FTC’s New Junk Fees Rule Requires Upfront Pricing for Tickets, Hotels, and Rentals
The Federal Trade Commission (FTC) has issued a new Junk Fees Rule aimed at eliminating deceptive pricing practices in industries like live events, hotels, and vacation rentals. This bipartisan rule will require businesses to disclose the full cost of purchases upfront, including all service and convenience fees, starting April 2024.
While junk fees themselves will not be banned, they must now be clearly communicated at the beginning of the purchasing process, ensuring consumers no longer face surprise charges at checkout.
FTC’s Consumer-Centric Ruling
The ruling comes after the FTC collected significant public input, including 12,000 responses during its proposal stage in October 2023 and an additional 60,000 comments in the lead-up to the final decision.
FTC Chair Lina M. Khan emphasized the importance of transparency in a statement:
“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. 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.”
The FTC estimates that the new rule will:
- Save consumers 53 million hours annually that were previously spent deciphering hidden fees.
- Lead to $11 billion in savings over the next decade.
Who’s Affected?
The Junk Fees Rule targets industries notorious for adding hidden costs, including:
- Live Event Ticketing: Concerts, sports, and theater tickets sold through platforms like Ticketmaster and other agencies must display all charges upfront.
- Hotels: Room prices must reflect resort fees, service charges, and taxes upfront.
- Vacation Rentals: Platforms like Airbnb and Vrbo must show the total cost, including cleaning and service fees, from the start of the booking process.
This ruling follows increasing public frustration over unclear pricing tactics, which led President Joe Biden to urge platforms like Live Nation and Ticketmaster to adopt upfront pricing practices voluntarily in June 2023.
Why This Matters
Hidden junk fees have long been a point of contention, with critics arguing that they exploit consumers and distort competition. By requiring full transparency, the FTC’s rule allows consumers to:
- Budget more effectively by knowing the true cost at the start.
- Make informed purchasing decisions without last-minute surprises.
The initiative also pushes for broader legislation to combat junk fees across the economy, encouraging state and federal regulators to take similar action.
Key Takeaways:
- The Junk Fees Rule takes effect April 2024.
- Businesses must display total pricing upfront, including all fees.
- The FTC projects $11 billion in savings for consumers over the next decade.
As the FTC cracks down on deceptive pricing, the rule marks a significant step toward fairness and transparency in the marketplace—offering consumers clarity and saving them time and money.
