Samuel Levine Letter to Pennsylvania House of Representatives

UNITED STATES OF AMERICA
Federal Trade Commission
WASHINGTON, D.C. 20580
Office of the Director
Bureau of Consumer Protection
April 19, 2023
Consumer Protection, Technology & Utilities Committee
Pennsylvania House of Representatives
c/o Hon. Nick Pisciottano
121 Irvis Office Building
P.O. Box 202038
Harrisburg, PA 17120-2038
Dear Representatives:
I understand that Representative Pisciottano has introduced the “Pay the Price You See”
legislation in the Pennsylvania House of Representatives to address “junk fees” and that the
Consumer Protection, Technology & Utilities Committee seeks public input on the proposed
legislation. I welcome the opportunity to submit a statement about the Federal Trade
Commission’s (“FTC”) concurrent efforts to address junk fees. The views in this letter are my
own and do not necessarily reflect the views of the FTC or any individual Commissioner.
American consumers, workers, and small businesses today are swamped with junk fees that
frustrate consumers, erode trust, impair comparison shopping, and facilitate inflation. Junk fees
refers to unfair or deceptive fees that are charged for goods or services that have little or no
added value to the consumer, including goods or services that consumers would reasonably
assume to be included within the overall advertised price. Some junk fees are also “hidden,”
meaning they are disclosed only at a later stage in the consumer’s purchasing process or not at
all. Junk fees manifest in markets ranging from auto financing to international calling cards and
payday loans—they are not only are widespread but are also growing. Such fees impose
substantial economic harms on consumers and impede the dissemination of important market
information.
Enforcement Efforts
Consumers have long expressed concern to the FTC about the prevalence of junk fees across a
range of industries and the FTC has employed a variety of tools to understand and address them.
The FTC has engaged in a number of enforcement actions against companies that the FTC
alleged charged unfair or deceptive junk fees in violation of Section 5 of the FTC Act, 15 U.S.C.
§ 45(a),1 and other statutes that the FTC has the authority to enforce.2 Most recently, for
1 Section 5 of the FTC Act prohibits unfair or deceptive acts or practices in or affecting commerce, including any
representation, omission, or practice that is likely to mislead a consumer acting reasonably under the circumstances,
to the consumer’s detriment.
2 See, e.g., Stipulated Order at 2, FTC v. Hold Billing Servs., Ltd., No. 98-cv-00629 (W.D. Tex. May 4, 2016);
Compl. at 3, FTC v. T-Mobile USA, Inc., No. 14-cv-967 (W.D. Wash. filed July 1, 2014); Compl. at 3, FTC v.
AT&T Mobility, LLC, No. 14-cv-3227 (N.D. Ga. filed Oct. 8, 2014).; FTC v. Inc21.com Corp., 745 F. Supp. 2d 975,
982 (N.D. Cal. 2010); Stipulated Order at 8, FTC v. Websource Media, LLC, No. H-06-1980 (S.D. Tex. July 17,
2007); Compl. at 8, FTC v. Nationwide Connections, Inc., No. 06-80180 (S.D. Fla. filed Feb. 27, 2006); Stipulated

example, the Commission took action in the fall of 2022 against Vonage, an internet phone
service provider, requiring the company to pay $100 million in refunds to consumers that were
trapped into subscriptions and hit with surprise early termination fees.3 Also in the fall of 2022,
the Commission took action against Passport Automotive Group and its top executives for
tacking hundreds to thousands of dollars in illegal junk fees onto car prices and discriminating
against Black and Latino consumers with higher financing costs.4 In the summer of 2022, the
FTC took action against healthcare company Benefytt Technologies for selling sham insurance
and charging people with exorbitant junk fees for unwanted add-ons without their permission.5
The company was required to pay $100 million in refunds.6
Research and Outreach
Prior to and alongside its enforcement efforts, the FTC sought comments about and analyzed
junk fees through workshops and reports. In 2012, the FTC hosted a workshop on drip pricing, a
pricing technique in which firms advertise only part of a product’s price and reveal other charges
later as the customer goes through the buying process.7 In 2017, the FTC published a report
analyzing the costs and benefits of disclosing resort fees, which are per-room, per-night,
mandatory fees charged by some hotels.8 The report concluded that “separating mandatory resort
fees from posted room rates without first disclosing the total price is likely to harm consumers by
increasing the search costs and cognitive costs of finding and choosing hotel accommodations”
and that it was “unlikely to result in benefits that offset the likely harm to consumers.”9
More recently, in 2019, the FTC hosted a workshop that featured a panel on pricing and fee
issues in the market for live-event tickets and issued a corresponding staff report.10 The
workshop revealed that market participants believed they could not correct course without
regulatory intervention. For example, after a market leader took unilateral action to phase out
hidden fees, the platform “lost significant market share and abandoned the policy after a year
because consumers perceived the platform’s advertised prices to be higher than its competitors’
Judgment and Order, FTC v. Mercury Mktg. of Del., Inc., No. 00-cv-3281, 2004 WL 2677177, *1 (E.D. Pa. Nov. 22,
2004); Compl. at 2, FTC v. Millennium Telecard, Inc., No. 2:11-cv-02479 (D.N.J. filed May 2, 2011); Compl. at 6,
FTC v. NetSpend Corp., No. 1:16-cv-04203 (N.D. Ga. filed Apr. 11, 2017); Compl. at 13, FTC v. Lead Express,
Inc., No. 2:20-cv-00840 (D. Nev. filed May 11, 2020); First Am. Compl. at 3, FTC v. LendingClub Corp., No. 3:18-
cv-02454 (N.D. Cal. filed Oct. 22, 2018); Compl. at 14–16, FTC v. FleetCor Techs., Inc., No. 1:19-cv-05727 (N.D.
Ga. filed Dec. 10, 2019); Compl. at 3, FTC v. Liberty Chevrolet, Inc., No. 20-cv-3945 (S.D.N.Y. filed May 21,
2020); Compl. at 7–8, FTC v. N. Am. Auto. Servs., Inc., No. 1:22-cv-01690 (N.D. Ill. filed Mar. 31, 2022); Compl. at
11–14, United States v. Funeral & Cremation Grp. of N. Am. LLC, No. 0:22-cv-60779 (S.D. Fla. filed Apr. 22,
2022); Stipulated Order at 6–8; United States v. Funeral & Cremation Grp. of N. Am. LLC, No. 0:22-cv-60779 (S.D.
Fla. filed Apr. 6, 2023); Compl. at 12–14, FTC v. OMICS Grp. Inc., No. 2:16-cv-02022 (D. Nev. filed Aug. 25,
2016); Compl. at 12–13, FTC v. Citigroup Inc., No. 010-cv-0606 (N.D. Ga. filed Mar. 6, 2001); Compl. at 11, FTC
v. Stewart Fin. Co. Holdings, Inc., No. 1:03-cv-2648 (N.D. Ga. filed Sept. 4, 2003).
3 Stipulated Order at 11, FTC v. Vonage Holdings Corp., No. 3:22-cv-6435 (D.N.J. filed Nov. 3, 2022); Compl. at
11–17, FTC v. Vonage Holdings Corp., No. 3:22-cv-6435 (D. N.J. filed Nov. 3, 2022).
4 Compl. at 8–13, FTC v. Passport Auto. Grp., Inc., No. 8:22-cv-2670 (D. Md. filed Oct. 18, 2022); see also
Stipulated Order, FTC v. Passport Auto. Grp., Inc., No. 8:22-cv-2670 (D. Md. filed Oct. 21, 2022).
5 Compl. at 25–38, FTC v. Benefytt Techs., Inc., No. 8:22-cv-1794 (M.D. Fla. filed Aug. 8, 2022).
6 Stipulated Order at 26, FTC v. Benefytt Techs., Inc., No. 8:22-cv-1794 (M.D. Fla. filed Aug. 11, 2022).
7 Fed. Trade Comm’n, The Economics of Drip Pricing (May 21, 2012), https://www.ftc.gov/news-
events/events/2012/05/economics-drip-pricing.
8 Mary W. Sullivan, Fed. Trade Comm’n, Economic Analysis of Hotel Resort Fees (2017),
http://www.ftc.gov/system/files/documents/reports/economic-analysis-hotel-resort-
fees/p115503_hotel_resort_fees_economic_issues_paper.pdf.
9 Id. at 36–37.
10 Fed. Trade Comm’n, “That’s the Ticket” Workshop: Staff Perspective, 4 (May 2020).

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displayed prices.”11 Ticket sellers who participated in the workshop that did not provide upfront
all-in pricing “favored requiring all-in pricing through federal legislation or rulemaking.”12
Potential Proposed Rulemaking
Most recently, in October 2022, the FTC issued an advanced notice of proposed rulemaking
(“ANPR”) seeking public comment on a potential rule to address junk fees proliferating
throughout the economy. The ANPR sought public comment on the prevalence of junk fees, the
unfair or deceptive tactics companies use to impose them, the harms caused by junk fees, and
whether a new rule would better protect consumers. Consumers and industry members
demonstrated strong interest in the questions posed by the ANPR: the FTC received 12,046
comments in response.
These ANPR comments overwhelmingly expressed frustration with unexplained mandatory fees.
Many ANPR comments raised concerns that sellers fail to disclose the total amount consumers
will pay, misrepresent the amount, and only disclose fees after consumers have expended time in
the purchasing transaction. Many comments also stated that sellers do not adequately disclose or
misrepresent the nature or purpose of fees, using vague names for fees or using fees as a profit
generator instead of providing consumers with services. The comments related to a wide range of
goods and services, such as ticket sales, hotels, vacation rentals, apartment rentals, tax
preparation services, restaurants, delivery services, utilities, telephone, internet, and cable
services, and auto sales. FTC staff is currently analyzing the comments to determine the
appropriate next steps.
Thank you for the opportunity to provide information about the FTC’s efforts to address junk
fees at the federal level. I hope that the FTC’s work provides useful insight as you consider
legislation addressing junk fees in Pennsylvania. To the extent the Federal Trade Commission
can provide assistance with these inquiries, please do not hesitate to contact me.
Very truly yours,
Samuel Levine
Director, Bureau of Consumer Protection
11 Id.
12 Id.