FTC extends comment period on plan for broad ‘junk fee' regs

The Federal Trade Commission has given businesses and consumers another month to comment on the agency's October notion to crack down on what it calls "junk fees."

The public comment extension announced Dec. 21 shifts the deadline for feedback from Jan. 9 to Feb. 8.

The FTC said commissioners voted 4-0 in favor of the extension following "the request of interested persons."

The FTC's new idea, announced Oct. 20, has echoes of its June proposal to crack down on dealership bait-and-switch advertising and finance-and-insurance practices. The FTC's "junk fee" concept also would target charging for worthless items and advertising a product price differently from what the customer actually will have to pay.

But the October action is a separate, more general initiative that would affect not just dealerships but other various other industries, too. (The FTC has cited event ticket and hotel room purchases as potential sources of "junk fees," for example.)

Its breadth could mean opposition from multiple sectors, according to Randy Henrick, an auto retail compliance attorney for Ignite Consulting Partners.

A 2018 Consumer Reports poll cited by the FTC found 85 percent of people had paid hidden fees in the past two years, and 96 percent find them annoying. Thirty-four percent had encountered unexpected fees with auto purchases or loans.

The October "junk fee" concept is in a far more preliminary stage than the FTC's dealership-specific initiative. The FTC has announced eight types of behavior it might like to check with regulations, but the agency hasn't released any draft language of rules to accomplish this. The FTC proposes to combat:

1. Misrepresenting or not " clearly and conspicuously" disclosing "the total cost of any good or service for sale" in ads or marketing.

2. Misrepresenting or not disclosing "the existence of any fees, interest, charges, or other costs that are not reasonably avoidable for any good or service" in ads or marketing.

3. Misrepresenting or not disclosing if "fees, interest, charges, products or services are optional or required."

4. Misrepresenting or not disclosing "any material restriction, limitation or condition concerning any good or service that may result in a mandatory charge ... or that may diminish the consumer's use of the good or service, including the amount the consumer receives."

5. Misrepresenting that a customer owes for "any product or service the consumer did not agree to purchase."

6. Charging for anything "without express and informed consent."

7. Charging for "fees, interest, goods, services or programs that have little or no added value to the consumer or that consumers would reasonably assume to be included within the overall advertised price."

8. Misrepresenting or not disclosing "the nature or purpose of any fees, interest, charges or other costs."

The FTC defined "junk fees" in the new rule-making as "unfair or deceptive fees that are charged for goods or services that have little or no added value to the consumer, including goods or services that consumers would reasonably assume to be included within the overall advertised price."

Public comments on the new initiative can be submitted through a variety of channels, including online at regulations.gov.

The June "Motor Vehicle Dealers Trade Regulation Rule" would apply only to auto dealerships and is in a more concrete state, with the industry able to see exactly what rules would be added to the Code of Federal Regulations.

Public comment on that initiative closed in September after the FTC denied a request by the National Automobile Dealers Association and other industry groups for more time. The agency has received more than 10,000 comments.