FTC bans ‘bait-and-switch’ junk fees in hotels, rentals, ticket sales

[Simone Del Rosario]

The Federal Trade Commission says gone are the days of ‘bait-and-switch’ when buying a concert ticket or booking a hotel or rental.

Lina Khan:

“Junk fees cost Americans over $90 billion a year, money that corporations are extracting from Americans just because they can these junk fees function as an invisible tax that inflates prices across the economy.”

Simone Del Rosario:

The FTC announced a rule Tuesday that bans junk fees in the industries.

You’ve seen it before … you think you know the nightly rate or ticket price, only to find a much higher total from fees once you hit checkout.

According to the FTC, “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 U.S. Chamber of Commerce came out against the rule this year. The group said in February it’s “nothing more than an attempt to micromanage businesses’ pricing structures, often undermining businesses’ ability to give consumers options at different price points.” They said, “To be clear, the U.S. Chamber supports efforts to enhance price transparency … However, the FTC’s proposed rule severely misses the mark.”

Lina Khan:

The proposal would make sure that corporations cannot lure people in with an artificially low price, but then when it’s time to make the purchase, add all sorts of mystery fees that significantly raise the overall cost.

Simone Del Rosario:

While the U.S. Chamber said, “the FTC will replace consumers’ ability to pick winners and losers in the marketplace, undermining American free enterprise.”

The live-event ticketing space is welcoming the rule. In a statement to Straight Arrow News, Live Nation said, “We’ve led the industry by adopting all-in pricing at all Live Nation venues and festivals and applaud the FTC’s industry-wide mandate so fans will now be able to see the total price of a ticket right upfront no matter where they go to see a show or buy a ticket.”

Ticketmaster said it is “pleased to see the FTC mandate the necessary changes to make ticket-buying more transparent for fans so the first price they see is the price they pay.”

Live Nation Entertainment may be in the FTC’s corner on this one, but it’s still being sued by the country’s other antitrust enforcer, the Department of Justice, which has accused it of having a monopoly over ticket sales. Live Nation and Ticketmaster merged in 2010.

But back to junk fees. Airbnb is also on board with the change, having implemented a “total price display” on its search results for about two years. We’ve also reached out to the American Hotel & Lodging Association for their thoughts on the new rule but have yet to receive a response. We’ll add it to the text of the article at SAN.com if we hear from them.

This final rule comes in the final weeks of President Joe Biden’s term. He made hidden fees a central point to his administration’s agenda, and even used his 2023 State of the Union address to talk about the issue.

President Joe Biden:

My administration is also taking on junk fees, those hidden surcharges too many companies use to make you pay more. For example, we’re making airlines show you the full ticket price up front refund your money if your flight is canceled or delayed. We’ve reduced exorbitant bank overdrafts by saving consumers more than $1 billion a year, we’re cutting credit card late fees by 75% from $30 to $8 look, junk. Fees may not matter to very wealthy, but they matter to most other folks in homes like the one I grew up in, like many of you did, they add up to hundreds of dollars a month.

Simone Del Rosario:

With President-elect Donald Trump entering the White House next month, it’s unclear what will happen to this new junk fee rule. The commission passed the rule by a 4 to 1 vote. The only dissenting vote is Commissioner Andrew Ferguson, whom Trump has named to be the next FTC chair.

He wrote that his dissent has “nothing to do with the merits of the Final Rule” … saying, “I dissent only on the ground that the time for rulemaking by the Biden-Harris FTC is over” … adding, “This lame-duck Commission should give its regulatory pen a much-needed rest, focus on routine law-enforcement, and prepare for an orderly transition.”

For Straight Arrow News, I’m Simone Del Rosario