The Federal Trade Commission (FTC) announced a proposed rule to prohibit junk fees, which are “hidden” and “bogus” fees that can cost consumers an estimated tens of billions of dollars in unexpected costs.
“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape. These junk fees now cost Americans tens of billions of dollars per year—money that corporations are extracting from working families because they can,” FTC chair Lina Khan said in a statement announcing the proposed rule. “By hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront. The FTC’s proposed rule to bank junk fees will save people money and time, and make our markets more fair and competitive.”
The proposed rule would address hidden fees related to a variety of consumer experiences, including renting an apartment and paying utility bills. The FTC said consumers reported sellers often do not advertise the total amount required to pay and would only disclose fees after consumers were well into completing the transaction.
“The National Apartment Association (NAA) and our network of more than 92,000 members nationwide strongly support transparency and dialogue between housing providers and their residents—beginning with the leasing process and extending throughout the resident’s time in their apartment home,” NAA president and CEO Bob Pinnegar said in a statement responding to the FTC’s proposed rule on junk fees. “Rental housing fees are disclosed in the lease and during the application of the leasing process. It is incumbent on both parties to ensure they can uphold the terms of their contractual agreement.”
Pinnegar said policymakers should 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.” The National Multifamily Housing Council previously issued a statement expressing that the organization “strongly disagree[d]” with the characterization that rental housing residents “are being pervasively taken advantage of by housing providers.” The organization said it is not aware of evidence supporting the assumption that rental fees are “junk” fees.
As part of the proposed rule, businesses would have to include all mandatory fees when telling consumers a price to allow them to shop for the lowest prices, according to the FTC. The proposed rule would also allow the FTC to secure refunds for harmed customers and seek monetary penalties against companies that do not comply with its provisions.
“I believe that every renter should know the true cost of finding and staying in their home and not be hit with hidden costs and junk fees. Earlier this year, we called for reform in the housing industry to increase transparency for renters across the country, reflecting the Biden-Harris administration and the Department of Housing and Urban Development’s commitment,” said HUD secretary Marcia L. Fudge. “HUD continues to release research and data highlighting state, local, and private-sector policies to encourage fairness and equity in the rental market.”