The Federal Trade Commission announced that it has finalized a Junk Fees Rule which essentially prohibits businesses in the live-event ticketing and short-term lodging industries from using bait-and-switch pricing and other tactics used to hide total prices and bury “junk fees.”
The rule will ensure that pricing information is provided in a transparent and truthful way and that consumers are no longer harmed from such unfair and deceptive practices. Consumers searching for hotels or vacation rentals or seats at a show or sporting event will no longer be surprised by a pile of “resort,” “convenience,” or “service” fees inflating the advertised price. By requiring up-front disclosure of total price that includes all applicable fees, the rule will make comparison shopping easier, resulting in savings for consumers and leveling the competitive playing field.
“People deserve to know up-front what they’re being asked to pay—without worrying that they’ll later be saddled with mysterious fees that they haven’t budgeted for and can’t avoid,” said FTC Chair Lina Khan. “The FTC’s rule will put an end to junk fees around live event tickets, hotels, and vacation rentals, saving Americans billions of dollars and millions of hours in wasted time. I urge enforcers to continue cracking down on these unlawful fees and encourage state and federal policymakers to build on this success with legislation that bans unfair and deceptive junk fees across the economy.”
The FTC launched this rulemaking in 2022 by requesting public input on whether a rule could help eliminate unfair and deceptive pricing tactics. After receiving more than 12,000 comments on how hidden and misleading fees affected personal spending and competition, the FTC announced a proposed rule in October 2023 and invited a second round of comments. The Commission received more than 60,000 additional comments which it considered in developing the final rule announced today.
The Final Rule
The Junk Fees Rule aims to prevent businesses from deceiving its consumers in terms of pricing information. The rule does not prohibit any type or amount of fee and any specific pricing strategies. Rather, it simply requires that businesses that advertise their pricing tell consumers the whole truth up-front about prices and fees.
The rule requires that businesses clearly disclose the true total price which includes all mandatory fees whenever they offer, display, or advertise any price of live-event tickets or short-term lodging. Businesses cannot misrepresent any fee or charge in any offer, display, or ad for live-event tickets or short-term lodging.
In addition, the rule requires businesses to display the total price more blatantly than most other pricing information. This means that the most prominent price in an ad needs to be the all-in total price—truthful itemization and breakdowns are fine but should not overshadow what consumers want to know: the real total.
Finally, the rule requires businesses that exclude fees up front to clearly disclose the nature, purpose, identity, and amount of those fees before consumers agree to pay. For example, businesses that exclude shipping or taxes from the advertised price must openly disclose those fees before the consumer enters their payment information.
The FTC estimates that the Junk Fees Rule will save consumers up to 53 million hours per year of wasted time spent searching for the total price for live-event tickets and short-term lodging. This time savings is equivalent to more than $11 billion over the next decade. 