FTC Implements Final Junk Fees Rule

Investing.com — The Federal Trade Commission (FTC) has implemented a final Junk Fees Rule aimed at prohibiting deceptive 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 among businesses.

Key Features of the Rule

The rule, which targets bait-and-switch pricing tactics, was announced by FTC Chair Lina M. Khan. She emphasized that consumers have the right to know the full cost of a service or product upfront, without the worry of unexpected fees. The rule will help to 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.

Transparency in Pricing

The Junk Fees Rule will ensure that pricing information is presented in a transparent, truthful, and timely manner to consumers. It aims to eliminate surprise fees that often inflate the advertised price of hotels, vacation rentals, and live-event tickets. The rule mandates the upfront disclosure of the total price, including all fees, making it easier for consumers to compare prices and creating a fair competitive environment for businesses.

Development Process

The rulemaking process began in 2022, with the FTC seeking public input on whether such a rule could help eliminate unfair pricing tactics. After receiving over 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 the development of the final rule.

Estimated Savings

The FTC estimates that the Junk Fees Rule will save consumers up to 53 million hours per year, equating to more than $11 billion over the next decade. This time saving is calculated based on the time consumers spend searching for the total price of live-event tickets and short-term lodging.

Advertisement Requirements

The final rule targets specific deceptive pricing practices in the sale of live-event tickets and short-term lodging. It does not prohibit any type or amount of fee or specific pricing strategies. Instead, it requires businesses to truthfully disclose the total price, including all mandatory fees, in their advertisements.

Furthermore, the rule mandates businesses to display the total price more prominently than other pricing information. Businesses that exclude certain fees from the advertised price must clearly disclose those fees before consumers provide their payment information.

Future Enforcement

The FTC will continue to enforce laws prohibiting deceptive pricing tactics in industries beyond live-event ticketing and short-term lodging. The final rule was approved by a vote of 4-1, with Commissioner Andrew Ferguson dissenting. The rule will become effective 120 days after its publication in the Federal Register.

The FTC is dedicated to promoting competition and protecting and educating consumers. It advises consumers to report any fraudulent, scam, or bad business practices at ReportFraud.ftc.gov.

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