The Federal Trade Commission announced new rules requiring companies to provide up-front pricing for services such as vacation rentals, hotels and event tickets.
The new rule is intended to eliminate "junk fees," the added costs that are tacked on when a consumer goes to checkout for a purchase. The FTC said it expects the new rule will save consumers up to 53 million hours per year of wasted time spent searching for the total price for tickets and lodging.
The new rule "requires that businesses 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." In other words, fees are still allowed but must be disclosed earlier in the transaction process.
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For instance, a person purchasing a ticket for this weekend's NFL game between the Cincinnati Bengals and Cleveland Browns is shown a ticket price of $110. The ticket contains a $21.40 service fee and a $3 order processing fee, bringing the total before taxes to $134.40. The new rule would likely result in the $134.40 price being displayed before getting to the checkout screen.
“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 FTC Chair Lina M. Khan. “The FTC’s rule will put an end to junk fees around live event tickets, hotels, and vacation rentals, saving Americans billions of dollars and millions of hours in wasted time. 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.”
The new rule had the support of four out of five FTC commissioners. Andrew Ferguson, who is expected to Khan's place as chair when President-elect Donald Trump takes office, was the lone dissenting vote.
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"This lame-duck Commission should give its regulatory pen a much-needed rest, focus on routine law-enforcement, and prepare for an orderly transition. It is particularly inappropriate for the Biden-Harris FTC to adopt a major new rule that it will never enforce, as the Final Rule will not take effect until many months after President Trump takes his oath of office," he wrote. "My vote, however, should not be understood to state my position on the Final Rule’s merits, or on whether the Commission under President Trump should enforce the Final Rule."
President Joe Biden has said that the FTC's new rule will lower the cost for Americans.
"We all know the experience of encountering a hidden fee at the very last stage of check out—these junk fees sneak onto your bill and companies end up making you pay more because they can. Those fees add up, taking real money out of the pockets of Americans," Biden said.
The new rules are set to go into effect next year.
