Investing.com — The Federal Trade Commission (FTC) has implemented a final rule on junk fees aimed at prohibiting misleading pricing and hidden fees in the live event ticketing and short-term lodging industries. The rule is designed to protect consumers from unfair pricing practices and promote fair competition between businesses.
The rule, which targets bait-and-switch pricing tactics, was announced by FTC Chair Lina M. Khan. He emphasized that consumers have the right to know the total cost of a service or product in advance, without worrying about unexpected charges. The rule will help eradicate hidden fees related to live event tickets, hotels and vacation rentals, potentially saving Americans billions of dollars and millions of hours in wasted time.
The Junk Rate Rule will ensure that pricing information is presented in a transparent, truthful and timely manner to consumers. Its goal is to eliminate surprise fees that often inflate the advertised price of hotels, vacation rentals and live event tickets. The rule requires upfront disclosure of the full price, including all fees, making it easier for consumers to compare prices and creating a fair competitive environment for businesses.
The rulemaking process began in 2022, when the FTC sought public input on whether such a rule could help eliminate unfair pricing tactics. After receiving more than 12,000 comments, a proposed rule was announced in October 2023, followed by a second round of comments. More than 60,000 additional comments were considered in developing the final rule.
The FTC estimates that the Junk Fee Rule will save consumers up to 53 million hours per year, equal to more than $11 billion over the next decade. This time savings is calculated based on the time consumers spend searching for the full price of live event tickets and short-term accommodation.
The final rule targets specific deceptive pricing practices in the sale of tickets for live events and short-term accommodations. It does not prohibit any type or amount of fees or specific pricing strategies. Instead, it requires companies to truthfully disclose the full price, including all mandatory fees, in their ads.
Additionally, the rule requires companies to display the total price more prominently than other pricing information. Companies that exclude certain fees from the advertised price must clearly disclose those fees before consumers provide their payment information.
The FTC will continue to enforce laws prohibiting deceptive pricing tactics in industries beyond live event ticket sales and short-term lodging. The final rule was approved by a 4-1 vote, with Commissioner Andrew Ferguson dissenting. The rule will take effect 120 days after its publication in the Federal Register.
The FTC is dedicated to promoting competition and protecting and educating consumers. Advises consumers to report any fraud, scams or bad business practices at ReportFraud.ftc.gov.
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