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You’ve found the perfect hotel room for $89 a night. You enter your credit card information, click “book now,” and suddenly the total jumps to $135. What?
Welcome to the world of junk fees—hidden, surprise, or deceptive charges added to the advertised price of goods and services. These fees cost American consumers tens of billions of dollars every year and can inflate the final price of a purchase by 20% or more.
The practice has become so widespread that it’s triggered a coordinated federal crackdown. Agencies like the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) are now targeting these fees across multiple industries.
What Are Junk Fees and Where Do They Hide?
Junk fees undermine your ability to make informed decisions by obscuring the true cost of products and services. This makes effective comparison shopping nearly impossible.
The problem isn’t confined to a few rogue industries. It’s a systematic pricing strategy that has become entrenched across vast sectors of the U.S. economy. The consistency in fee types and language—”service fee,” “convenience fee,” “processing fee”—across different industries suggests widespread adoption of these tactics.
The Psychology Behind Hidden Pricing
The primary tactic used is called “drip pricing.” Companies advertise an attractively low base price to lure you in, then incrementally add mandatory fees throughout the purchasing process.
This strategy exploits consumer psychology. Once you’ve invested time and effort selecting a product, you’re far more likely to accept the higher final price rather than abandon the purchase and start over.
The Federal Trade Commission has identified this as a form of “bait-and-switch” tactic, where the advertised price misrepresents the total cost you must ultimately pay.
Mandatory vs. Optional Fees
A critical distinction exists between mandatory and optional fees. Optional fees are for legitimate add-ons you actively choose, like upgrading an airplane seat or buying trip insurance.
The regulatory backlash focuses on mandatory fees—charges you must pay to receive the advertised product or service but that aren’t included in the initial price.
These problematic fees generally fall into two categories:
Hidden or Surprise Fees: Charges for seemingly standard parts of a transaction that simply aren’t included in the advertised price. Classic examples include hotel “resort fees” for using the pool or Wi-Fi, and “service fees” on concert tickets.
Bogus or Excessive Fees: Charges for services that have little to no real value, are fraudulent, or are wildly disproportionate to the cost of the service provided. This includes “convenience fees” for paying a bill you already owe, or “regulatory charges” on cell phone bills that aren’t actually mandated by any government body.
Where Junk Fees Strike: Industry by Industry
Financial Services
The financial sector generates billions in revenue from charges that often surprise consumers.
Overdraft & Non-Sufficient Funds Fees: A simple mistake can turn a $3 cup of coffee into a $38 expense when banks charge overdraft fees averaging $30 to $35. In 2019 alone, bank revenue from overdraft and NSF fees exceeded $15 billion.
Regulators have also targeted “surprise” overdraft fees, known as “authorize positive, settle negative” fees. This occurs when a bank authorizes a debit card transaction because you have sufficient funds at that moment, but by the time the transaction settles days later, your account is overdrawn.
Credit Card Late Fees: These penalties for missing payment due dates are a massive revenue stream for card issuers. According to the CFPB, of the $23.6 billion in fees charged by credit card companies in 2019, nearly 60%—or $14 billion—came from late fees alone.
“Pay-to-Pay” Fees: Companies, including loan servicers and debt collectors, may charge a fee simply for making a payment online or over the phone. The Fair Debt Collection Practices Act often prohibits debt collectors from adding such fees if they weren’t part of the original agreement.
Mortgage Closing Costs: When buying a home, consumers face a barrage of fees for services like credit reports, property appraisals, title insurance, and document preparation. These closing costs averaged $6,000 in 2022, creating a major barrier to homeownership.
Prepaid Card Fees: Prepaid cards are vital financial tools for millions of unbanked or underbanked Americans. However, these cards can be loaded with fees for basic functions like checking a balance, inactivity, or speaking to customer service.
Travel and Lodging
The travel industry is notorious for using drip pricing to make fares and rates appear lower than they actually are.
Hotel “Resort Fees”: This is the classic junk fee. A hotel advertises a nightly rate, but upon booking or at checkout, adds a mandatory daily “resort fee,” “destination fee,” or “amenity fee” for access to amenities like Wi-Fi, the gym, or the pool—services many guests assume are included.
Airline Fees: While charges for optional services like extra legroom are legitimate, the controversy centers on lack of upfront transparency for fees many travelers consider essential. This includes charges for checked bags, carry-on bags, and fees required to ensure young children can sit with their parents.
Short-Term Rental Fees: Vacation rental platforms like Airbnb and VRBO have come under fire for tacking on significant fees late in the booking process. These often include hefty “cleaning fees” and vaguely defined “service fees” that can dramatically increase the total cost.
Rental Car Fees: The price quoted for a rental car often excludes a host of surcharges that only appear on the final bill, covering everything from airport concessions to vehicle licensing.
Live Entertainment and Ticketing
Buying tickets for concerts and sporting events has become a masterclass in fee accumulation.
Consumers are typically hit with a combination of fees that can add 20% or more to a ticket’s face value:
Service Fee / Convenience Fee: A per-ticket charge levied by the ticketing company for the “convenience” of buying online.
Order Processing Fee: A per-order charge, ostensibly for handling the transaction.
Facility Charge: A per-ticket fee set by and paid to the venue itself to cover operational costs.
A real-world example: a ticket with a face value of $145.50 can end up costing $180.55 after a $26.80 service fee, a $4 facility charge, and a $4.25 order processing fee are added.
Housing and Rentals
The rental housing market has seen a proliferation of fees that drive up the cost of living.
Application and Screening Fees: Landlords often charge non-refundable application fees to every prospective tenant, meaning they can collect hundreds of dollars for a single available unit.
Monthly “Junk” Fees: Beyond rent, tenants are increasingly charged monthly fees for services like trash collection, pest control, or a “technology fee” for an online payment portal. Some are blatantly bogus, like a “$100 January fee” one landlord was found charging tenants each year.
These fees have a particularly harsh effect on low-income households and renters of color. Data shows that renters of color are more likely to pay application fees, pay higher median application fees, and submit five or more applications during a housing search.
Everyday Bills and Services
Junk fees have infiltrated routine monthly bills and common consumer services.
Cable & Cell Phone Bills: Many providers add line items like an “Administrative Charge” or “Regulatory Recovery Fee.” These are designed to look like government-mandated taxes but are actually company-imposed fees. These charges can add up to an average of $450 per year to a consumer’s cable bill.
Food & Grocery Delivery: A New York Times investigation found that a combination of service fees, delivery fees, and other surcharges can increase the price of a meal by as much as 91% before the driver’s tip is even considered.
Healthcare “Facility Fees”: Hospital systems that acquire independent doctors’ offices often begin charging patients a “facility fee” on top of the bill for the doctor’s service. Patients have reported receiving these fees for routine care like mammograms and heart screenings, simply because the clinic is now hospital-affiliated.
Auto Sales and Servicing: Hidden fees often materialize late in the car-buying process. In the auto loan servicing market, the CFPB has identified illegal junk fees such as inflated repossession fees and excessive late fees.
The Complete Fee Directory
| Fee Name(s) | Industry/Sector | What It Is (and Why It’s a “Junk Fee”) | Typical Cost |
|---|---|---|---|
| Resort Fee / Destination Fee / Amenity Fee | Hotels & Lodging | A mandatory daily charge for amenities (e.g., Wi-Fi, pool access), often hidden from the initial advertised room rate | $20 – $50+ per night |
| Overdraft Fee / Non-Sufficient Funds (NSF) Fee | Banking & Financial Services | A penalty charged when your account balance drops below zero. “Surprise” fees can occur even if you had funds at the time of authorization | $30 – $35 per occurrence |
| Service Fee / Convenience Fee | Event Ticketing, Bill Payments, Travel | A per-ticket or per-transaction charge for buying online or paying a bill. The fee often far exceeds the actual processing cost | Can be 20% or more of the ticket’s face value |
| Credit Card Late Fee | Banking & Financial Services | A penalty for not paying your credit card bill by the due date. A major source of revenue for card issuers | Was typically $32 before new regulations |
| Airline Family Seating Fee | Airlines | A fee charged to ensure a family, particularly one with young children, can sit together on a flight | Varies by airline and flight |
| Rental Application Fee | Real Estate & Rentals | A non-refundable fee paid by prospective tenants to apply for a rental unit. Landlords can collect multiple fees for one vacancy | $25 – $100+ per applicant |
| Cable & Internet “Administrative” or “Regulatory” Fee | Telecommunications | A company-imposed fee disguised to look like a government tax or mandate, used to pass business costs to consumers | Can add up to $450 per year |
| Facility Fee | Healthcare | A charge added to a patient’s bill simply for receiving care at a hospital-owned outpatient clinic, on top of the physician’s fee | Can be hundreds of dollars per visit |
| Food Delivery Service Fee | Gig Economy / Restaurants | A fee charged by apps like DoorDash or Uber Eats that is separate from the delivery cost and tip | Can contribute to a 91% markup on meal cost |
| Mortgage Closing Costs | Banking & Real Estate | A bundle of fees for services like appraisals, title insurance, and document prep, which can be a barrier to homeownership | Median of $6,000 in 2022 |
The True Cost of Hidden Charges
The proliferation of junk fees extends far beyond consumer annoyance. It imposes substantial costs on American households and distorts the U.S. economy.
By creating severe information asymmetry—where sellers know the true price but buyers don’t—junk fees cause market failure, preventing the market from operating efficiently and fairly.
The National Price Tag
On a national scale, the cost of junk fees is staggering. The Federal Trade Commission and White House estimate that these charges drain “tens of billions of dollars per year” from the American economy.
Specific regulatory actions highlight the magnitude. The CFPB’s rule to cap most credit card late fees is projected to save consumers an estimated $9 to $10 billion annually. The CFPB’s scrutiny of overdraft practices has already contributed to a decline of over $6.1 billion in annual overdraft and NSF fee revenue for banks.
The Household Impact
This national cost translates into a significant burden on individual households. Research from Consumer Reports estimates that the average American family of four loses more than $3,200 each year to junk fees.
Studies have repeatedly shown that “drip pricing” can lead consumers to pay as much as 20% more for a product or service than they would have if the full price had been disclosed upfront.
This financial burden isn’t distributed equally. Junk fees disproportionately harm families living paycheck to paycheck, low-income households, and communities of color, who have less financial cushion to absorb unexpected charges.
Market Distortion and Unfair Competition
Beyond direct costs to consumers, junk fees damage the competitive landscape. A healthy market relies on consumers being able to compare products based on price and quality. Junk fees systematically undermine this process.
When companies hide mandatory fees, they can advertise an artificially low price that appears more attractive than competitors who are more transparent.
This creates a “race to the bottom,” where even businesses that want to be transparent feel pressured to adopt deceptive pricing tactics to remain competitive. This dynamic punishes fair-dealing businesses and rewards deception.
The Human Cost
The impact of junk fees can’t be measured in dollars alone. The FTC estimates that in the live-ticketing and short-term lodging sectors alone, consumers waste more than 50 million hours per year trying to hunt down the true total price of their purchases. This wasted time is valued at more than $10 billion over a decade.
These fees generate immense frustration and erode consumer trust in businesses and entire industries. A survey by Morning Consult found that over half of respondents (56%) said junk fees negatively affected their financial situation, and nearly equal number (51%) reported a negative impact on their emotional well-being.
In the financial sector, 62% of consumers expressed reduced trust in financial institutions due to these practices. Nearly three-quarters (74%) of Americans state that a candidate’s stance on junk fees is an important factor in their voting decisions.
The Government Fights Back
In response to growing economic burden and public frustration, the federal government has launched a coordinated assault on junk fees. This “whole-of-government” effort involves several key agencies deploying rulemaking, enforcement actions, and proposed legislation.
The White House Initiative
The push against junk fees is a signature policy of the Biden Administration. The White House announced the creation of the Strike Force on Unfair and Illegal Pricing, co-chaired by the Department of Justice (DOJ) and Federal Trade Commission (FTC).
The FTC’s “Junk Fees Rule”
As the nation’s lead consumer protection agency, the FTC is at the forefront of this battle. After an extensive public comment period that garnered tens of thousands of responses, the FTC issued its Rule on Unfair or Deceptive Fees.
Scope: The final rule targets two sectors notorious for hidden fees: live-event tickets and short-term lodging (including hotels, motels, and vacation rentals).
Key Requirements: The rule, effective May 12, 2025, imposes two primary mandates:
All-In, Upfront Pricing: Businesses must display the “Total Price” whenever a price is advertised. This must include all mandatory fees and charges that a consumer cannot reasonably avoid. The only charges that can be excluded are government-imposed taxes and shipping fees.
No Misrepresentation: The rule makes it illegal to misrepresent the nature, purpose, or refundability of any fee. Businesses must clearly explain what a fee is for, avoiding vague terms like “service fee” unless their purpose is clearly defined.
Enforcement: Violations can result in civil penalties up to $51,744 per violation, as well as orders to refund money to consumers. The FTC has warned it will use its broader authority to police junk fees in other industries not covered by the new rule.
The CFPB Targets Financial Fees
The CFPB has been particularly aggressive in its campaign against junk fees within financial services.
Credit Card Late Fees: The CFPB finalized a rule that dramatically reduces the “safe harbor” amount for credit card late fees for large issuers. The rule caps the typical late fee at $8, down from the previous average of $32. The agency estimates this will save over 45 million Americans more than $10 billion annually.
Overdraft Fees: The CFPB has proposed a rule that would treat most overdraft services as a form of “credit,” making them subject to stricter disclosure requirements. This would effectively force banks to either lower their overdraft fees significantly or stop offering the service in its current form.
Mortgage and Auto Loan Servicing: Through supervisory examinations, the CFPB has cracked down on illegal fees charged by loan servicers, including unnecessary property inspections, excessive late fees, and fake private mortgage insurance premiums.
Other Financial Fees: The CFPB has issued guidance stating that large banks generally cannot charge customers for basic information requests, such as getting a copy of a bank statement.
Congressional Action: The Junk Fee Prevention Act
Congress is considering comprehensive legislation to tackle the problem. The Junk Fee Prevention Act (H.R.2463 / S.916) was introduced in both the House and Senate.
Key Provisions: If passed, this bill would:
- Mandate all-in, upfront pricing for live event tickets, short-term lodging, and other entertainment services
- Prohibit airlines from charging extra for a child aged 13 or younger to sit next to an accompanying adult
- Ban telecommunication companies from charging excessive early termination fees
Status: This is a proposed bill that has not been passed into law. It has been referred to various committees for consideration, but its path to becoming law remains uncertain.
Other Agency Actions
The Department of Transportation (DOT) issued its own rule requiring airlines to disclose fees for baggage and flight changes upfront. However, that rule has been legally challenged by airline industry groups and is currently stayed by a federal court.
The Federal Communications Commission (FCC) has also taken steps to address junk fees in the telecommunications sector.
Industry Pushback: The Other Side of the Story
Industries that charge these fees offer a range of justifications and counterarguments. This pushback combines public relations campaigns, direct lobbying, and aggressive legal challenges.
The U.S. Chamber of Commerce
The Chamber of Commerce has positioned itself as a leading opponent of the government’s approach.
Core Argument: The Chamber frames the government’s actions as “micromanagement of businesses’ pricing structures” and an attempt at government price-setting that oversteps federal agency authority. It argues that pricing should be determined by market competition, not regulatory requirements.
Potential Consumer Harm: The Chamber contends that rigid mandates for all-in upfront pricing could paradoxically harm consumers. It warns such rules could make it difficult for companies to advertise discounts effectively and may force them to eliminate dynamic pricing models that can benefit consumers when prices scale downward.
Position on Regulation: While stating it supports price transparency, the Chamber strongly opposed the FTC’s proposed rule, recommending its complete withdrawal. It argues the FTC is acting on “questionable legal theories” without credible evidence that disclosing fees before purchase is inherently deceptive.
The Banking Industry
The banking industry, led by the American Bankers Association (ABA), has mounted a robust defense of overdraft protection services.
Overdraft as a Valued Service: The ABA’s primary defense is that overdraft protection is not a penalty but a form of short-term liquidity that millions of consumers voluntarily opt-in to use for emergency expenses. They emphasize that under a 2009 rule, consumers must affirmatively consent to the service.
Consumer Satisfaction: The ABA cites survey data showing that 70% of consumers find their bank’s overdraft protection valuable, and 80% of those who used it were glad the bank covered their payment rather than declining it.
Legal Challenge: The ABA’s core legal argument against the CFPB’s proposed overdraft rule is that the agency is unlawfully redefining the term “credit” under the Truth in Lending Act. They contend that Congress never intended for overdraft to be regulated as a loan.
Warning of Consequences: The ABA warns that price caps will make overdraft services economically unviable for many banks, forcing them to restrict or eliminate the product entirely. This could harm consumers who rely on it and push them toward less desirable alternatives like payday loans.
The Airline Industry
The airline industry’s opposition focuses on agency authority rather than the fees themselves.
Existing Transparency: Airlines for America (A4A) asserts that airlines already provide complete disclosure of all fees before purchase. They argue new rules would “greatly confuse consumers” by overwhelming them with information.
Jurisdictional Challenge: A4A’s central argument is that the DOT has exceeded its statutory authority. They contend that relevant law empowers the DOT to investigate specific instances of unfair practices on a case-by-case basis, not to issue broad prescriptive rules.
Legal Victory: This argument proved persuasive in court. The U.S. Court of Appeals for the Fifth Circuit granted A4A’s request for a stay of the DOT rule, finding that airlines made a strong showing the rule likely exceeds the DOT’s authority.
The Hotel Industry
The hotel industry justifies resort fees by framing them as a consumer-friendly value proposition.
Fees as Bundled Value: The American Hotel & Lodging Association (AHLA) argues that resort fees bundle various amenities—such as Wi-Fi, gym access, pool use, and shuttle services—into a single, discounted charge. They claim that if these amenities were priced individually, the total cost would likely be much higher.
Limited Practice: The AHLA emphasizes that resort fees are not widespread, claiming only about 6-7% of U.S. hotels charge them, typically properties with far more amenities.
Strategic Support for Legislation: Rather than opposing all regulation, the AHLA champions the Hotel Fees Transparency Act. They support this bipartisan bill because it would create a single, consistent federal standard across the entire lodging ecosystem.
The Ticketing Industry
Ticketmaster and its parent company Live Nation defend their fee structure by explaining the complex economics of live events.
Costs and Revenue Sharing: Ticketmaster states that the face value of a ticket is set by the artist, promoter, or sports team. Additional fees are necessary to cover operational costs of all parties involved in putting on a live event.
Revenue Distribution: The revenue from service fees is shared with their clients—the venues, artists, and promoters. Ticketmaster is effectively paid to be a “punching bag” for consumer frustration over fees that are passed back to event creators themselves.
Proactive Transparency: Facing pressure from state laws and the impending FTC rule, Live Nation and Ticketmaster announced in 2023 that they would begin implementing “all-in pricing,” showing the total cost upfront for shows at their owned-and-operated venues.
The Fee Debate: Key Positions
| Stakeholder | Core Argument FOR Regulation / AGAINST Fees | Core Argument AGAINST Regulation / FOR Fees |
|---|---|---|
| U.S. Government (FTC/CFPB) | Fees are often hidden, deceptive, and anticompetitive. They harm consumers, especially low-income families, and punish honest businesses. Regulation is necessary to ensure price transparency and restore fair market competition. | N/A |
| U.S. Chamber of Commerce | N/A | Regulation is government overreach and price-setting that stifles innovation. All-in pricing mandates can eliminate pro-consumer practices like discounts and dynamic pricing. The market should determine pricing structures. |
| American Bankers Association | N/A | Overdraft protection is a valuable, optional liquidity service that consumers choose to use. The CFPB is illegally redefining “credit” to impose price caps that will eliminate the service and harm consumers who rely on it. |
| Airlines for America | N/A | Airlines already provide fee transparency. The DOT has exceeded its statutory authority by issuing prescriptive rules instead of adjudicating specific cases. The rule would confuse consumers with information overload. |
| American Hotel & Lodging Association | N/A | Resort fees offer consumers better value by bundling amenities at a discount. The practice is not widespread and is disclosed upfront. A consistent legislative standard for all lodging providers is preferable to piecemeal rules. |
| Ticketmaster / Live Nation | N/A | Fees cover operational costs for ticketing platforms, venues, and artists. Fee revenue is shared among all parties involved in creating the event. They have moved toward voluntary all-in pricing and support a national standard. |
Your Defense Against Junk Fees
While government agencies work on top-down solutions, consumers aren’t powerless. By adopting a vigilant and proactive mindset, you can significantly reduce your exposure to junk fees.
When consumers “vote with their wallets” by choosing transparent businesses and actively disputing unfair charges, they create market pressure that encourages more companies to adopt fair pricing practices.
The Three Pillars of Protection
A strong defense against junk fees rests on three fundamental principles:
Read Before You Click: The most basic defense is to slow down and read everything before you pay, sign, or agree. This includes terms and conditions, the checkout summary, and any fine print. Don’t agree to anything you haven’t actually read. Review your bank and credit card statements regularly to catch new or unexpected recurring fees.
Question Everything: If you see a fee on a bill or at checkout that you don’t understand, ask what it’s for. Don’t be intimidated by official-sounding names like “company charge” or “regulatory fee,” as these are often just ways for businesses to pass their costs on to you.
Compare the All-In Price: The single most effective strategy is to ignore the advertised “sticker price” and only compare the final, total, all-in price across different providers. If one merchant has a mysterious added charge, see if a competitor offers the same product or service without it.
Sector-Specific Strategies
Banking:
- Avoid overdrafts by managing your account carefully and setting up low-balance alerts
- Consider switching to a credit union or online bank with lower or no fees
- Use only in-network ATMs to avoid double fees
Airlines:
- Book directly through the airline’s website to avoid third-party charges
- Pack light to avoid baggage fees
- Choose airlines known for more transparent pricing
Hotels & Rentals:
- Use price filters that show “total price” or “display price with taxes and fees”
- Use hotel points when possible, as some loyalty programs waive resort fees on award stays
- Consider the stay length—large cleaning fees might be reasonable for a week but exorbitant for one night
Car Rentals:
- Bring your own toll transponder to avoid daily rental fees
- Ensure your transponder works in your destination state
Food Delivery:
- Order directly from restaurants and pick up yourself
- Pay with cash to avoid credit card surcharges
Event Tickets:
- Purchase tickets directly from the venue’s physical box office to avoid most service fees
- You’ll likely still pay facility charges, but can save significantly on other fees
Disputing and Reporting Fees
If you get hit with a fee you believe is unfair or deceptive:
Negotiate and Ask: Sometimes a fee can be waived just by asking. This can be particularly effective with hotel resort fees, especially if you can point out that a key amenity was out of service during your stay.
Pay with a Credit Card: Whenever possible, use a credit card for purchases where you suspect questionable fees might arise. Credit cards offer robust consumer protections and a formal dispute resolution process. It’s much easier to dispute a charge on a credit card than to get cash back or reverse a debit card transaction.
File an Official Complaint: Reporting your experience to federal regulators provides valuable data that helps agencies identify patterns of abuse and build cases.
For general unfair or deceptive practices, including issues with non-financial products like tickets and hotels, file a complaint with the Federal Trade Commission.
For issues with financial products like bank accounts, credit cards, or loans, file a complaint with the Consumer Financial Protection Bureau or call (855) 411-CFPB (2372).
The Power of Consumer Action
Individual consumer actions, when multiplied across millions of people, create powerful market signals. Companies track complaint volumes, customer acquisition costs, and churn rates. When enough consumers choose transparency over deception, the market responds.
Our articles make government information more accessible. Please consult a qualified professional for financial, legal, or health advice specific to your circumstances.