); Compl. ]] 19-21, 24,
FTC v. Hold Billing Serv., Ltd., No. SA-98-CA-0629-FB (W.D. Tex.
filed July 16, 1998) (alleging defendants had previously added
third-party charges to consumers' phone bills without permission by
using sweepstakes entry forms as contracts to authorize charges);
Compl. ]] 18, 33, 56-58, FTC v. Lake, No. 8:15-cv-00585-CJC-JPR
(C.D. Cal. filed Apr. 14, 2015) (alleging defendants misrepresented
that trial loan payments or reinstatement fee payments would be held
in escrow and refunded to the consumer if the loan modification was
not approved); FTC. v. Hope for Car Owners, LLC, No. 2:12-CV-
778–GEB-EFB, 2013 WL 322895, at *3-4 (E.D. Cal. Jan. 24, 2013)
(finding that the FTC sufficiently stated a claim for
misrepresentation of the refundability of vehicle loan modification
fees and entering default judgment); Am. Compl. ]] 38-39, 58-60, FTC
v. U.S. Mortg. Funding, Inc., No. 9:11-cv-80155-JIC (S.D. Fla. filed
July 26, 2011) (alleging defendants misrepresented that an upfront
loan modification fee was refundable); FTC v. Nat'l Bus.
Consultants, Inc., 781 F. Supp. 1136, 1143 (E.D. La. 1991) (``The
defendants' misrepresentations regarding the ease with which the
`performance deposit' could be refunded composed a large part of the
various and sundry misrepresentations.'').
\205\ Final Compl. ]] 7-8, 12-20, 26-34, 50-52, Amazon Flex, No.
C-4746, supra n. 204.
\206\ Id. at ]] 26-34.
\207\ Press Release, Fed. Trade Comm'n, FTC Returns Nearly $60
Million to Drivers Whose Tips Were Illegally Withheld by Amazon
(Nov. 2, 2021), <a href="https://www.ftc.gov/news-events/news/press-releases/2021/11/ftc-returns-nearly-60-million-drivers-whose-tips-were-illegally-withheld-amazon">https://www.ftc.gov/news-events/news/press-releases/2021/11/ftc-returns-nearly-60-million-drivers-whose-tips-were-illegally-withheld-amazon</a>.
\208\ Compl. ]] 20-24, 60-70, Benefytt Techs., No. 8:22-cv-1794,
supra n. 204.
\209\ E.g., Stipulated Order against corporate defendants at 8-
9, 26, 27, Benefytt Techs., No. 8:22-cv-1794 (M.D. Fla. Aug. 11,
2022).
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The Commission also addressed misrepresentations about the nature
and purpose of fees, including their amount and whether they were
mandatory, in FTC v. Stewart Finance Company Holdings. The Commission
alleged in part that defendants misrepresented optional ancillary
products as mandatory and misrepresented the cost of a direct deposit
option as free when it incurred a monthly charge.\210\ The case, which
was resolved before the Supreme Court's decision in AMG Capital
Management v. FTC limited avenues for the Commission to obtain monetary
relief,\211\ resulted in a settlement that provided monetary redress to
consumers and, among other terms, prohibited the defendants from
misrepresenting the cost, benefit, or optional nature of any ancillary
loan products and from misrepresenting direct deposit as a ``free''
service, or misrepresenting its costs and terms.\212\ Similarly, in FTC
v. Websource Media, LLC, the Commission addressed misrepresentations
about the amount of fees when it alleged defendants offered a free
trial for a website design but added fees for the website to consumers'
telephone bills.\213\ Settlements reached in 2007 and 2009 provided
monetary redress to consumers and prohibited the defendants from making
various misrepresentations.\214\ In FTC v. U.S. Mortgage Funding, Inc.,
the Commission alleged the defendants violated Section 5 of the FTC Act
when they misrepresented that large upfront fees charged to homeowners
to negotiate loan modifications would be refunded if a modification was
not obtained.\215\ The case resulted in default judgments against two
defendants and settlements with the remaining four defendants that
included monetary judgments and bans on providing mortgage relief
services, among other things.\216\
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\210\ Compl. ]] 25-27, 54-56, Stewart Fin. Co., No. 1:03-cv-
02648, supra n. 204.
\211\ AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341, 1352 (2021)
\212\ Stipulated Final J. against defendants and relief
defendant 12-16, Stewart Fin. Co., No. 1:03-cv-02648 (N.D. Ga. Oct.
28, 2003).
\213\ Am. Compl. ]] 20-21, Websource Media, No. 4:06-cv-01980,
supra n. 204.
\214\ E.g., Stipulated Final J. against Websource Media, et al.
7-12, Websource Media, No. 4:06-cv-01980 (S.D. Tex. July 17, 2007);
Stipulated Final J. against Steven L. Kennedy 6-9, Websource Media,
No. 4:06-cv-01980 (S.D. Tex. July 29, 2009).
\215\ Am. Compl. ]] 38-39, 58-60, U.S. Mortg. Funding, No. 9:11-
cv-80155-JIC, supra n. 204.
\216\ Press Release, Fed. Trade Comm'n, FTC Action Leads to Ban
on Alleged Mortgage Relief Scammers Who Harmed Thousands of
Consumers (Feb. 14, 2012), <a href="https://www.ftc.gov/news-events/news/press-releases/2012/02/ftc-action-leads-ban-alleged-mortgage-relief-scammers-who-harmed-thousands-consumers">https://www.ftc.gov/news-events/news/press-releases/2012/02/ftc-action-leads-ban-alleged-mortgage-relief-scammers-who-harmed-thousands-consumers</a>.
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To complement its law enforcement efforts, the FTC has engaged with
the public through a variety of measures over more than a decade to
address unfair or deceptive practices related to fees. For example, in
2012, the FTC's Bureau of Economics held a conference designed to
``examine the theoretical motivation for drip pricing and its impact on
consumers, empirical studies, and policy issues pertaining to drip
pricing.'' \217\ The conference brought together a variety of experts
including economists and policy experts to give an overview of drip
pricing and look at its impact on the market. Following the workshop,
Commission staff sent warning letters to hotels and online travel
agents, stating that they were not adequately disclosing resort fees or
including those fees in the total price.\218\ Likewise, in 2017, the
Commission published a report that reviewed the existing literature on
shrouded pricing and examined the costs and benefits of disclosing
resort fees.\219\ In 2019, the Commission hosted a workshop that
examined pricing and fee issues in the
[[Page 77437]]
live-event tickets market and subsequently issued a staff report on the
subject.\220\
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\217\ Fed. Trade Comm'n, The Economics of Drip Pricing (May 21,
2012), <a href="https://www.ftc.gov/news-events/events/2012/05/economics-drip-pricing">https://www.ftc.gov/news-events/events/2012/05/economics-drip-pricing</a>.
\218\ Press Release, Fed. Trade Comm'n, FTC Warns Hotel
Operators that Price Quotes that Exclude ``Resort Fees'' and Other
Mandatory Surcharges May Be Deceptive (Nov. 28, 2012), <a href="https://www.ftc.gov/news-events/news/press-releases/2012/11/ftc-warns-hotel-operators-price-quotes-exclude-resort-fees-other-mandatory-surcharges-may-be">https://www.ftc.gov/news-events/news/press-releases/2012/11/ftc-warns-hotel-operators-price-quotes-exclude-resort-fees-other-mandatory-surcharges-may-be</a>.
\219\ Sullivan, supra n. 153. As used in this NPRM, the term
shrouded pricing includes practices related to both drip pricing and
partitioned pricing, which the Commission has previously defined as
follows: ``Partitioned pricing entails dividing the price into
multiple components without disclosing the total. Drip pricing is
the practice of advertising only part of a product's price upfront
and revealing additional charges later as consumers go through the
buying process.'' Id. at v.
\220\ Fed. Trade Comm'n, ``That's the Ticket'' Workshop: Staff
Perspective, 4 (May 2020).
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The Commission's law enforcement partners have also brought actions
addressing unfair or deceptive practices relating to fees. For example,
State Attorneys General have brought cases against hotel chains and
delivery apps involving unfair or deceptive fees.\221\ Numerous private
lawsuits have involved unfair or deceptive fees across various
industries.\222\
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\221\ See, e.g., Assurance of Voluntary Compliance ] 2, Texas v.
Marriott Int'l, Inc., No. 2023CI09717 (Tex. Dist. Ct. May 16, 2023)
(alleging defendant misrepresented various fees, including resort
fees, and did not include all mandatory fees in the advertised room
rate in violation of the Texas Deceptive Trade Practices Act);
Plaintiff's Original Pet. ] 1, Texas v. Hyatt Hotels Corp., No.
C2023-0884D (Tex. Dist. Ct. May 15, 2023) (alleging defendant did
not include mandatory fees in advertised room rates in violation of
the Texas Deceptive Trade Practices Act); Consent Order ] 6,
District of Columbia v. Maplebear, Inc., No. 2020 CA 003777B (D.C.
Super. Ct. Aug. 19, 2022) (prohibiting defendant from
misrepresenting the nature and purpose of fees applied to consumers'
orders); Compl. ]] 2, 5-8, District of Columbia v. Grubhub Holdings,
Inc., No. 2022 CA 001199 B, (D.C. Super. Ct. filed Mar. 21, 2022)
(alleging in part that defendants misrepresented to consumers that
defendants' only fee was a ``Delivery Fee'' while obscuring a
``Service Fee'' or disclosing a ``Small order fee'' only at the end
of the checkout process); Assurance of Voluntary Compliance ] 2,
Commonwealth v. Marriott Int'l, Inc., No. GD-21-014016 (Pa. Ct. C.P.
Nov. 16, 2021) (alleging defendant misrepresented its room rates by
failing to include items such as mandatory fees in its pricing);
Consent Order ] 3.1-3.18, In re Drivo LLC, N.J. Div. Consumer Aff.
(Sept. 16, 2020) (prohibiting unfair and deceptive practices
relating to damage fees and third party reservation fees for rental
vehicles); Agreed Final J. ] 8, Texas v. Guided Tourist, LLC, No. D-
1-GN-19-001618 (Tex. Dist. Ct. Mar. 26, 2019) (enjoining defendant
from advertising ticket prices other than the total ticket price,
including all mandatory fees); Settlement Agreement ]] 8(b)-(c),
Florida v. Dollar Thrifty Auto. Grp., Inc., Case No. 16-2018-cv-
005938, (Fla. Cir. Ct. Jan. 14, 2019) (alleging in part that
defendant misrepresented optional charges as mandatory and did not
sufficiently disclose toll-related fees). Additionally, Intuit
recently entered into a multistate settlement of allegations that it
misrepresented its tax filing products would come at no cost. See
generally, Assurance of Voluntary Compliance, Commonwealth v. Intuit
Inc., No. 220500324 (Pa. Ct. C.P. May 4, 2022).
\222\ See, e.g., Compl. ]] 4-6, Hecox v. DoorDash, Inc., No.
1:23-cv-01006 (D. Md. filed Apr. 14, 2023) (alleging in part that
defendant employs deceptively named fees leading consumers to
mistakenly believe the fees were for delivery people or the
municipality); Class Action Compl. ]] 7-16, Ramirez v. Bank of Am.,
N.A., No. 5:22-cv-00859 (N.D. Cal. filed Feb. 10, 2022) (alleging
misrepresentations about the refundability of fees); Compl. ]] 2-3,
Abdelsayed v. Marriot Int'l, Inc., No. 3:21-cv-00402 (S.D. Cal.
filed Mar. 5, 2021) (alleging defendant engaged in drip pricing by
baiting consumers with lower prices and adding charges, such as
resort fees, amenity fees, and destination fees, throughout the
vending process); Compl. ]] 1, 3-5, Travelers United v. MGM Resorts
Int'l, Inc., No. 2021-CA-00477-B (D.C. Super. Ct. filed Feb. 18,
2021) (alleging defendant hid portions of daily room rates via
resort fees and ultimately misled consumers); Compl. ]] 18, 31, 43,
Lee v. Ticketmaster LLC, No. 18-cv-05987 (N.D. Cal. filed Sept. 28,
2018) (alleging, in part, that defendants were unjustly enriched
through service charges added to resale tickets); Second Am. Compl.
]] 1-2, Wang v. Stubhub, Inc., No. CGC-18564120 (Cal. Super. Ct.
filed Feb. 25, 2019) (alleging defendant intentionally hid
additional fees in order to advertise artificially low ticket
prices); Class Action Compl. ]] 1, 33-34, Holl v. United Parcel
Service, Inc., No. 3:16-cv-05856 (N.D. Cal. filed Oct. 11, 2016)
(alleging misrepresentations about the amount of fees); Class Action
Compl. ]] 27, 36, 46-51, Cross v. Point and Pay LLC, No. 6:16-cv-
01182 (M.D. Fla. filed June 29, 2016) (same). See also FTC-2022-
0069-6042 (tracking class action cases related to unfair and
deceptive fees).
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Some States have also taken legislative or regulatory action
involving unfair or deceptive fees. For example, California \223\ and
Pennsylvania \224\ legislators have introduced legislation prohibiting
advertising prices that do not include all mandatory fees, with some
exceptions. In June 2022, New York passed legislation directed at
increasing transparency during the ticket-buying process, banning
hidden fees for live events, and prohibiting delivery fees on tickets
delivered electronically or printed at home.\225\ Similar legislation
has been introduced in Massachusetts.\226\
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\223\ Cal. S.B. 478, (2023-2024) Regular Session.
\224\ H.B. 636 (2023-2024) (Pa. 2023).
\225\ N.Y. Arts & Cult. Aff. Law Sec. 25.01-25.33 (McKinney
2023); see also Governor Hochul Signs Legislation Targeting Unfair
Ticketing Practices in Live Event Industry (June 30, 2022), <a href="https://www.governor.ny.gov/news/governor-hochul-signs-legislation-targeting-unfair-ticketing-practices-live-event-industry">https://www.governor.ny.gov/news/governor-hochul-signs-legislation-targeting-unfair-ticketing-practices-live-event-industry</a>.
\226\ An Act Ensuring Transparent Ticket Pricing, H.259, 193rd
Gen. Court (Mass. 2023) (would amend Massachusetts' law licensing
the sale of admission tickets, Mass. Gen. Laws ch. 140, Sec. 182A,
to require the truthful, non-deceptive, clear, and conspicuous
disclosure of the total cost of a ticket, and what portions
represent a service charge or other ancillary fee, prior to
selection, and to prohibit the price from increasing, except for
certain delivery fees, prior to payment).
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Regulators in countries such as Canada and Australia, as well as
international bodies such as the European Union, have also begun
regulating unfair and deceptive fee practices. In September 2023, the
United Kingdom solicited public comment on drip pricing. That numerous
countries outside of the United States have addressed fees and
deceptive pricing through legislation and law enforcement lends
additional support to the conclusion that these types of fees are
prevalent. Paragraph 74.01(1.1) of the Canadian Competition Act \227\
regulates drip pricing and has resulted in actions against online
ticket sellers, car rental services, and flight-booking services.\228\
Similarly, the Australian Competition and Consumer Act of 2010 requires
businesses to prominently display a figure that represents the single
price for goods or services.\229\ European Union law prohibits
misleading and aggressive commercial practices toward consumers, with
specific directives requiring that consumers be informed of the total
price of goods and services.\230\ The UK Department for Business &
Trade commissioned research demonstrating that drip pricing is
prevalent across the economy and started a ``consultation'' soliciting
public views.\231\
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\227\ Competition Act, R.S.C., 1985, c. C-34, ] 74.01(1.1)
(Can.), <a href="https://laws.justice.gc.ca/eng/acts/C-34/FullText.html">https://laws.justice.gc.ca/eng/acts/C-34/FullText.html</a>.
\228\ See, e.g., several deceptive pricing cases, among others,
made public by the Canadian Competition Bureau at <a href="https://ised-isde.canada.ca/site/competition-bureau-canada/en/deceptive-marketing-practices/cases-and-outcomes">https://ised-isde.canada.ca/site/competition-bureau-canada/en/deceptive-marketing-practices/cases-and-outcomes</a>.
\229\ Competition and Consumer Act 2010,Vol. 4, Sched. 2, Ch. 3,
P. 3-1, Sec. 48 (Austl.), <a href="https://www.legislation.gov.au/Details/C2023C00043">https://www.legislation.gov.au/Details/C2023C00043</a>.
\230\ Directive 2005/29/EC of the European Parliament and of the
Council of 11 May 2005 concerning unfair business-to-consumer
commercial practices in the internal market, <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02005L0029-20220528">https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02005L0029-20220528</a>;
see also Directive 2011/83/EU of the European Parliament and of the
Council of 25 October 2011 on consumer rights, <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02011L0083-20220528">https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02011L0083-20220528</a>.
Additionally, a 1998 Directive required that the selling price
should be indicated for all products referred to in the Article,
which means a price that is the final price for a unit of the
product including VAT and all other taxes. Directive 98/6/EC of the
European Parliament and of the Council of 16 February 1998 on
consumer protection in the indication of the prices of products
offered to consumers, <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A01998L0006-20220528">https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A01998L0006-20220528</a>.
\231\ UK Department for Business & Trade, Estimating the
Prevalence and Impact of Online Drip Pricing (2023), <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1182208/estimating-the-prevalence-and-impact-of-online-drip-pricing.pdf">https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1182208/estimating-the-prevalence-and-impact-of-online-drip-pricing.pdf</a>; UK Department for Business & Trade,
Smarter Regulation: Consultation on Improving Price Transparency and
Product Information for Consumers (2023), <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1182962/consultation-on-improving-price-transparency-and-product-information-for-consumers.pdf">https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1182962/consultation-on-improving-price-transparency-and-product-information-for-consumers.pdf</a>.
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IV. Reasons for the Proposed Rule on Unfair or Deceptive Fees
The Commission believes that the proposed rule will substantially
improve its ability to combat the most prevalent unfair or deceptive
practices relating to fees and other charges and may also strengthen
deterrence against these practices in the first instance. While unfair
or deceptive practices relating to fees are already unlawful under
Section 5 of the FTC Act, which prohibits unfair or deceptive acts or
practices, the proposed rule (if finalized) will allow the Commission
to seek civil penalties against violators and
[[Page 77438]]
more readily obtain monetary redress for the consumers who are harmed.
The Commission's objectives in commencing this rulemaking are to
deter deceptive and unfair acts or practices involving fees, to promote
a level playing field that enables comparison shopping and allows
honest businesses to compete, and to expand the available remedies
where such practices are uncovered. In the ANPR, the Commission
described how a recent U.S. Supreme Court decision,\232\ which
overturned 40 years of precedent from the U.S. Circuit Courts of Appeal
that uniformly held the Commission could take action under Section
13(b) of the FTC Act to return money unlawfully taken from consumers
through unfair or deceptive acts or practices, has made it
significantly more difficult for the Commission to return money to
injured consumers.\233\ Without Section 13(b) as it had historically
been understood, the Commission's only means to return money unlawfully
taken from consumers is Section 19, which provides two paths for
consumer redress. The longer path under Section 19(a)(2) requires the
Commission to first obtain a final administrative order. Then, to
recover money for consumers, the Commission must prove in Federal court
that the violator engaged in fraudulent or dishonest conduct.\234\ The
shorter path under Section 19(a)(1), which allows the Commission to
recover consumer redress directly through a Federal court action or
obtain civil penalties, is available only when a rule has been
violated.\235\
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\232\ AMG Cap. Mgmt., 141 S. Ct. 1341.
\233\ Fed. Trade Comm'n, ANPR: Unfair or Deceptive Fees Trade
Regulation Rule Commission Matter No. R207011, 87 FR 67413 at 67415
(Nov. 8, 2022), <a href="https://www.federalregister.gov/documents/2022/11/08/2022-24326/unfair-or-deceptive-fees-trade-regulation-rule-commission-matter-no-r207011">https://www.federalregister.gov/documents/2022/11/08/2022-24326/unfair-or-deceptive-fees-trade-regulation-rule-commission-matter-no-r207011</a>.
\234\ See 15 U.S.C. 57b(a)(2) (``If the Commission satisfies the
court that the act or practice to which the cease and desist order
relates is one which a reasonable man would have known under the
circumstances was dishonest or fraudulent, the court may grant
relief.'').
\235\ Compare 15 U.S.C. 57b(a)(1) (rule violations), with id.
57b(a)(2) (Section 5 violations).
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The proposed rule will make available the shorter path in a broader
set of Commission enforcement actions so that it can more efficiently
redress consumers. Currently, the Commission can directly pursue in
Federal court Section 19 remedies, including civil penalties and
consumer redress, for unfair or deceptive practices relating to fees
only if those practices violate certain other rules or statutes
enforced by the Commission, such as the Commission's Telemarketing
Sales Rule (``TSR''),\236\ the Restore Online Shoppers' Confidence Act
(``ROSCA''),\237\ Negative Option Rule,\238\ or Funeral Rule,\239\
which prohibit unfair or deceptive pricing practices, but apply only in
specific contexts. Further, the FTC has addressed unfair or deceptive
fee practices through numerous enforcement actions, warning letters,
workshops, and reports spanning more than a decade.\240\ Despite these
efforts, the issues associated with unfair or deceptive fees have
persisted. Prohibiting unfair or deceptive practices relating to fees
across industries expands the Commission's enforcement toolkit and
allows it to deliver on its mission by stopping and deterring harmful
conduct and making American consumers whole when they have been
wronged. Because unfair or deceptive practices relating to fees are so
prevalent and so harmful, the unlocking of additional remedies through
this rulemaking, particularly the possibility of seeking civil
penalties against violators as well as obtaining redress for consumers
who are harmed, will allow the Commission to more effectively police
unfair or deceptive fee practices.
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\236\ 16 CFR 310.
\237\ 15 U.S.C. 8401-8405.
\238\ 16 CFR 425.
\239\ 16 CFR 453.
\240\ See discussion supra Section III.C.
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V. Overview and Scope of the Proposed Rule on Unfair or Deceptive Fees
The Commission's proposed rule is straightforward. It borrows from
existing rules and statutory definitions by declaring that unfair or
deceptive practices with respect to fees are unlawful. These unfair or
deceptive practices include bait-and-switch pricing and misrepresenting
the nature and purpose of fees. As noted in Section III, case law, the
Commission's experience, the experience of commenters, and other
evidence cited herein are replete with examples of such unfair or
deceptive practices.
Several commenters raised questions about jurisdiction. The
Commission's enforcement of the proposed rule is subject to all
existing limitations of the law: of unfair or deceptive acts or
practices under the FTC Act; of the FTC's jurisdiction; and of the U.S.
Constitution--the Commission cannot bring a complaint to enforce the
rule if the complaint would exceed the Commission's jurisdiction or
offend the Constitution.
The Commission invites written comments on the proposed Rule, and,
in particular, answers to the specific questions set forth in Section
X.
A. Sec. 464.1 Definitions
Proposed Sec. 464.1 contains definitions for the following terms:
``Ancillary Good or Service,'' ``Business,'' ``Clear(ly) and
Conspicuous(ly),'' ``Government Charges,'' ``Pricing Information,''
``Shipping Charges,'' and ``Total Price.'' Each of these terms is used
in the proposed Rule.
``Ancillary Good or Service'' is defined as any additional good(s)
or service(s) offered to a consumer as part of the same transaction.
This would include goods or services not necessary to render the
primary good or service fit for its intended use but are nevertheless
offered as part of the same transaction. An Ancillary Good or Service
may be mandatory or optional. For example, if a hotel offers a consumer
the option to purchase or decline trip insurance with a room
reservation, the insurance would be an optional ancillary service. If a
housing rental agreement includes a fee that the consumer cannot
reasonably avoid for a trash valet service, it would be a mandatory
ancillary service. If a business includes a fee the consumer cannot
reasonably avoid to process the payment for any good or service, such
payment processing would be a mandatory ancillary service.
``Business'' is defined as an individual, corporation, partnership,
association, or any other entity that offers goods or services,
including, but not limited to, online, in mobile applications, and in
physical locations. This definition is industry neutral. However, this
definition contains a carveout for certain motor vehicle dealers that
must comply with 16 CFR 463, requiring a cash price disclosure and
prohibiting misrepresentations. On July 13, 2022, the Commission
published in the Federal Register a notice of proposed rulemaking for a
Motor Vehicle Dealers Trade Regulation Rule, which if finalized would
be published at 16 CFR 463. The proposed Motor Vehicle Dealers Rule
would require covered motor vehicle dealers to, among other things,
disclose the true ``Offering Price'' of a vehicle in advertisements or
communications that reference a specific vehicle or any monetary amount
or financing term for any vehicle, and would prohibit dealers from
making certain misrepresentations. The proposed Rule on Unfair or
Deceptive Fees provides that if the Commission finalizes the proposed
Motor Vehicle Dealers Rule's Offering Price and misrepresentations
provisions and such rule is published and in effect at 16 CFR 463,
motor vehicle dealers subject to that part would be excluded from
coverage under the proposed Rule
[[Page 77439]]
on Unfair or Deceptive Fees. If there is no provision published and in
effect at 16 CFR 463 requiring motor vehicle dealers to disclose the
cash price and prohibiting misrepresentations, motor vehicle dealers
would not be exempt from the definition of ``Business'' and therefore
would be subject to the proposed Rule on Unfair and Deceptive Fees.
``Clear(ly) and Conspicuous(ly)'' is defined consistently with
longstanding Commission interpretation and practice.
``Government Charges'' means all fees or charges imposed on
consumers by a Federal, State, or local government agency, unit, or
department. This definition covers only fees or charges imposed by the
government on consumers and does not encompass fees or charges that the
government imposes on a business and that the business chooses to pass
on to consumers.
``Pricing Information'' is defined as any information relating to
any amount a consumer may pay.
``Shipping Charges'' is defined as all fees or charges that
reasonably reflect the amount a Business incurs to send physical goods
to a consumer through the mail, including private mail services. This
definition does not include delivery through couriers, such as those in
mobile delivery applications. This definition is limited to the amount
that reasonably reflects what a Business incurs to send goods. Thus,
for the purposes of the provision that references Shipping Charges, a
Business cannot artificially inflate the cost of shipping.
``Total Price'' is defined as the maximum total of all fees or
charges a consumer must pay for a good or service and any mandatory
Ancillary Good or Service, except that Shipping Charges and Government
Charges may be excluded. The use of the phrase ``maximum total'' would
allow businesses to apply discounts and rebates after disclosing the
Total Price. Because the Total Price includes all charges that a
consumer must pay, it covers mandatory charges. As explained in Section
III.A., because there is an implied representation that a good or
service offered for sale is fit for the purposes for which it is sold,
a Business cannot treat a feature as optional if it is necessary to
render the good or service fit for its intended use. The Total Price
need not include Shipping Charges (all fees or charges that reasonably
reflect the amount a Business incurs to send physical goods to a
consumer through the mail, including private mail services) and
Government Charges (all fees or charges imposed on consumers by a
Federal, State, or local government agency, unit, or department).
Because the Shipping Charges must reasonably reflect the amount a
Business incurs, a Business cannot artificially inflate the cost of
shipping that is excluded from the Total Price. A Business likewise
cannot artificially inflate taxes excluded from the Total Price because
the definition of Government Charges covers only those charges imposed
by the government on consumers.
B. Sec. 464.2 Hidden Fees Prohibited
The prohibition against bait-and-switch pricing in proposed Sec.
464.2(a) would cover unlawful conduct by Businesses that offer,
display, or advertise an amount a consumer may pay without Clearly and
Conspicuously disclosing the Total Price. In this rule, the Total Price
includes all charges that a consumer must pay for a good or service,
including any mandatory Ancillary Good or Service. As explained in
Section V.A., Total Price need not include Shipping Charges and
Government Charges. Proposed Sec. 464.2(b) clarifies that a Business
that is required to disclose the Total Price in an offer, display, or
advertisement under Sec. 464.2(a) must disclose it more prominently
than any other Pricing Information.
The prohibition on hidden fees applies to amounts ``offered,
displayed, or advertised'' by a Business even if a different entity
provides the good or service. For example, if an online travel agent
advertises a price for a hotel room provided by a hotel chain, the
online travel agent must display the Total Price, inclusive of
mandatory fees charged by the hotel chain. Similarly, if a Business
advertises a price for a product that it provides to the consumer and
requires an ancillary good or service provided by another entity, such
as payment processing, the charge for the mandatory ancillary good or
service must be included in the Total Price.
The Commission anticipates the possibility of providing certain
exclusions from the proposed rule, including for some financial
products where the Total Price cannot practically be determined. As
discussed in Section X, the Commission is seeking comment on the proper
scope of any such exclusion. Further, as discussed in Section V.A., the
proposed rule also contains a carveout for certain motor vehicle
dealers that must comply with 16 CFR 463, which requires cash price
disclosures and prohibits cer
[…truncated; see source link]Indexed from Federal Register on November 9, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.