UNITED STATES OF AMERICA

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, DC 20580

Office of the Director

Bureau of Consumer Protection

January 15, 2025

Governor Jared Polis

State Capitol Building

200 E. Colfax Ave., Room 136

Denver, CO 80203-1716

Dear Governor Polis:

As the Director of the Bureau of Consumer Protection of the Federal Trade Commission

(“FTC”), I write to provide information about the FTC’s efforts to address junk fees that cheat

consumers and undermine competition. 1 I hope you find this useful as Colorado legislators

consider introducing a comprehensive bill this term.

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

refer 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 a wide range of markets and are growing. Such fees impose

substantial economic harms on consumers, impede the dissemination of important market

information, and put businesses that do not hide these fees at a competitive disadvantage.

FTC’s Rulemaking Efforts

In October 2022, the FTC issued an advance 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, which

overwhelmingly expressed frustration with unexplained mandatory fees.

A year later, in October 2023, the FTC announced a notice of proposed rulemaking (“NPRM”)

and sought public comment on a proposed rule. The proposed rule sought to ban hidden fees by

prohibiting businesses from advertising prices that hide or leave out mandatory fees. The

The views in this letter are my own and do not necessarily reflect the views of the FTC or any

individual Commissioner.

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proposed rule would have prohibited sellers from misrepresenting fees and required certain

disclosures about the nature and purpose of fees. The FTC received more than 60,000 comments

on the NPRM.

This December, the FTC announced a bipartisan final Junk Fees Rule that will prohibit bait-andswitch pricing and other tactics used to hide total prices and bury junk fees in the live-event

ticketing and short-term lodging industries. Although the rule is limited to two industries, the

FTC’s Statement of Basis and Purpose concludes that the administrative record supports a

finding that hiding fees is an unfair or deceptive act or practice, and that the practice is prevalent

throughout the economy. And, of course, industries beyond live-event ticketing and short-term

lodging are prohibited from deceiving consumers about fees and pricing per longstanding FTC

and state UDAP law. The FTC will use its law enforcement authority to continue to vigorously

pursue bait-and-switch pricing across industries..

Recent Enforcement Efforts

Although the FTC’s rule is limited to two industries, consumers have longed expressed concern

to the agency around junk fees across a wide 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 The NPRM and SBP include additional examples of efforts across

government to halt junk fees, but here are two recent examples of the Commission’s work in this

area.

In December, Grubhub agreed to pay $25 million to settle charges from the FTC and the Illinois

Attorney General that the food delivery firm engaged in an array of unlawful practices, including

hiding the true cost of its delivery services—a tactic that a former executive called a “pricing

shell game.” Grubhub advertised that diners will pay a single, low-cost amount for Grubhub’s

services in connection with a delivery order. In reality, Grubhub tacked on junk fees, resulting in

a final price that was often more than double what it originally advertised. These surprise fees

were often labeled as “service fees” or “small order fees,” but were simply delivery fees in

disguise. As part of the settlement, Grubhub is required to disclose the true cost of delivery and

to stop adding junk fees to orders.

A few months earlier, in September 2024, the Commission took action against Invitation Homes,

the country’s largest landlord of single-family homes, for an array of alleged unlawful actions

against consumers, including advertising monthly rental rates that failed to include mandatory

junk fees that could total more than $1,700 yearly. Consumers looking for rental houses paid

nonrefundable fees—including application fees up to $55 and reservation fees up to $500—

based on the deceptively advertised rates. Consumers learned that the price would be higher than

advertised only when they received a copy of their lease, and sometimes not even until after they

signed the lease. These undisclosed fees ranged from “services” such as “smart home”

technology and “utility management,” to air filter delivery and internet packages. The FTC’s $48

million settlement prohibits the company from deceiving consumers about the true rental price of

a house, including a requirement to include all mandatory monthly fees in a house’s advertised

rental price, and to disclose whether listed fees are mandatory or not.

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Colorado Legislation

As Colorado considers legislation to combat junk fees, I hope the FTC’s recent rulemaking and

enforcement experience provides useful insight. Although the FTC’s final rule is limited to two

industries, the Commission found that unfair and deceptive fee practices are prevalent

throughout the economy. These practices can be especially harmful to low-income consumers

looking for rental housing or other essentials, 2 and a comprehensive law would address these

fees market-wide.

Thank you for the opportunity to provide information about the FTC’s efforts to address junk

fees at the federal level. We hope our work proves helpful as Colorado considers additional

steps to strengthen competition and save its citizens money and time.

Very truly yours,

Samuel Levine

Director, Bureau of Consumer Protection

Federal Trade Commission

Copies to:

Colorado Attorney General Phil Weiser

Colorado Department of Law

Ralph L. Carr Judicial Building

1300 Broadway, 10th Floor

Denver, CO 80203

Colorado House Speaker Julie McCluskie

State Capitol Building

200 E. Colfax Ave., Room 307

Denver, CO 80203

Colorado Senate President James Coleman

State Capitol Building

200 E. Colfax Ave., Room 346

Denver, CO 80203

Colorado Representative Javier Mabrey

Chair, Colorado House Judiciary Committee

State Capitol Building

200 E. Colfax Ave., Room 307

Denver, CO 80203

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In addition to finalizing the Junk Fee Rule, the FTC recently finalized the CARS Rule, which

cracks down on hidden add-ons in the auto industry and requires upfront pricing. See

https://www.ftc.gov/news-events/news/press-releases/2023/12/ftc-announces-cars-rule-fightscams-vehicle-shopping.

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Colorado Senator Julie Gonzales

Chair, Colorado Senate Judiciary Committee

State Capitol Building

200 E. Colfax Ave., Room 346

Denver, CO 80203

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