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Consumer Reports urges FTC to finalize proposed ban on costly junk fees

CR submits nearly 50,000 petition signatures and hundreds of stories from consumers fed up with rampant hidden junk fees in comment letter to FTC

WASHINGTON, D.C. – The Federal Trade Commission’s proposed ban on hidden junk fees will create greater transparency and accountability around pricing that will foster more competition in the marketplace and help consumers find better deals, according to Consumer Reports. CR submitted a comment letter to the FTC in support of the proposed rule, which included nearly 50,000 petition signatures and hundreds of stories from consumers frustrated with how frequently they are charged hidden junk fees.

“Americans are fed up with hidden junk fees that jack up the cost of everything from hotel stays and concert tickets to bank accounts and cell phone service,” said Chuck Bell, advocacy program director for Consumer Reports. “Hidden junk fees are a nuisance that can really add up and cause financial hardship for families living on tight budgets.”

Bell continued, “Companies shouldn’t be allowed to hide the true cost of products and surprise consumers with costly junk fees that can’t be avoided. The FTC’s proposed ban will prevent companies from charging hidden and deceptive junk fees that distort the true cost of goods and services so consumers know upfront exactly how much they will be charged.”

The FTC’s proposed rule prohibits companies from charging hidden fees and requires them to disclose the total cost of products and services upfront to consumers. The proposal would cover companies across the economy that would be subject to penalties and required to provide refunds if they failed to comply.

Consumer Reports Survey Finds Hidden Junk Fees Are Common

In April 2023, Consumer Reports conducted a nationally representative survey of 2,121 U.S. adults to learn more about their experiences with hidden fees across a range of products and services. CR asked Americans who had used particular services in the past two years whether they had encountered unexpected fees and found that 49 percent had experienced unexpected fees for telecommunications services; 45 percent for live entertainment or sporting events; 37 percent for gas or electric utilities; 37 percent for hotel stays; 35 percent for air travel; 27 percent for credit cards; 26 percent for auto loans and purchase; and 23 percent for personal banking services.

Fifty-one percent of Americans who had encountered hidden fees for telecommunications services said the fees caused them to exceed their budget for cable, internet or phone service, and two out of three Americans (68 percent) said they are paying more in hidden fees now than they did five years ago.

Michael McCauley, michael.mccauley@consumer.org