Go-To Guide:

• 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”:

• Tim Butler Quoted in LA Times Article on California ‘Junk Fees’
• California Bans Hidden Fees, Effective July 1, 2024
• CFPB Releases Report Highlighting Junk Fees on Mortgage Servicing
• CFPB Unveils Final Rule Banning ‘Excessive’ Credit Card Late Fees
• CFPB Issues Proposed Rule to Stop ‘Junk Fees’ on Bank Accounts
• CFPB Issues Advisory Opinion on ‘Illegal Junk Fees’ By Large Financial Firms
• FTC Proposed Rule Targeting ‘Junk Fees’
• California AG Publishes FAQs on California’s ‘Junk Fee’ Law