The U.S. Federal Trade Commission spent at least half of last year grappling with the issue of so-called “junk tariffs.” These are nickel and diming fees that are “unnecessary, unavoidable, or … that increase costs while adding little or no value.” Convenience fees for ticketing or credit card use, resort fees at hotels, or connection fees for phone cards are easy targets. The FTC spent the first part of its multi-round battle specifically dealing garbage charges in the automotive industry — fees that include the bait and switch price, fees for fake products and services, or fees for products and services that cost the merchant nothing, and costs for items that should be included in the advertised purchase price (target fees, anyone? ). The government agency received more than 10,000 comments on trading junk fees before closing the box for proposals in September 2022, and the so-called Trade regulation rule for motor vehicle dealers. The aim is to develop “guidelines that provide consumers with key protections against traders who unlawfully charge junk fees or engage in bait-and-switch advertising without their consent”.
However, shortly after the process was completed, the FTC took up the case again regarding unfair or deceptive charges it’s being scooped up by all kinds of businesses making tens of billions a year, a few dollars at a time. It appears to have so much to do with the proposed rulemaking that “interested parties” have forced the FTC to extend the process. The office announced that the comment period will last until February 8. Automotive news broke down the following eight garbage fee categories:
- “Clearly and conspicuously” misrepresenting or disclosing “the full cost of any good or service for sale” in advertising or marketing.
- Misrepresenting or disclosing in advertising or marketing “any fee, interest, charge or other charge that cannot reasonably be avoided for any good or service”.
- Misrepresenting or disclosing that “fees, interest, charges, products or services are optional or mandatory.”
- Misrepresenting or disclosing “a material limitation, restriction, or condition relating to any good or service that may result in a mandatory charge … or that may reduce the consumer’s use of the good or service, including the amount received by the consumer.”
- Misrepresenting that a customer owes “any product or service that the consumer did not consent to purchase.”
- Payment of fees for anything “without express and informed consent”.
- Charges, interest, goods, services or programs that have little or no added value to the consumer or that the consumer would reasonably expect to be included in the advertised total price.
- “Misleading or disclosing the nature or purpose of any fee, interest, charge or other charge”.
If all goes well, the result would force companies to pre-announce “the inclusion of any mandatory fees when consumers are told the price of a good or service.”
Even though auto-specific garbage fee regulations are already in the chamber, this new rulemaking doesn’t ban comments about the auto industry and everything else. So if you want to see the FTC get down to dealing with specific, questionable lines on the bill you sent the new car to or the hotel bill you received when you had to fly three states away to buy a car. , visit the comments page to vent the hurt.
However, if your main concern is the markings, don’t worry. Their sometimes delayed disclosure is an artifact of the contracts between manufacturers and franchise dealers. The OEM dealer’s franchise agreement may make it mandatory that the dealer will not advertise any vehicle below or above a certain MSRP. So even if the dealer knows they plan to charge $100,000 for a vehicle with a minimum price of $60,000, the OEM agreement allows the dealer to advertise the vehicle for no more than $62,000. Then the prospect calls, gets the bad news, and is angry at the dealer for wasting everyone’s time. Technically, ADM would be considered spam number 2 in the list above. The FTC cannot prevent a merchant from uploading an ADM; the solution would be to figure out how to acquire ADM without violating the franchise agreement with the OEM.
But in the meantime, there are plenty of other appropriate trash fees to deal with. At the time of writing, there are over 5,200 comments in the journal. Go to Regulations.gov for hearing.