Chamber of Commerce, Industry Groups Warn FTC that Junk Fee Ban Faces Likely Legal Challenge

The U.S. Chamber of Commerce and other industry groups recently warned the Federal Trade Commission (FTC) that its push to ban junk fees will likely face a legal challenge, setting up what could be a high-stakes affair for both the Biden administration and his 2024 re-election campaign. The Chamber and industry groups say the FTC is not authorized to enact such broad regulations restricting fees.

They said a final rule would risk a legal challenge under the major questions doctrine maintained by the U.S. Supreme Court’s 2022 West Virginia v. EPA decision. “If Congress wanted the Commission to issue an economy-wide rulemaking on fees and fee disclosures, Congress would have instructed the agency to do so,” the Chamber’s letter read, according to Bloomberg Law.

The FTC’s proposal from October would mandate that companies disclose all fees upfront for any good or service. The Chamber specifically called out surprise processing fees for concert or sporting event tickets, as well as surprise hotel resort fees. Many industries said they shouldn’t be included in that rule because their pricing practices are already governed by state laws and regulations. 

For example, banks said the FTC shouldn’t include them in the rule because they’re regulated by the Consumer Financial Protection Bureau (CFPB) and other federal agencies. Additionally, the Arizona Indian Gaming Association said that Indian tribal governments should be exempt, similar to the treatment of other governmental entities.

“If the FTC intends to exclude governments from the regulation but simply forgot to say anything about tribes, the FTC should expressly exclude tribes and tribal entities from the sweep of the proposed regulation,” wrote the gaming group in its February 5 letter.

Online marketplaces noted that fully disclosing costs could make it more difficult for them to use variable pricing tools to save consumers money. The Chamber of Progress, which represents online marketplaces and other tech firms, said the rule would pose challenges to companies that offer variable shipping costs.

Alternatively, the Consumer Federation of America and 51 other consumer groups wrote a letter stating that a junk fee rule would make it easier for the FTC to return money to wronged consumers. “The FTC will be able to serve its purpose and continue its mission to prevent, punish and deter unfair and deceptive conduct in the form of junk fees,” they said.