FTC bans ‘bait-and-switch’ hidden fees for hotel and event tickets

It Federal Trade Commission (FTC) announced on Tuesday that it had finalized a new junk fee rule aimed at banning the use of bait-and-switch pricing and other tactics that hide fees and the total cost of tickets to live events, as well as hotels and vacation rentals.

“People deserve to know upfront what they’re being asked to pay without worrying that they’ll be saddled with mysterious fees they didn’t budget for and can’t avoid,” FTC Chairwoman Lina Khan said in a statement. “The FTC rule will end junk fees around live event tickets, hotels and vacation rentals, saving Americans billions of dollars and millions of hours in lost time.

“I urge enforcement agencies to continue cracking down on these illegal fees and encourage state and federal policymakers to build on this success with legislation that bans unfair and deceptive garbage fees across the economy.”

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Leena Khan performs onstage at the Fast Company Innovation Festival 2024 at BMCC Tribeca PAC on September 19, 2024 in New York City. (Eugene Gologursky/Getty Images for Fast Company/Getty Images)

“We all know the experience of running into a hidden fee at the very end,” President Biden said in a statement taking real money out of Americans’ pockets.”

President Biden speaks during the National Association of States Legislative Conference in Washington, D.C., on February 12, 2024. (Chris Kleponis/CNP/Bloomberg via Getty Images/Getty Images)

The rule was approved by a 4-1 vote, with the lone dissenting vote coming from Commissioner Andrew Ferguson, the Republican nominee who will serve as FTC chairman when President-elect Trump takes office in January.

Ferguson opposed the rule and argued that “the time for rulemaking by the Biden-Harris FTC is over.” He did not consider whether the FTC should enforce the rule when Trump returns to the White House.

Commissioner Melissa Holyoak, the FTC’s other Republican appointee, voted in favor of the rule and said it “helps protect consumers and competition while maintaining the flexibility of businesses to engage in lawful activities. advertising and pricing practice”.

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The rule neither prohibits any type or amount of fees nor prohibits any pricing strategy. Rather, it requires businesses that advertise their pricing tell consumers the whole truth about prices and fees ahead.

The Federal Trade Commission building in Washington, DC (Jeffrey Greenberg/Universal Images Group via Getty Images/Getty Images)

The rules require businesses to “clearly and conspicuously” disclose the true total price, including all mandatory fees, when they offer, display or advertise any price for live event tickets or short-term accommodation. The rule prohibits businesses from misrepresenting any fees or charges.

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The most prominent price displayed in the ad must include the total price, and while they may show the item and breakdown, they cannot overshadow the actual total.

The rule also requires businesses that pre-exclude allowable fees to clearly and conspicuously disclose the nature, purpose, identity, and amount of those fees before consumers agree to pay.

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For example, businesses that exclude shipping or taxes from an advertised price must clearly and prominently disclose those charges before a consumer enters payment information.

Reuters contributed to this report.