Junk fees (also known as hidden fees) are fees designed to confuse or deceive consumers by exploiting their behavioral biases. [1] These tend to come in the form of mandatory back-end fees and hidden add-on charges, which obscure the true cost of goods and services. [1] [2] Junk fees stand in contrast to "all-in", "upfront" pricing where consumers are shown a true single price, inclusive of fees, at the start of the shopping process. [1] Economists criticize junk fees for "increas[ing] search costs and equilibrium prices, distort[ing] consumer choices, and divert[ing] innovation toward exploitative rather than value-enhancing strategies". [1]
Even in the presence of competition and disclosure, and despite their unpopularity, firms often opt for junk fees because consumers do not consistently punish firms that resort to junk fees. [1] Some firms, such as StubHub, that reluctantly use junk fees have advocated for regulatory action to impose restrictions on junk fees in order to level the playing field and prevent collective action problems among firms. [1] Other firms, such as Delta Air Lines, have strongly criticized efforts by the government to restrict junk fees. [3] The Cato Institute have criticized restrictions on junk fees. [4]
Event ticket sellers, such as Ticketmaster, are renowned for junk fees. U.S. airline companies are also known for junk fees. [1] Cable television providers, hotels, and restaurants have also been known to use junk fees. [1] Some junk fees are mandatory while others are non-mandatory but shrouded in confusing language that make consumers think they are mandatory. [1]
Junk fees are distinct from add-on fees that consumers accept through informed choice, such as paying more for a pizza with customized toppings, paying more for a hotel room with a better view, or paying extra for a seat in business class on an airplane. [1]
The Joe Biden administration undertook regulatory efforts to restrict junk fees. [5] [6] In 2023, the U.S. Federal Trade Commission (FTC) required auto dealers to disclose the actual up-front price in all their advertising or promotional materials. [1] This was struck down by the Fifth Circuit Court of Appeals in January 2025. [1]
In 2024, the FTC required upfront pricing in the live-event ticketing and short-term lodging industries. The rule went into effect in May 2025. [1]
In 2023, the Canadian government was reported to follow in the steps of the Biden administration and target junk fees. [7]
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