Economic Liberties Proposes “All-In” Rule to Combat Junk Fees in Digital Marketplace

August 2, 2022 Press Release

Washington, D.C. — The American Economic Liberties Project today submitted a written comment to the Federal Trade Commission in response to a request for information about how the agency should rewrite digital advertising guidelines.

The digital marketplace has become a breeding ground for deceptive, fraudulent, and anti-competitive tactics, with pervasive “junk fees”. Economic Liberties’ comment details how these fees confuse consumers and harm competition by rewarding firms that find the most deceptive way to advertise their prices. It also proposes a comprehensive solution, detailing how an “all-in” rule, contrasted against previous targeted strategies, would require advertisers to reveal the full amount that will be due at the end of the purchasing process, including all mandatory fees.

“The bane of every consumer experience and and a detriment to fair competition, junk fees have become a defining feature of concentrated markets, including the digital marketplace,” said Katherine Van Dyck, Senior Legal Counsel at the American Economic Liberties Project. “Junk fees flood the purchasing experience with deceptive tricks designed to mislead consumers and discourage honest businesses from succeeding in the advertising space. We urge the Federal Trade Commission to pass broader enforcement rules — not piecemeal regulatory approaches — in order to combat these misleading practices once and for all.”

As junk fees have grown in prevalence, online sellers have developed methods like drip pricing and partitioned pricing to conceal the true cost of the goods and services they sell to consumers and business customers alike. The end result is a confusing marketplace for buyers, and their existence structurally harms competition. Drip pricing and partitioned pricing have enabled the proliferation of junk fees in online transactions, so buyers cannot take advertised prices at face value or comparison shop with any efficiency.

The ubiquity of junk fees and deceptive pricing practices is not only a matter of protecting the individual buyer from deception. Markets work to the benefit of buyers, sellers, consumers, and workers only if all participants are playing by a set of fair rules. If deceptive junk fees are permitted, we will have markets that reward companies and sellers who put their entrepreneurial energies into finding clever ways to add unlisted fees, “optional” services, and other add-on costs to the final price of what they are selling. Honest businesspeople—who make investments and innovations to grow their companies, provide consumers with better and cheaper services, and expand their workforce—should be the ones to get ahead in a fair marketplace.

Read the full comment letter to the Federal Trade Commission here.

Learn more about Economic Liberties here



The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.