FTC bans 'bait-and-switch' hidden fees for hotel and event tickets

The Federal Trade Commission (FTC) on Tuesday announced it finalized a new junk fees rule that seeks to prohibit the use of bait-and-switch pricing and other tactics that hide fees and the total price for tickets to live events as well as hotel and vacation rentals.

"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 Khan said in a statement. "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.

"I urge enforcers to continue cracking down on these unlawful fees and encourage state and federal policymakers to build on this success with legislation that bans unfair and deceptive junk fees across the economy."

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"We all know the experience of encountering a hidden fee at the very last stage of checkout," President Biden said in a statement. "These junk fees sneak onto your bill, and companies end up making you pay more because they can. Those fees add up, taking real money out of the pockets of Americans."

The rule was approved by a 4-1 vote, with the lone dissenting vote coming from Commissioner Andrew Ferguson, a Republican appointee who will take over as the FTC's chair when President-elect Trump takes office in January.

Ferguson opposed the rule and argued that "the time for rulemaking by the Biden-Harris FTC is over." He didn't weigh in on whether the FTC should enforce the rule once Trump returns to the White House.

Commissioner Melissa Holyoak, the FTC's other Republican appointee, voted in favor of the rule and said it "helps protect consumers and competition, while also preserving flexibility for businesses to engage in lawful advertising and pricing practices."

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The rule neither prohibits any type or amount of fee, nor does it prohibit any particular pricing strategy. Rather, it requires that businesses that advertise their pricing tell consumers the whole truth up front about prices and fees.

Businesses are required by the rule to "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 rule prohibits businesses from misrepresenting any fee or charge.

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The most prominent price shown in an ad has to include the total price, and while they can display itemization and breakdowns, they can't overshadow the real total.

The rule also requires businesses that exclude allowable fees up front to clearly and conspicuously disclose the nature, purpose, identity and the amount of those fees before consumers consent to pay. 

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For example, businesses that exclude shipping or taxes from the advertised price must clearly and conspicuously disclose those fees before a consumer enters payment information.

Reuters contributed to this report.