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  • The Federal Trade Commission (FTC) recently took action against Doxo, charging that the company uses deceptive “junk fee” practices that harm consumers.
  • The complaint alleges that Doxo used misleading search ads and deceptive designs to hide millions in “junk fees.”
  • The FTC’s enforcement action against Doxo, along with the agency’s proposed rule to prohibit “junk fees,” highlights the FTC’s effort to protect consumers from unfair billing practices associated with so-called “junk fees.”

The FTC recently took action against bill payment company Doxo and its co-founders, accusing them of engaging in deceptive “junk fee” practices that harmed consumers. The FTC’s complaint alleges that Doxo used misleading search ads and deceptive designs to conceal millions of dollars in “junk fees.”

“Doxo intercepted consumers trying to reach their billers and tricked them into paying millions of dollars in junk fees,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a separate press release. “The FTC will continue to take action when companies use deceptive design tricks to harm consumers.”

The Complaint

The FTC alleges that Doxo tricked consumers into using its service by posing as the official payment channel for billers and adding “junk fees” to their bills. According to the FTC, Doxo’s actions violated several laws, including the FTC Act, the Restore Online Shoppers’ Confidence Act, and the Gramm-Leach-Bliley Act.

When consumers enter their billing information, Doxo adds an extra fee to the “final payment amount,” revealing it only at the last payment stage in “greyed-out fine print,” according to the complaint.

Furthermore, the complaint asserts that Doxo uses deceptive practices to enroll consumers in its recurring subscription program. Despite promising subscribers savings on delivery fees, Doxo often continues to charge these fees.

Takeaways

This FTC enforcement action shows the agency’s focus on holding companies accountable for imposing “junk fees” on consumers. It aligns with the FTC’s recently proposed rule to ban junk fees, as previously discussed in a GT Alert.

As noted in our October 2023 GT Alert, in light of the Biden administration’s focus on “junk fees,” businesses should consider carefully reviewing their fees structures and related disclosures to ensure they do not create unnecessary regulatory risk.

We have provided ongoing analysis and commentary on this issue as it has developed. See below for more context on legislative and regulatory efforts to curb “junk fees”:

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Photo of Timothy A. Butler Timothy A. Butler

Tim Butler helps companies thrive by developing tailored strategies to address their regulatory compliance challenges and vigorously defending them in government enforcement actions and bet-the-company lawsuits.

A former prosecuting attorney for the Federal Trade Commission (FTC) and former senior official in the Georgia

Tim Butler helps companies thrive by developing tailored strategies to address their regulatory compliance challenges and vigorously defending them in government enforcement actions and bet-the-company lawsuits.

A former prosecuting attorney for the Federal Trade Commission (FTC) and former senior official in the Georgia Attorney General’s Office, Tim has led the defense of dozens of government investigations and enforcement actions brought by the FTC, the Consumer Financial Protection Bureau (CFPB), and the various state attorneys general. Tim also regularly defends clients in bet-the-company lawsuits, including complex business disputes and consumer class actions alleging privacy, false advertising, and unfair or deceptive business practice claims.

Tim is an experienced guide for companies struggling with regulatory complexity. He offers clear advice that helps his clients meet the demands of the ever-growing set of laws and regulations governing data privacy and cybersecurity, advertising and marketing practices, and consumer financial products and services. Clients rely on Tim’s business-minded and practical strategies to address their most difficult regulatory compliance challenges.

A graduate of the University of Chicago and Stanford Law School, Tim is a prolific author and regularly speaks to industry and trade groups about the evolving privacy landscape, about cutting-edge issues affecting payments and fintech companies, and about developments at the FTC, the CFPB, and within the state attorneys general community.

Photo of Matthew White Matthew White

Matt White guides clients through regulatory compliance challenges and represents clients in regulatory and civil investigations and litigation.

Matt has counseled fintech and payment companies on regulatory compliance matters, including those involving the Electronic Fund Transfer Act, the Fair Credit Reporting Act, the…

Matt White guides clients through regulatory compliance challenges and represents clients in regulatory and civil investigations and litigation.

Matt has counseled fintech and payment companies on regulatory compliance matters, including those involving the Electronic Fund Transfer Act, the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the Truth in Lending Act, and their respective implementing regulations (Regulations E, V, P, and Z). Adept with the Consumer Financial Protection Bureau’s (CFPB) Prepaid Rule, Matt has provided guidance regarding prepaid cards and related compliance.

Matt has also aided clients in developing regulatory compliant products and functionalities, including an earned wage access program, reimbursement prepaid card programs, new merchant cash advance products, and tokenized payment capabilities. In connection with products on which Matt advises, he has also negotiated high-stakes technology sales agreements involving complex regulatory issues, including compliance with data privacy laws, financial regulations, and card network rules.

Beyond helping clients strategize for regulatory complexity, Matt also helps clients navigate government investigations and enforcement actions brought by the Federal Trade Commission (FTC), CFPB, and state attorneys general.

Photo of Tessa Cierny Tessa Cierny

Tessa Cierny advises companies on financial technology and data privacy issues. She has experience counseling companies on state and federal regulatory compliance, including existing and emerging privacy laws, such as the E.U.’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act

Tessa Cierny advises companies on financial technology and data privacy issues. She has experience counseling companies on state and federal regulatory compliance, including existing and emerging privacy laws, such as the E.U.’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), as well as financial and banking regulations, such as the CFPB’s Section 1071 Small Business Lending Rule (Regulation B). In addition, she assists clients in defending business disputes and data breach litigation.

Prior to joining Greenberg Traurig, she served as global records manager for WestRock, where she developed and implemented email and data retention policies for global data privacy regulation compliance. In this role, she also advised on data privacy concerns related to data retention, data loss prevention, and data governance.

Photo of Zeba Pirani Zeba Pirani

Zeba Pirani is a Resident Attorney based in Greenberg Traurig’s Atlanta office.