FTC, CFPB, and California Crack Down on Hidden Fees

  • The FTC proposed a new rule aimed at ensuring greater transparency for consumers regarding mandatory fees, also referred to as “junk fees.” Under this proposal, businesses would be required to incorporate all mandatory fees into the “Total Price” advertised to consumers. In addition, businesses would need to make clear representations regarding the nature and purpose of fees and whether they are refundable.
  • Separately, the CFPB issued an advisory opinion regarding a 2010 federal law requiring large banks and credit unions to provide complete and accurate account information when requested by accountholders, without imposing junk fees as a requirement to receive answers to questions. The guidance is a response to market monitoring and public comments alleging that large banks have in some instances charged customers for basic information that is necessary to uncover and fix issues with their bank accounts, or to understand and maintain their finances. The CFPB separately issued a report finding that $140 million had been returned to consumers as a result of its supervisory efforts combatting junk fees.
  • In addition, a new California law, sponsored by AG Rob Bonta, was signed into law and will prohibit “drip pricing” in California beginning on July 1, 2024. The law mandates that businesses are required to display all mandatory pricing from the outset when presenting price information to consumers, with the exception of taxes or other government imposed fees.