“FTC announces ban on hidden “junk fees” in hotels, concerts, sports, and many other industries, requiring companies to transparently disclose all charges to consumers. The move aims to prevent surprise billing and promote fair competition in affected markets. #FTC #junkfees”
FTC Bans Hidden ‘Junk’ Fees For Hotels, Concerts, Sports… But Spares Other Industries
The Federal Trade Commission (FTC) on Tuesday unveiled a new set of rules outlawing the practice of hiding so-called “junk fees” from consumers until the end of the purchase process. However, the long-awaited rules have a relatively narrow scope: They only encompass live event tickets, hotels and vacation rentals — sparing airlines, auto dealers and many other prominent generators of consumer grievances.
“Consumers searching for hotels or vacation rentals or seats at a show or sporting event will no longer be surprised by a pile of ‘resort,’ ‘convenience,’ or ‘service’ fees inflating the advertised price,” said the FTC in a statement accompanying the publishing of a 313-page explanation of the rules and the process used to draft them. The FTC claims the rule will save consumers upwards of 53 million hours annually in “wasted time spent searching for the total price,” putting a price tag of $11 billion on the time savings. Advocates for the rule also hope that clearer all-in pricing will also nudge prices downward.
Rather than banning “junk fees,” the rule demands that they be disclosed earlier, and requires businesses to display the total price more prominently than than most other pricing information. “This means that the most prominent price in an ad needs to be the all-in total price,” said the FTC. Sellers must “clearly and conspicuously disclose the true total price inclusive of all mandatory fees whenever they offer, display, or advertise any price of live-event tickets or short-term lodging.”
The rule is far narrower than what the unconstitutional FTC first had in mind: A 2023 proposal would have sweepingly applied the rules across the entire US economy. Meanwhile, other attempts by the Biden administration to limit fees have hit legal headwinds. For example, a Consumer Financial Protection Bureau-declared $8 cap on credit card late fees has been blocked by a federal judge in Fort Worth.
“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,” said lame-duck FTC chair Lina Khan.
The FTC adopted the rule in a 4-1 vote. The sole dissenter was Republican Andrew Ferguson, Trump’s pick to chair the commission in his upcoming administration. In a dissenting statement, Ferguson said his “no” vote wasn’t a statement on the merits of the rule. “I dissent only on the ground that the time for rulemaking by the Biden-Harris FTC is over,” he said in a statement. “It is particularly inappropriate for the Biden-Harris FTC to adopt a major new rule that it will never enforce,” given the rule won’t take effect until April.
Under Elon Musk and Vivek Ramaswamy, Trump’s “Department of Government Efficiency” is promising to hack away at the sprawling thicket of federal regulations, it’s unclear if the new rules will be shredded by the new administration and its accompanying Republican-controlled House and Senate. Given the popular appeal, that seems doubtful.