Ad Industry Wants FTC To Clarify 'Junk Fee' Proposal

The ad industry on Wednesday urged the Federal Trade Commission to clarify its proposal to outlaw so-called “junk fees.”

“The FTC does not make clear what 'junk fees' it proposes to limit or regulate, and without additional clarity, the proposed rule may unintentionally capture complex pricing models that promote consumer choice,” the Association of National Advertisers writes in comments submitted to the agency.

The ad organization elaborates that requiring businesses to disclose a “total price” in ads “may not fully account for the vast array of pricing models used in today’s market.”

The comments come in response to the FTC's October proposal to issue new regulations that would effectively prohibit businesses from advertising one price, then charging a higher amount due to extra fees.

Specifically the proposed rule requires companies that advertise prices to “clearly and conspicuously” disclose the total price, including fees. That total price also would have to appear “more prominently” than any other pricing information.



The agency says the proposal aims to ensure that businesses “will no longer be able to lure consumers with artificially low prices that they later inflate with mandatory fees or to deceive consumers about the nature and purpose of fees.”

The Association of National Advertisers says the proposal doesn't take into account every business model.

“For example, a business may advertise a particular base price for a hotel stay; however, the actual purchase price of the stay may vary widely based on a consumer’s preferences,” the group writes.

“Whereas some consumers may consider WiFi, turn-down service, all-inclusive packages, or resort excursions such as water sports or guided tours part and parcel of a vacation experience, and therefore may view fees for these features as mandatory, other consumers may travel without thinking of those offerings as an integral or mandatory part of a hotel stay,” the organization adds.

The group also questions whether new rules are needed, writing that the FTC can already prosecute businesses that advertise deceptive prices.

“By examining a specific set of facts related to fee practices, such enforcement actions would provide a clear picture of what constitutes unlawful conduct in this area,” the group writes. 

The tech policy organization Chamber of Progress also weighed in Wednesday with the FTC, arguing that the proposed rules make sense for some industries -- such as airlines -- but aren't well suited to all online marketplaces.

For instance, that group writes, some online platforms use “dynamic pricing” -- meaning they charge different prices for deliveries depending on factors such as the availability of delivery people.

“With dynamic pricing in place, the price of delivery services could change throughout the day, thereby changing the total price for each item,” that organization writes. “It is unclear how platforms would capture this fluctuation without creating confusion for customers or misrepresenting prices.”

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