Insights to Help Your Business
How the FTC’s New Regulations Will Reshape Checkout Protection (And How to Stay Ahead)
Why your current shipping protection model could be putting you at risk.
The era of hidden fees and fine-print add-ons at checkout is over. The Federal Trade Commission’s (FTC) has introduced new regulations targeting hidden and misleading fees. These updates directly impact how online merchants present and apply shipping protection and other optional add-ons at checkout.
If your business uses a tool or partner that automatically adds protection fees, or doesn’t provide a clear opt-in for customers, you may be at risk of non-compliance, reputational damage, and even regulatory penalties.
Today, we break down what the new rule means, why it matters, and how to adapt your checkout protection strategy to stay compliant and competitive.
What Does the FTC’s “Junk Fees” Rule Say?
In December 2024, the FTC finalized a rule banning so-called “junk fees”—hidden or surprise charges that are tacked onto purchases without clear disclosure. These rules apply to everything from concert tickets to travel bookings—and yes, ecommerce checkouts.
According to the FTC, the rule prohibits:
- Pre-checked boxes or auto-applied charges for optional services like shipping protection
- Fees that are disclosed only at the final stages of checkout or post-purchase
- Making it difficult to remove or decline add-ons
- Failing to clearly explain the price and benefit of optional charges
What This Means for Checkout Protection
If your shipping protection or insurance solution is automatically applied to customer carts, lacks clear opt-in, or presents vague benefit explanations, it may now violate FTC guidelines.
That’s a serious concern. Not only could it expose your business to enforcement action, but it can also undermine customer trust; especially as consumers become more aware of these practices.
Common risks under the new rules:
- Auto-applied protection fees with no opt-out (or difficult opt-out)
- Fees appearing after purchase or in the confirmation email
- Vague or inconsistent explanations of the charge and benefit
- Inconsistencies in implementation across merchants or platforms
These approaches may have once driven higher attachment rates—but now, they could drive legal scrutiny and customer churn.
The Better Way: Transparent, Compliant Checkout Protection
To stay ahead, merchants need a shipping protection solution that’s designed for compliance and customer experience from the ground up.
That’s where InsureShield® Shipping Protection comes in.
Built by UPS Capital®, InsureShield offers a fully transparent, flexible, and FTC-aligned protection model that gives merchants control and gives customers clarity.
- FTC-Compliant Checkout - Transparent pricing and clear opt-in
- Claims Filing Wait Period - No wait—file immediately after an issue
- Flexible Coverage Models- Merchant-paid, customer-paid, or hybrid options
- Customizable Rules- Protect everything, some things, or let customers decide
- Seamless Integration - Consistent experience across platforms
- Trusted Backing - Backed by UPS Capital, a name merchants trust
Why It Matters Now
The checkout experience is more than just a transactional touchpoint—it’s a key moment of trust between your brand and your customer. Missteps at this stage can cost you revenue, loyalty, and credibility.
With the FTC’s new rule now in place, the need for transparent, flexible, and consistent shipping protection is urgent. Tools that rely on opt-out behavior or obscure pricing structures are no longer safe bets.
Switching to InsureShield means you get:
- A future-proof solution that evolves with regulation
- A clear, fast, and customer-friendly claims process
- The ability to scale across enterprise or SMB ecommerce platforms
- Peace of mind knowing you’re protecting both your shipments and your reputation
How to Stay Ahead of the Curve
Merchants who adapt early not only avoid risk, they also create competitive advantage.
By offering protection that is clearly explained, easy to elect, and backed by a trusted brand, you can increase customer satisfaction, reduce post-purchase issues, and build a checkout flow that aligns with the future of ecommerce.
The FTC’s crackdown on hidden fees is a wake-up call. Ecommerce brands must take a hard look at how they present and apply shipping protection—and ensure their current tools are aligned with both customer expectations and regulatory mandates.
InsureShield gives you everything you need to stay compliant, competitive, and customer-first. Want to learn more? Speak to a representative today.
