FTC Proposes ‘Junk Fees’ Rule Would Address ‘Hidden’ and ‘Bogus’ Fees

The Federal Trade Commission proposed a rule to ban so-called junk fees, “which are hidden and bogus fees that can harm consumers and undercut honest businesses.” Claiming that the fees can cost consumers tens of billions of dollars in aggregate annually, the new rule proposal says that “consumers are fed up with hidden fees for everything from booking hotels and resort fees to buying concert tickets online, renting an apartment, and paying utility bills.” The position is that “unexpected and unnecessary fees” are a way to boost profits for companies at the expense of consumers who don’t realize there are additional costs and so are tricked into paying higher prices. Last year, the FTC asked for public comments as to whether such a rule could help eliminate the practice. Having received more than 12,000 responses, the agency is looking for a new round of comments on a proposed rule. In the Notice of Proposed Ruling published in the Federal Register, multiple sections addressed different industries, with rental housing being one. “Comments from individual consumers about rental housing fees stated that leasing companies advertise monthly rents that do not include fees for mandatory ancillary services that unexpectedly and significantly increase renters’ monthly expenditures,” the FTC wrote. “The comments stated that leasing companies do not always identify the purpose of these fees.” Consumer and policy groups in favor of a rule supported regulations that would cover apartments, house rentals, and manufactured home communities. One recommendation was that the FTC “require that online platforms for rental advertisements disclose all fees, including fees charged before and after signing rental leases” and that the agency “investigate unfair or deceptive practices related to housing fees” and “provide guidance on fees.” The National Consumer Law Center further suggested that a rule should prohibit some rental-related fees — typically levied by corporate or large landlords — “often impose fees that are excessive in amount or greater than the cost to the landlord of providing a service, that are for services not provided, that are for services that landlords are legally obligated to provide as part of renting habitable premises, or that prevent competition.” The National Apartment Association sent a statement that it “and our network of more than 92,000 members nationwide strongly support transparency and dialogue between housing providers and their residents.” It also said, “Rental housing fees are disclosed in the lease and during the application and leasing process” and that policymakers need to understand that “layering additional regulations will heavily impact housing operations and harm the affordability and availability of rental housing, ultimately hurting the very individuals they seek to protect.”