As the Biden administration finalizes new rules to reduce what it calls"junk fees," the National Restaurant Association is saying the White House's proposal would create "chaos" at restaurants.
The Federal Trade Commission published proposed rules in late 2023 that would require businesses to disclose all mandatory fees when giving customers a price. The FTC provided examples, such as concert tickets and renting an apartment, which might have added fees not visible in the original purchase price.
While the FTC said that eliminating junk fees would save consumers money, the National Restaurant Association says it could create a scenario in which restaurants would need to print multiple menus for customers. For instance, when restaurants require large parties to pay a set gratuity, the National Restaurant Association says the new rules would mean restaurants would have to print entirely new menus.
The public had until Feb. 7 to submit its feedback to the FTC on the proposed rules.The National Restaurant Association sent its letter to the Biden administration last week explaining why the rules would hurt the industry and consumers.
"Imagine walking into a restaurant and the person at the desk asks you how you’re going to be paying that evening," the letter reads. "This would become an uncomfortable reality in a world where restaurants can’t use surcharges and are forced to have one menu for large parties, one for smaller parties, one for people paying with credit cards, one for takeout, and one for delivery. This is why if restaurants are not excluded from the final rule, the Association and the Law Center urge the Commission to permit restaurants to utilize service fees, credit card surcharges, and delivery fees so long as they meet certain notice and disclosure requirements that provide appropriate pricing transparency and shopping comparison abilities for consumers."
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The National Restaurant Association said it estimates that restaurants would each need to spend an average of $5,000 in order to comply with the new rules, which would cost the industry a total of $3.5 billion.
“While the National Restaurant Association and the Restaurant Law Center appreciate the Commission’s aim to provide increased price transparency for consumers, this proposed rule ultimately fails to achieve this objective in the restaurant industry,” said Brennan Duckett, director of technology and innovation policy for the National Restaurant Association. “A one-size-fits-all prohibition on common restaurant charges is both unworkable and unlawful, and we therefore have urged the Commission to exclude the industry from any final rule of similar nature and scope.”
The FTC has defended its efforts by saying price transparency is important for consumers.
“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape. These junk fees now cost Americans tens of billions of dollars per year — money that corporations are extracting from working families just because they can,” said FTC Chair Lina M. Khan. “By hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront. The FTC’s proposed rule to ban junk fees will save people money and time, and make our markets more fair and competitive.”
The FTC has not said when it will publish finalized rules.
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