The FTC’s latest rule mandates transparency of all fees upon booking, revolutionizing consumers’ booking experiences.
At a Glance
- The FTC’s new rule targets hidden fees in the hospitality and ticketing sectors.
- Consumers will now receive full disclosure of all mandatory fees upfront.
- The rule was approved with a 4-1 Commission vote.
- Civil penalties will apply for violations, with potential DOJ involvement.
FTC’s New Regulatory Rule
The Federal Trade Commission has announced a new rule targeting hidden or “junk fees” in the hotel and rental industries. Businesses must now disclose all mandatory fees, including service, cleaning, and resort charges, at the beginning of the booking process rather than adding them unexpectedly at checkout. This initiative aims to eliminate the bait-and-switch pricing tactics that have long plagued consumers. Such transparency is anticipated to save consumers substantial time and prevent surprise costs at final payment stages.
The rule, set to become effective 120 days post-publication, was developed following extensive public engagement, drawing over 72,000 comments. The FTC’s strategy is underpinned by a commitment to protecting consumers and ensuring honesty within competitive markets. This initiative promises to save consumers 53 million hours annually, which could translate into $11 billion savings over a 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
Expected Enforcement and Penalties
Violators of the new rule face stern consequences, including civil penalties up to $51,000 per day for each infraction. In severe cases, infractions may be referred to the Department of Justice for further action. Although the rule obligates upfront fee disclosure, it does not prohibit businesses from charging specific fees, such as resort or cleaning fees. Instead, these fees must be readily disclosed and integrated within the total price.
“People deserve to know up-front what they’re being asked to pay,” 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.”
This decision, though supported by most commissioners, saw dissent from Commissioner Andrew Ferguson, who raised concerns about the timing of the rule’s introduction. Nevertheless, with the rule receiving a 4-1 vote, the directive moves forward.
Impact on Industry and Consumers
The FTC’s rule notably does not encompass industries such as rental cars, broadband internet, or movie tickets, illustrating a concentrated focus on creating transparent practices within specific sectors. Airlines, for instance, are managed under separate directives from the Department of Transportation, which are embroiled in ongoing legal challenges.
Some businesses, particularly those in California, have already embraced fee transparency due to stringent state requirements. As the rule takes effect, its success is expected to set a precedent for similar measures across other consumer-facing industries.
