Attorney General Bonta Supports the Federal Trade Commission’s Efforts to Ban Hidden Fees Nationwide

OAKLAND — California Attorney General Rob Bonta today submitted a comment letter to the Federal Trade Commission (FTC) supporting the Commission’s new “Rule on Unfair or Deceptive Fees,” which would ban hidden fees nationwide. The FTC's proposed rule would prohibit deception regarding the total costs of goods or services by banning the practices of omitting fees from advertised prices or misrepresenting the nature and purpose of fees. This proposed federal ban on hidden fees (also called “junk fees”) follows California's nation-leading work to protect consumers from deceptive advertised prices. Last year, Attorney General Bonta and the California Low-Income Consumer Coalition co-sponsored Senate Bill 478 (SB 478), which bans hidden fees by prohibiting businesses from showing a price to California consumers that isn’t the upfront, all-in price. Under SB 478, all advertised, displayed, or offered prices must include all mandatory fees, other than tax and shipping. SB 478 was signed by Governor Newsom in October and will take effect on July 1, 2024. 

“It is essential that families across the nation have price transparency when making purchases. As evidenced by California's landmark legislation to ban hidden fees, California recognizes the importance of protecting consumers through price transparency,” said Attorney General Bonta. “We thank and commend the Federal Trade Commission in setting a national floor for consumer protections while preserving the ability of states to go further in protecting their consumers; we are proud to work alongside our federal partners to ensure a fair and transparent marketplace and to protect consumers from confusing and increasingly egregious hidden fees.” 

Hidden fees are fees in which a seller uses an artificially low headline price to attract a customer and usually either discloses additional required fees, or even the real price, in lighter or smaller print or reveals additional unavoidable charges after the consumer has entered the brick-and-mortar business, clicked on the link, or opened the app. These additional, unavoidable charges are often given vague descriptions like “service fee,” or misleadingly bundled with taxes, such as quoting a single amount for “taxes and fees.”  According to a 2018 report by Consumer Reports, at least 85 percent of Americans reported having encountered a hidden fee over the prior two years. SB 478 makes abundantly clear that businesses are prohibited from using hidden fees in California. 

A copy of the letter is available here.