The Federal Trade Commission (FTC) has finalized its **Junk Fees Rule**, a regulation designed to eliminate deceptive pricing practices such as bait-and-switch tactics and hidden fees in the live-event ticketing and short-term lodging industries. These practices, which often obscure the true cost of products and services, harm consumers and create unfair competition for honest businesses.
**“Consumers deserve transparency,”** said FTC Chair Lina M. Khan. **“They should know the full price upfront without worrying about surprise fees they didn’t plan for. This rule will save Americans billions of dollars and countless hours of wasted time. I encourage policymakers to build on this success and extend protections against junk fees across the economy.”**
### Key Features of the Junk Fees Rule
The rule ensures that businesses in the live-event ticketing and short-term lodging sectors present pricing information clearly, truthfully, and in a timely manner. This means consumers booking hotels, vacation rentals, or tickets for concerts and sporting events will no longer face unexpected charges like “resort,” “service,” or “convenience” fees tacked onto the advertised price. By requiring upfront disclosure of the total price, the rule simplifies comparison shopping, saves consumers money, and fosters fair competition.
### Background and Development
The FTC began exploring this issue in 2022, soliciting public feedback on whether a rule could address unfair pricing tactics. After receiving over 12,000 comments detailing how hidden fees affected personal budgets and market competition, the FTC proposed a rule in October 2023. A second round of public comments brought in an additional 60,000 responses, which helped shape the final rule announced today.
The FTC estimates that the Junk Fees Rule will save consumers up to **53 million hours annually**—time that would otherwise be spent searching for the true cost of tickets and lodging. This time savings translates to an economic benefit of over **$11 billion over the next decade**.
### What the Rule Does
The Junk Fees Rule targets deceptive pricing practices while allowing businesses flexibility in how they structure their fees. It does not ban specific fees or pricing strategies but requires businesses to be transparent about the total cost upfront. Key provisions include:
1. **Total Price Disclosure**: Businesses must clearly display the full price, including all mandatory fees, whenever they advertise or display prices for live-event tickets or short-term lodging.
2. **Prominent Pricing**: The total price must be the most visible price in advertisements, ensuring that consumers can easily identify the full cost. Detailed breakdowns of fees are allowed but cannot overshadow the total price.
3. **Fee Transparency**: If certain fees (e.g., shipping or taxes) are excluded from the advertised price, businesses must clearly disclose their nature, purpose, and amount before consumers finalize their purchase.
While the rule specifically targets live-event ticketing and short-term lodging, other industries are still subject to longstanding laws prohibiting deceptive pricing. The FTC will continue to enforce these laws through case-by-case actions against practices like drip pricing and hidden fees.
### Implementation and Enforcement
The rule was approved by a 4-1 vote among FTC commissioners, with Commissioner Andrew Ferguson dissenting. Statements from Chair Lina M. Khan, Commissioner Rebecca Kelly Slaughter, and Commissioner Melissa Holyoak accompanied the announcement, reflecting their perspectives on the rule. Commissioner Ferguson issued a dissenting statement.
The rule will take effect **120 days after its publication in the Federal Register**. The FTC’s Bureau of Consumer Protection, led by staffers Annette Soberats, Stacy Cammarano, and Karen Mandel, spearheaded the development of this regulation.
### Broader Implications
The Junk Fees Rule represents a significant step toward greater transparency in pricing practices, particularly in industries where hidden fees have long been a source of frustration for consumers. By requiring upfront disclosure of total costs, the FTC aims to empower consumers, save time and money, and promote fair competition in the marketplace.
Source: ftc.gov