On February 7, 2024, the Federal Motor Carrier Safety Administration (FMCSA) voiced its support for recently proposed federal regulations promulgated by the Federal Trade Commission (FTC) (88 FR 77420) (16 CFR 464) which would prohibit unfair or deceptive practices in the form of the inclusion of certain fees for a variety of goods or services. While the FTC’s proposed rule would seek to eliminate hidden or misleading “junk” fees in the context of many industries, including lodging, live ticketing events, food and grocery delivery services, and telecommunications, the FMCSA specifically voiced its support for the rule-making in the context of predatory tows of commercial motor vehicles.
If enacted, the proposed FTC rule would seek to strengthen the FTC Act (15 U.S.C. 45) by preventing the omission of mandatory fees from advertised prices and the lack of explanation for the nature and purpose of certain fees and charges. Specifically, the proposed rule would allow the FTC to seek civil penalties against businesses found to be unlawfully promulgating junk fees in the form of bait-and-switch tactics. The rule would require businesses to clearly and conspicuously disclose the total price of a good or service to a consumer at the front end of a transaction, including the disclosure of any
mandatory or ancillary fees related to the good or service. If enacted, the FTC would have the ability to pursue monetary penalties against businesses deemed to have included hidden or junk fees in their services and to seek refunds for victimized consumers.
In highlighting the applicability of this proposed rule within the context of predatory towing, the FMCSA set forth how the rule could be used in the context of consensual tows (where a vehicle operator has requested a towing company’s services) or, more prevalently, in the context of nonconsensual tows (where a vehicle is removed from public or private property without the owner’s knowledge or consent or where a towing company is called to an accident scene at the request of law enforcement). The FMCSA noted that towing companies often use possession of the vehicle as leverage to price gouge and prey on owners or operators by failing to disclose certain fees until after the completion of the tow.
As the FMCSA noted, companies operating in interstate commerce often find themselves interacting with towing companies with which they have little to no familiarity in a jurisdiction where the laws governing towing and recovery might vary, making it difficult for owners and operators to refute the
validity of certain towing fees. Such fees might include “administrative fees” and “equipment fees,” which have nothing to do with the actual towing services rendered. Other fees are often not disclosed until after the tow, as a towing company may use the weight of the vehicle or the distance of the tow to attempt to justify increased rates. Finally, the FMCSA noted that both the number of fees included on certain towing invoices and the amounts charged for certain fees on invoices are often excessive, particularly in the nonconsensual towing context where owners are at the mercy of a towing company requested by law enforcement or property owners.
The FMCSA voiced its support of the FTC’s definition of “total price” in the proposed rule as “the maximum total of all fees or charges a consumer must pay for a good or service and any mandatory "ancillary good or service.” The FMCSA indicated that the rule should clarify what fees are to be included in the total price by adding the term “mandatory ancillary fee,” which would set forth the essential service being provided. The FMCSA also suggested that any fee not included or disclosed as part of the upfront price be prohibited. Moreover, the FMCSA suggested that the FTC use its authority under the rule to prohibit or restrict excessive numbers and amounts of fees.
The FMCSA’s comment referenced a recent study compiled by the American Transportation Research Institute (ATRI) from November 2023, which found that 29.8% of crash-related tows included some form of predatory billing practices by towing and recovery companies. See Leslie, Alex and Alexa Pupillo,
Causes and Countermeasures of Predatory Towing, American Transportation Research Institute (Nov. 2023). The study included a thorough breakdown of the varying laws among the states and methods for contesting predatory towing practices.
Motor carriers who have been subject to predatory towing practices should consider reviewing the various laws in the states in which they operate, following the status of the proposed rule, and contacting lawmakers to voice support for towing reform at the federal, state, and local level. The FMCSA’s support of the FTC rule, while appreciated, is just one step in the right direction towards the continued fight against predatory towing. If enacted, motor carriers should be mindful that the FTC will need victimized motor carriers to report any instances of predatory towing and that the agency will need personnel to enforce the rule’s provisions.
