Today, the FTC proposed a new rule that would ban hidden fees and bogus fees that are used to drive up the cost of a service higher than advertised. This practice has been very common in cable TV for years. Cable companies will advertise one price for TV but include a long list of fees, including RSN fee, Broadcast TV fee, HD Technology fee, and more.
Now, under these proposed new rules, cable companies would no longer be able to hide these fees in small text or in your contract but would be forced to include them upfront.
In the press release, the FTC said these “provisions are aimed at ensuring businesses will no longer be able to lure consumers with artificially low prices that they later inflate with mandatory fees or to deceive consumers about the nature and purpose of fees.”
“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape. These junk fees now cost Americans tens of billions of dollars per year—money that corporations are extracting from working families just because they can,” 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 says this new rule would ban hidden fees and bogus fees. Here is how the FTC describes these fees:
- Hidden Fees. Consumers told the FTC that dishonest businesses routinely engage in bait-and-switch pricing tactics that hide mandatory fees and deceive consumers about the price. This is because fees imposed later, but before the purchase is made, significantly increase the total that consumers pay. Accordingly, the proposed rule would prohibit businesses from advertising prices that hide or leave out mandatory fees; and
- Bogus Fees. Many consumers also said that they often do not know what fees are for, because dishonest businesses routinely misrepresent or fail to adequately disclose the nature or purpose of the fees. The rule would prohibit sellers from misrepresenting fees and require them to disclose upfront the amount and purpose of the fees and whether they are refundable.
This new rule would impact not only cable TV companies but also a long list of other industries that use fees to hide the true cost of an advertised service.
“No one likes surprise charges on their bill. Consumers deserve to know exactly what they are paying for when they sign up for communications services. But when it comes to these bills, what you see isn’t always what you get,” said FCC Chairwoman Jessica Rosenworcel. “Instead, consumers have often been saddled with additional junk fees that may exorbitantly raise the price of their previously agreed-to monthly charges. To combat this, we’re implementing Broadband Consumer Labels, a new tool that will increase price transparency and reduce cost confusion, help consumers compare services, and provide ‘all-in-pricing’ so that every American can understand upfront and without any surprises how much they can expect to be paying for these services.”
These rules are still only proposals, but the FTC seems determined to make them law. For now, though, we could be years away from them being implemented, but this is a good first step.