FTC Targets ‘Junk Fees’ in Event Ticketing and Lodging Sectors
The FTC has unveiled a rule blocking “bait-and-switch” pricing for hotels and concert tickets.
Such tactics, the Federal Trade Commission (FTC) said Tuesday (Dec. 17) are used by the live-event ticketing and short-term lodging sectors to mask total prices and hide junk fees.
“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,” FTC Chair Lina M. Khan said in a news release.
“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.”
The Junk Fees Rule, approved by the commission in a 4-1 bipartisan vote, is designed to ensure that consumers seeking hotels or tickets for concerts or sporting events won’t be surprised by “resort,” “convenience” or “service” fees.
The commission estimates the rule will save customers 53 million hours per year of wasted time spent looking for the total price for live-event tickets and short-term lodging, the equivalent to more than $11 billion across the next decade.
The rule doesn’t limit the types or amounts of fees or specific pricing strategies, but rather requires businesses to be upfront about prices.
“To accomplish this, the Junk Fees 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,” the FTC said.
The rule also requires businesses to display the total price more prominently than most other pricing information. And businesses that exclude “allowable fees” up front must “clearly and conspicuously” reveal the nature, purpose, identity and amount of those fees before consumers agree to pay.
The rule is part of a larger battle waged by the Biden administration against junk fees. As covered here last week, another regulator, the Consumer Financial Protection Bureau (CFPB) has introduced a new rule designed to close what it called an “outdated overdraft loophole” in lending laws. The new rule, set to take effect Oct. 1 of next year, applies to banks and credit unions with assets of more than $10 billion.
“The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they’re charging on overdraft loans,” CFPB Director Rohit Chopra said in a news release.
Last year, the agency said, consumers paid more than $5.8 billion in reported overdraft and non-sufficient fund fees, in spite of some banks having reduced or eliminated such charges.
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