FTC Cracks Down on Hidden Costs: New Rule Bans “Junk Fees” in Travel and Entertainment

The Federal Trade Commission (FTC) has taken a significant step toward enhancing price transparency with a new rule aimed at banning “junk fees” in the travel and entertainment industries.

Announced on December 17, 2024, the rule targets hidden and misrepresented fees for hotels, short-term rentals, and live-event tickets, requiring businesses to disclose the total cost upfront.

The FTC’s move aims to eliminate bait-and-switch pricing practices that obscure true costs, a longstanding frustration for consumers. The rule applies to hotel booking websites, platforms like Airbnb and Vrbo, and ticket sellers for live events.

Key Provisions of the Rule

Under the new rule, businesses must clearly display the total price, including all mandatory fees, when advertising or offering live-event tickets and short-term lodging. This total price must be displayed more prominently than other pricing information to prevent confusion.

For businesses excluding certain allowable fees, such as taxes or shipping costs, the rule mandates clear disclosure of their nature, purpose, identity, and amount before consumers finalize their purchase.

Background and Consumer Impact

The FTC launched its investigation into junk fees in 2022, gathering feedback from over 70,000 public comments. The new regulation is expected to take effect in 120 days, with the FTC estimating significant benefits for consumers.

The agency projects that the rule will save consumers up to 53 million hours annually spent searching for accurate pricing and potentially save over $11 billion in the next decade.

FTC Chair Lina Khan highlighted the significance of the rule: “This action ensures consumers get upfront, honest pricing and puts an end to deceptive practices that waste time and money.”

Broader Efforts Toward Price Transparency

This rule is part of the FTC’s broader campaign to combat deceptive pricing tactics. The commission is also collaborating with the Department of Transportation to address hidden fees in the airline industry and strengthen passenger rights.

While the new rule sets a clear standard for travel and live events, the FTC plans to continue tackling similar issues in other sectors through targeted enforcement actions.

By requiring upfront cost disclosures, the FTC’s latest action represents a major win for consumers, promoting fairness and transparency across industries that have long relied on hidden fees to pad profits.

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