FTC Proposes Rule to Ban ‘Junk Fees,’ Potentially Saving Travelers Billions
The Federal Trade Commission (FTC) has introduced a new proposed rule aimed at prohibiting businesses from imposing “junk fees,” which are often hidden from consumers. If enacted, this rule could lead to significant cost savings for travelers on various expenses, including event tickets and accommodations. The FTC’s proposal mandates fines for non-compliance and requires businesses to reimburse consumers for such fees.
According to the FTC, this new rule has the potential to save consumers tens of billions of dollars by eliminating junk fees across the economy, including the travel industry. Additionally, it is estimated that implementing this rule would save consumers more than 50 million hours annually that are otherwise wasted on deciphering the total cost of live ticketing and short-term lodging.
FTC Chair Lina M. Khan emphasized the burden that unexpected and unnecessary fees impose on Americans, costing them billions annually. She explained that these fees make it challenging for consumers to compare products or services and penalize businesses that are transparent about their pricing. The proposed rule seeks to eliminate junk fees, benefiting consumers and fostering fair and competitive markets.
This initiative follows legal actions and government investigations targeting travel industry giants like Frontier Airlines, Marriott, Hilton, and Hyatt for charging concealed fees. If the rule is enacted, businesses would be prohibited from advertising prices that hide mandatory fees and required to disclose the purpose of any additional fees to consumers.
The FTC can implement this proposal independently, without requiring approval from Congress, although a specific timeline for enactment has not been provided.
This proposed rule is part of the Biden-Harris Administration’s broader efforts to alleviate economic challenges for Americans. In the travel sector, the administration has pressed airlines to commit to refunding passengers impacted by cancellations or delays within the airlines’ control, among other measures.
U.S. Transportation Secretary Pete Buttigieg also expressed support for this initiative, emphasizing its aim to prevent working families from shouldering higher costs due to junk fees and promote transparency in the travel industry.
