Lina Hahn FTC rejects trash fee ban

FTC Chairwoman Lina Hahn is on the warpath against unnecessary tariffs, and she just won another victory. On Tuesday, the FTC finalized its Garbage Fee Rulewhich targets ticketing companies and hotels and accommodation options that try to insert additional, unadvertised fees. The rule was adopted by a 4-1 vote (s an extremely lame disagreement) and will enter into force on April 16, 2025.

The rule is quite simple – so simple that one might wonder why anything had to be done about it until now. All the FTC is asking companies to do is make all costs clear to consumers upfront. This means there are no additional fees that show up at checkout. Instead, fees such as hotel “resort” fees and “amenity” or “service” fees associated with concert tickets will have to be included in the advertised price immediately.

1. People deserve to know up front what price they’re being asked to pay, without worrying about being hit with mystery fees later that they can’t avoid.

Today @FTC finalizes a rule to ban these unwanted fees for short-term lodging and live event tickets.https://t.co/zwLEe3BUxL

— Lina Khan (@linakhanFTC) December 17, 2024

Businesses will still be able to exclude shipping charges and taxes from the prices they advertise, but they must make those prices clear before asking users to enter their payment information. And to make sure that companies don’t try to look cute with pricing by highlighting certain prices on a detailed list to make it look like consumers are getting a deal, the FTC has clarified that the actual total that will be paid must be the most prominently displayed price.

Kind of wild that “don’t lie about your prices” requires regulatory enforcement, but hey, here we are.

According to a White House Surveyevent ticket fees cost American consumers about $7.14 billion in 2023, while hotel resort fees cost consumers $3.3 billion. And the reason companies add these costs is simple: profit. Inconvenient add-ons that quickly add to your wallet also add to a company’s bottom line. Resort fees that ostensibly go toward maintenance around a hotel or rental property go on the books as 80-90% profit for hotel owners. Meanwhile, ticket sales are a major revenue driver for Ticketmaster thanks in part to service fees.

To no one’s surprise, consumers hate these fees. Study of the atmosphere found that 91% of hotel guests said they don’t like added fees like resort fees, and Ticketmaster’s service fees are so popular among visitors that the ticket seller regularly receives recommended to as the most hated company in america. Earlier this year, Lake Research Partners found about 80% of Americans support making hidden fees illegal—a figure that holds true across every demographic you can imagine.

And yet… So, that’s the thing. Consumers are not always the most rational actors. We just went through an election cycle where the feeling is that things are too expensive (they are) canceled indicators that the wider economy is thriving. Last year Morning Consult post a poll it showed that people would rather see prices fall than their wages rise, possibly because they think more about money going out than coming in.

Back to hotel and ticket prices. The pattern of dodging tolls along the way is called split pricing. there is at least some evidence to offer that while consumers may say they don’t like this model, they may actually react more positively to it than to the true price, because seeing the full price upfront can make them feel like they’re spending more. This does not mean that people will hate this new decision, which is undeniably a positive when it comes to price transparency. Just remember that people don’t always react to these things the way you might imagine.