ALTA Asks FTC to Provide Clear Definition of a 'Junk Fee'

January 10, 2023

ALTA submitted a letter in response to the Federal Trade Commission’s advance notice of proposed rulemaking (ANPR) to address certain deceptive or unfair acts or practices relating to fees.

In the ANPR, the FTC said junk fees frustrate consumers, erode trust, impair comparison shopping and facilitate inflation. The FTC said the term “junk fees” refers 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.

The letter to the FTC is like the letter ALTA sent the CFPB last year. ALTA said the FTC’s definition of a junk fee is too vague and subjective for the industry to follow. As written, it could be read to capture a host of legitimate and regulated fees for important and valued services. To help consumers and set standards for industry, it would be beneficial for the FTC to provide a robust set of clear examples of what would and would not fall under a “junk fee” definition. The FTC should consider a catch all exception for any fee that is already regulated by a state or the federal government, ALTA suggested.

“In the next step of the rulemaking process, the FTC should note that a fee is not necessarily a ‘junk fee’ just because it has different names in different parts of the country. In real estate closings, there are examples where the exact same service has a different name due to local custom and practice,” ALTA’s letter said. “Since the differently named fees are for a legitimate service, they should not be deemed a “junk fee” merely due to a different naming convention at the local level.”

The letter highlights the value the title insurance industry provides and the robust nature of the current regulatory framework. While ALTA shares the CFPB’s desire to root out companies and practices that mislead consumers about their charges, the bureau would benefit from conducting a full Administrative Procedures Act rulemaking before taking action on any area of concern, including so-called junk fees.

“While ALTA supports the FTC’s goals to root out practices that mislead consumers about their charges, we also strongly believe that the FTC should provide a specific and concise definition of a ‘junk fee’ in the next step of the rulemaking process,” ALTA said. “Detailed guidance is important so industry has clear rules of the road and can set appropriate expectations for consumers.”

Contact ALTA at 202-296-3671 or