The FTC’s Junk Fees rule, formally titled the “Rule on Unfair or Deceptive Fees,” becomes effective on May 12, 2025. Designed to promote transparency in consumer contract pricing, the rule is the outcome of a years-long study of deceptive or hidden pricing in consumer contracts, including apartment, hotel, and car rentals, concert tickets, mortgages, and bank deposit accounts. Nearly all consumers have had the experience of buying something online, only to be surprised post-sale that they unknowingly paid more than the listed, advertised price—such as paying a $5 “facility fee” when you purchase a $125 ticket to see your favorite band or sports team. Junk fees can net businesses who charge them millions, even billions of dollars per year. The FTC rule does not ban junk fees, but only requires that consumers be told clearly up front, before they hit “purchase,” whether they will be charged and whether they can opt out. Violation of the rule can give rise to liability under the FTC Act or under state laws that impose liability for unfair or deceptive pricing practices.
State legislatures have followed suit and enacted statutes that also prohibit hidden pricing. Minnesota, for example, amended its Deceptive Trade Practices Act effective January 1, 2025, especially for the purpose of requiring disclosure of mandatory fees and surcharges in everything from internet broadband contracts to food delivery apps. Businesses must ensure they advertise, up front, all mandatory fees that will be charged in connection with the sale of a service or good, except government-imposed taxes or charges. The cost of non-compliance by businesses who fail to adhere to the statute can be high—the Deceptive Trade Practices Act allows a court to award a consumer their costs and attorneys’ fees for having to bring a suit to obtain a refund.
The days of consumers being surprised by hidden fees, large and small, are not behind us—but with the new rules and statutes, they have a clear path toward challenging them.
For more information or to share your experience, contact Anne Regan.
Email: aregan@hjlawfirm.com
Direct: 952-460-9285
