The Federal Trade Commission (FTC) has announced a new rule banning “junk fees” on hotels and live-event tickets. This decision, revealed on December 17, 2024, will eliminate deceptive pricing practices and ensure transparency in these industries.
The FTC’s final Junk Fees Rule targets bait-and-switch pricing tactics that have long frustrated consumers. These practices often involve advertising a lower initial price, only to add substantial fees later in the purchasing process. FTC Chair Lina M. Khan highlighted the importance of upfront pricing. “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,” Khan stated.
This rule is part of a broader initiative by the Biden administration to crack down on hidden fees across various sectors of the economy. President Biden commented on the significance of this move, saying, “We all know the experience of encountering a hidden fee at the very last stage of checkout — these junk fees sneak onto your bill and companies end up making you pay more because they can. Those fees add up, taking real money out of the pockets of Americans.”
What Does The New Federal Rule Banning ‘Junk Fees’ Entail?
The new regulation requires businesses in the live-event ticketing and short-term lodging industries to disclose the total price. The cost should include all mandatory fees when advertising or displaying any price. This means that “resort fees,” “service charges,” and other similar add-ons must be included in the initial price shown to consumers.
Notably, the rule doesn’t prohibit any specific types or amounts of fees. Instead, it mandates transparency. This allows consumers to make informed decisions based on the true total cost. Businesses can still itemize or break down costs. However, the all-inclusive price must be displayed more prominently than other pricing information.
The FTC estimates that this rule will save consumers up to 53 million hours per year. These hours would otherwise be spent searching for the total price of live-event tickets and short-term lodging. This time savings is valued at more than $11 billion over the next decade. For businesses, the rule creates a more level playing field. Requiring all companies to disclose total prices upfront prevents those using hidden fees from gaining an unfair advantage over more transparent competitors.
