The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are taking robust measures to confront the issue of ‘junk fees’. On October 11, 2023, President Biden, FTC Chair Lina Khan, and CFPB Director Rohit Chopra jointly announced the latest in a sequence of actions aimed at this pervasive problem.
Junk fees, as broadly defined by the agencies, are hidden, surprise charges imposed on customers without clear disclosure. They’ve become a significant and ubiquitous consumer issue, catching everyday customers off guard and arguably obfuscating the true cost of products and services. These fees can appear in an array of contexts, from service charges in restaurants, to add on charges in utilities, and unexpected levies from financial institutions to name but a few.
The crackdown on junk fees began in earnest in early 2022, with the CFPB and FTC launching a series of preventive and punishing measures aimed at curbing this oblique way of extracting additional charges from consumers.
A more detailed review of the rules and any potential consequences for corporations remains under detailed analysis by specialists at McGuireWoods LLP.
While the full scale and specific repercussions of these new policies are yet to be fully understood, what is clear is that industry practices will be facing tighter regulations. Corporations need to remain attentive to this changing landscape, ensuring their fee structures are transparent, equitable, and devoid of any ‘junk fees’ that could land them in hot water with the FTC and CFPB moving forward.