FTC Issues Final Rule Banning Hidden ‘Junk Fees’ in Event Tickets, Hotels

The Federal Trade Commission (FTC) in Washington on Nov. 18, 2024. Madalina Vasiliu/The Epoch Times

The Federal Trade Commission (FTC) announced on Tuesday a sweeping new rule that prohibits so-called junk fees in live-event ticketing and short-term lodging, a measure the agency says will save American consumers billions of dollars every year and increase price transparency.

The rule, officially called the “Rule on Unfair or Deceptive Fees,” requires that businesses clearly and conspicuously disclose the total price of tickets and lodging up front, including all mandatory fees.

It also prohibits misrepresenting any fee and stipulates that the total price be displayed more prominently than any itemized breakdown, according to the FTC.

The rule is expected to take effect 120 days after its publication in the Federal Register and comes after a lengthy period of public comment.

It comes more than a year after the agency proposed new regulations aimed at curbing the rising number of surprise costs added at checkout, often described as resort fees, convenience charges, or service fees, according to the agency.

“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,” FTC Chair Lina Khan said in a statement.

According to the agency, the final rule applies specifically to live-event ticketing and short-term lodging, including hotels, vacation homes, and rental cabins.

Despite initial contemplation of broader measures touching other industries, the current scope does not include regulating junk fees in areas such as car rentals and airline travel.

Commissioner Andrew Ferguson dissented, not on the rule’s merits, but on the grounds that he believes the current administration shouldn’t adopt a new rule that would take effect after its term ends.

“The time for rulemaking by the Biden–Harris FTC is over,” he wrote in his dissenting statement.

“[President-elect Donald Trump’s] incoming Administration should have the opportunity to decide whether to adopt rules that it, not the Biden-Harris FTC, will be called upon to enforce.”

Trump announced last week he was nominating Ferguson to take over the agency from Khan when he takes office in January.

Consumer advocates praised the measure.

“This is great news that’s long overdue,” said Teresa Murray, consumer watchdog at the U.S. Public Interest Research Group (PIRG). “In what universe would a reasonable person think it was ever OK for a business to disclose only part of the actual cost of its product or service?”

She further criticized the rule’s limited scope, saying the action should extend beyond tickets and lodging to protect consumers in other markets.

The U.S. Chamber of Commerce has opposed the regulations, saying they amount to government overreach and micromanagement of pricing structures that could limit how businesses offer pricing options to consumers.

“The Chamber supports transparency in pricing,” it said in a public comment on the rule proposal in February. “Businesses cannot be allowed to misrepresent the total cost of a product or service, or to charge consumers for products or services they did not agree to purchase. Consumers should understand what they are purchasing, and the costs associated with the purchase.

“However, the Proposed Rule lacks clarity regarding its application, and as written, would be technically impossible for some industries to implement, and has the potential to chill legitimate pricing practices in an attempt to cure consumer frustrations with fees.”

The Chamber did not respond to a request for comment by publication time on the FTC’s announcement that it had finalized the rule this week.