New Laws, Consumer Actions Will Help Us Say Goodbye to Junk Fees

Andrew Lustigman, Chair of Olshan's Advertising, Marketing & Promotions Group and Co-Chair of the firm’s Brand Management & Protection Group, published an article in Bloomberg Law entitled “New Laws, Consumer Actions Will Help Us Say Goodbye to Junk Fees.” In the article, Andy discusses the increasing significance of surcharges and undisclosed fees impacting consumer purchasing decisions. Politicians and regulators are responding with proposed federal and state laws, such as the Junk Fee Prevention Act, aiming to compel marketers to transparently display the full price, including all fees. “The Junk Fee Prevention Act, introduced last April, pushes sellers to conspicuously display the full price, including all fees, in every advertisement and initial consumer interaction,” Andy writes. “If passed, this legislation would also grant the Federal Trade Commission authority to promulgate corresponding regulations.” The FTC’s Rule on Unfair or Deceptive Fees, which the agency proposed last fall and is accepting public comments on it until February 7, would outlaw hidden fees and bar businesses from advertising prices that obscure or omit mandatory fees in a range of industries. The Department of Transportation proposed a similar rule on Enhancing Transparency of Airline Ancillary Service Fees that would require airlines and online travel agencies to display the full price of a ticket, including baggage and other fees. Likewise, the Consumer Financial Protection Bureau proposed a rule last October requiring large banks to treat overdraft loans like credit cards, provide clear disclosures, and cap overdraft fees in line with their costs or established benchmarks, and the Federal Communications Commission finalized a rule requiring cable and internet service providers to list fees and services up front. On the state level, California passed Senate Bill 478 last year, which prohibits advertising prices that exclude mandatory fees, the Massachusetts Attorney General has proposed regulations that require pricing advertisements to prominently feature the total cost of goods or services before gathering consumer information, and a Pennsylvania bill requiring total pricing passed the House by 172-31 and is pending in the state senate. Consumer efforts have also aimed at junk fees, with litigation already directed at landlords hiding garbage removal fees as well as suits filed against the Bronx Zoo and Rockefeller Center for similar undisclosed fees. Andy explains that “the cost of hidden fees is rising. Businesses should carefully check their pricing to ensure fees are justified and sufficiently disclosed before a consumer makes a purchasing decision.”