A Federal Trade Commission proposal to prohibit unfair or deceptive practices relating to fees for goods or services risks creating substantial confusion about the cost of financial products and exceeds the agency’s statutory jurisdiction, the American Bankers Association and Consumer Bankers Association said today in a joint comment letter. The FTC late last year announced the proposed rule as part of the Biden administration’s effort to curtail so-called “junk fees” across a wide range of industries. Under the proposal, the agency would prohibit any business from misrepresenting the total costs of goods and services by omitting mandatory fees from advertised prices and misrepresenting the nature and purpose of fees.
In their letter, ABA and CBA noted that banks and financial institutions fall outside the FTC’s legal jurisdiction and therefore should not be covered by the proposal rule. At the same time, the proposal’s potential application to financial services creates a substantial risk of overlap and conflict with other statutes and regulations already governing the disclosure of fees associated with financial products, the associations said.
“The proposed rule would create confusion and increased risk of errors for both consumers and industry participants for mortgages, credit cards, student loans, auto loans, prepaid cards, deposit accounts and other financial products which already are subject to specific, mandatory price disclosure regimes tailored to these products under other federal statutes, in addition to state laws,” ABA and CBA said. The associations also requested an informal hearing to voice their concerns.