The White House has increasingly called out the travel industry for the proliferation of junk fees and now, it has a plan to get rid of the charges that travelers frequently encounter.
The Biden administration took another step to combat so-called junk fees. The Federal Trade Commission on Wednesday unveiled a proposed rule that would ban businesses — including hotel and lodging companies, short-term rental providers, and car rentals — from charging misleading fees. Businesses would also be required to show consumers the full price of their purchase up front, as well as whether fees are refundable.
“If these are rules are finalized, they won’t just be (made voluntary) — they’ll be made mandatory,” President Joe Biden said at a press conference at the White House.
Under the FTC’s proposal, companies that fail to comply with the agency’s regulations could be subject to fines and possibly have to provide refunds to consumers. Americans shell out roughly $65 billion annually on junk fees, according to the White House.
“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape,” said FTC Chair Lina M. Khan.
“By hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront. The FTC’s proposed rule to ban junk fees will save people money and time, and make our markets more fair and competitive.”
The FTC announced in October 2022 that it was exploring a rule to crack down on junk fees.
What comes next? First, a 60-day public comment period after which the FTC will determine any changes to the proposed rule, an agency spokesperson told Skift. Then the Commission would vote on a final rule.
The White House first raised concerns over these fees in October 2022 and has specifically targeted airline and hotel resort fees.
In March this year, two democratic senators introduced the Junk Fee Prevention Act, which would require full prices to be shown upfront and targets “surprise” and “exorbitant” fees. Over the summer, Democratic Senator Amy Klobuchar and Jerry Moran, a Republican, introduced a bipartisan bill known as the Hotel Fees Transparency Act.
Several executives speaking at the recent Skift Global Forum also addressed concerns pertaining to junk fees. Hilton CEO Chris Nassetta described as the issue as complicated since most hotel industry products are distributed through third-party channels. He said online travel agencies and metasearch companies need to be on the same page regarding pricing, which he added would prevent consumers from being misled.
Meanwhile, Airbnb CEO Brian Chesky said his company presents all fees upfront to consumers, which he described as simple and best for travelers.
UPDATE: This article has been updated to include a quote from President Joe Biden.
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Photo credit: The Biden administration has increasingly taken aim at junk fees Gage Skidmore / Wikimedia Commons