The Federal Trade Commission (FTC) announced its final Junk Fees Rule to eliminate deceptive pricing practices, specifically in live-event ticketing and short-term lodging industries. (You can read the entire Press Release here)
The rule targets bait-and-switch pricing tactics, where hidden fees are added to advertised prices, causing confusion and unfair competition. The Final Rule is much more limited than the original proposed rule that targeted ALL businesses. The ICCFA filed comments suggesting a couple of alternatives for the proposed rule, including:
- To exempt deathcare, since deathcare is already regulated under the Funeral Rule; or
- Modify the definition of “Business” in the proposed Rule to only include the industries that were the focus of the junk fee rule.
ICCFA comments were mentioned in the final rule, and ultimately, deathcare was omitted, with the only industries being specifically named as live-event ticketing and short-term lodging.
FTC Chair Lina M. Khan emphasized the importance of consumers knowing upfront costs to save time and money, urging further legislative actions against such practices across all sectors. The Junk Fees Rule mandates that businesses clearly and prominently disclose the total price, including all mandatory fees, whenever prices are advertised. This change ensures consumers can compare costs accurately without unexpected add-ons like “resort,” “convenience,” or “service” fees. Businesses must also present the total price more prominently than itemized fees and disclose any additional fees (e.g., shipping or taxes) before customers finalize payments.
The FTC initiated this rulemaking process in 2022, receiving over 12,000 comments initially and an additional 60,000 comments after proposing the rule in 2023. The overwhelming feedback highlighted the detrimental impact of hidden fees on consumers’ budgets and competition. The Commission estimates the rule will save consumers 53 million hours annually, equating to over $11 billion in savings over a decade.
While the rule specifically applies to live-event ticketing and short-term lodging, other industries remain subject to longstanding laws prohibiting misleading fees. The FTC will continue enforcement against bait-and-switch pricing strategies, like drip pricing, where fees are gradually revealed during a transaction. The FTC has broad oversight and rules in place that prohibit false or misleading pricing, which apply to all businesses. The rule does not ban fees outright but requires transparency to ensure fair practices.
The final rule was approved with a 4-1 Commission vote. Commissioner Andrew Ferguson dissented (It is worth reading his dissent, as he is the likely incoming Chair). At the same time, Chair Khan and Commissioners Rebecca Kelly Slaughter and Melissa Holyoak issued supportive statements. The rule will take effect 120 days after its publication in the Federal Register. Overall, this measure aims to protect consumers from deceptive practices while promoting fairness in pricing transparency across key industries – and it also allows deathcare to carry on as usual.
