The Federal Trade Commission’s new Junk Fees Rule promises to change the way consumers experience hotel bookings, rentals, and ticket purchases by demanding upfront disclosure of all fees, but will it really end the era of hidden charges?
At a Glance
- FTC announces Junk Fees Rule targeting hidden charges in hotels, rentals, and event tickets.
- New rule requires total prices to be disclosed upfront, clarifying true costs for consumers.
- Violators face civil penalties and could be referred to the Department of Justice.
- Expected to save consumers $11 billion over the next decade.
FTC’s Push for Transparency
The Federal Trade Commission announced a new regulation aiming to curb hidden fees, often termed “junk fees,” associated with hotels, short-term rentals, and event ticket vendors. This rule mandates these vendors to disclose all mandatory fees at the onset of a transaction, ensuring consumers are not surprised by additional charges at checkout. Violations of this rule could lead to civil penalties and severe cases may even be referred to the Department of Justice. This represents a significant move to promote transparency and consumer trust in these industries.
The FTC emphasized the pervasive issue of hidden fees through this bipartisan rule. It specifically targets bait-and-switch pricing known to harm both consumers and honest businesses. The rule also requires that businesses present the total price more prominently than other pricing information. Such disclosure is expected to save consumers substantial time and money, with estimates suggesting an annual savings of up to 53 million hours and $11 billion over the next decade.
#FTC's New Rule Outlaws Hidden Fees in Hotel and Ticket Sales
The Federal Trade Commission has introduced a new rule that mandates transparency in pricing for hotels and live-event tickets. This rule, termed the #JunkFees Rule, prohibits the use of bait-and-switch tactics by… pic.twitter.com/cSzxdGFAQs
— Evan Kirstel #B2B #TechFluencer (@EvanKirstel) December 17, 2024
Implementation and Enforcement
Once published in the Federal Register, the rule will become effective 120 days later, providing a transition period for compliance. FTC Chair Lina M. Khan highlighted the importance of preventing unexpected fees for consumers and reinforcing trust. The FTC has outlined potential civil penalties for violations, with fines reaching up to $51,000 per day for each infringement. In addition, cases involving severe violations could be escalated to the Department of Justice for further action.
“People deserve to know up-front what they’re being asked to pay—without worrying that they’ll later be saddled with mysterious fees that they haven’t budgeted for and can’t avoid,” said Khan.
The rule has not banned specific fees but insisted on transparency in presenting the total cost for services rendered. Though aimed at hotels, rentals, and concert tickets, the rule notably excludes rental cars, broadband internet, and movie tickets. This selective focus indicates a broader agenda to revisit and possibly regulate other sectors in the future as part of ongoing efforts to ensure fair trade practices.
Industry and Political Responses
The new rule saw approval by a four-to-one vote among the commission members, with some dissent, notably from Commissioner Andrew Ferguson, who expressed concerns over the rule’s timing. Despite the dissent, the approval marks a significant regulatory step, with the FTC reinforcing its commitment to handle deceptive pricing practices on a case-by-case basis in other sectors. Companies, especially in states like California with stringent consumer protection laws, may already comply with similar regulations. However, nationwide compliance might require business model adjustments for many others.
