The U.S. Federal Trade Commission announced a new rule on Tuesday that will prohibit ticket sellers, hotels, and vacation rental services from hiding total prices and burying junk fees during the checkout process. The Junk Fees Rule helps ensure that consumers know exactly what the full price will be before they buy event tickets or book short-term lodging.
Specifically, the rule looks to crack down on “resort,” “convenience,” or “service” fees that have become increasingly common in both industries. The price you see upfront is often a fraction of what you’ll pay once all the junk fees have been applied. Suddenly, that $50 ticket to a baseball game is double the advertised price as you’re getting ready to pay.
FTC Chair Lina M. Khan shared this statement: “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 started its rulemaking efforts in 2022 by asking the public if a rule would help eliminate unfair pricing practices such as junk fees. Over 12,000 comments about hidden and misleading fees later, the FTC announced a proposed rule in October 2023 and requested a second round of comments. This time, the commission received over 60,000.
Here are the ways that the new rule will put an end to hidden junk fees:
- Businesses are now required to clearly and conspicuously disclose the true price, including all of the mandatory fees, whenever they offer, display, or advertise any price of live-event tickets or short-term lodging.
- Businesses have to display the total price more prominently than most other pricing information.
- Businesses that exclude allowable fees up front, such as shipping or taxes, have to clearly and conspicuously disclose the nature, purpose, identity, and amount of those fees before consumers consent to pay.
The FTC estimates that the Junk Fees Rule will save consumers up to 53 million hours per year that they previously spent searching for the actual price of event tickets or short-term stays. The time savings is equivalent to $11 billion over the next ten years.