Restaurants fight FTC crackdown on junk fees as diners balk at new charges

Restaurants are pushing back against a proposed Federal Trade Commission (FTC) rule aimed at eliminating "junk fees," which include surcharges added to bills. In 2023, 15% of restaurant owners reported implementing such fees to manage rising costs. These surcharges, which can cover credit card processing, gratuities, and inflation, have become increasingly common, with a significant rise in service fees noted in transactions processed by Square. While restaurant operators argue that these fees help maintain lower menu prices and ensure fair employee compensation, critics claim they can mislead customers into paying more than expected. The Biden administration's broader initiative to tackle hidden fees has prompted restaurants to advocate for the necessity of certain surcharges, emphasizing transparency in their billing practices. Some states, like California, have already exempted restaurants from mandatory fee disclosures, allowing them to continue using service charges without additional scrutiny. The National Restaurant Association is lobbying for the protection of specific fees, such as those for large parties and credit card processing, arguing that eliminating these could lead to confusion and higher prices for consumers. Despite the pushback, there is acknowledgment within the industry that not all fees are justified, with some operators expressing concern over outdated surcharges.

- Restaurants are resisting FTC efforts to ban "junk fees" like surcharges.

- 15% of restaurant owners added fees in 2023 to cope with rising costs.

- Critics argue these fees can mislead customers about total meal costs.

- Some states have exempted restaurants from disclosing mandatory fees.

- The National Restaurant Association is advocating for the protection of certain surcharges.