The Federal Trade Commission (FTC) has today announced a new rule which will ban apps and websites in the hotel and event industries from using hidden fees to engage in bait-and-switch pricing.
The agency found it was common practice for companies to show a misleading price, which was then inflated by hidden costs like booking and resort fees, only revealed during the checkout process …
Companies won’t be banned from applying junk fees, but they will have to include them in the headline prices they show to consumers from the outset, so the price shown upfront is the total price you will pay.
The FTC first started consulting on this back in 2022, and received more than 12,000 comments on hidden fees and misleading pricing. An additional 60,000 comments were made after the agency announced its plans.
The FTC says that disclosure of real pricing will make comparison shopping easier, and prevent consumers having their time wasted.
The Junk Fees Rule will ensure that pricing information is presented in a timely, transparent, and truthful way to consumers of live-event tickets and short-term lodging, two industries whose pricing practices the Commission has studied in particular.
Consumers searching for hotels or vacation rentals or seats at a show or sporting event will no longer be surprised by a pile of “resort,” “convenience,” or “service” fees inflating the advertised price. By requiring up-front disclosure of total price including fees, the rule will make comparison shopping easier, resulting in savings for consumers and leveling the competitive playing field […]
The FTC estimates that the Junk Fees Rule will save consumers up to 53 million hours per year of wasted time spent searching for the total price for live-event tickets and short-term lodging.
In addition to apps and websites, the rule will also apply to ads, so companies will not be allowed to advertise a price unless that includes all the fees a customer would be required to pay to actually make a booking.
While this rule specifically targets the hotel and event sectors, the FTC says it is already illegal for businesses generally to deceive customers about the true prices of the goods and services they offer, so it will continue to use its law enforcement powers in other fields.
The law will take effect 120 days after publication.
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