The Federal Trade Commission (FTC) has issued a definitive regulation that prohibits hotels, ticketing services, and short-term rental businesses from incorporating undisclosed surcharges into their advertised prices. This new directive ensures that consumers are informed of the total cost, including any additional fees, before they commit to a purchase.
In a statement, FTC Chair Lina Khan emphasized the importance of transparency, saying, "Consumers have the right to know the exact amount they are expected to pay without the stress of unexpected fees that they have not accounted for and cannot evade." She further stated that the FTC's regulation would eliminate unnecessary fees associated with live event tickets, hotel bookings, and vacation rentals, potentially saving Americans billions of dollars and millions of hours of wasted time.
The regulation does not restrict the prices that sellers can set for their products or services; instead, it mandates that businesses must prominently display the total price, including all additional charges, more conspicuously than any other pricing details. The rule received bipartisan approval from the FTC commissioners, with Andrew Ferguson, the President-elect Donald Trump's nominee to succeed Khan as FTC chair, being the only dissenting voice.
Ferguson, who is currently an FTC commissioner, clarified that his vote against the regulation was not based on its merits but on his belief that the Biden administration's FTC should cease issuing new regulations following Trump's electoral victory. He stated, "I dissent solely on the grounds that the period for rulemaking by the Biden-Harris FTC has concluded. This outgoing Commission should allow its regulatory efforts to take a well-deserved pause." Ferguson also made it clear that his vote should not be interpreted as a reflection on the merits of the Final Rule or whether the Commission under President Trump should enforce it.
With the approval of this final rule, the FTC now has the authority to levy financial penalties against short-term rental and live-event ticketing companies that fail to disclose their complete pricing to consumers upfront. The regulation is scheduled to become effective 120 days following the announcement, which will be well after President Biden has left office. Live Nation, the parent company of Ticketmaster, the largest concert ticketing company in the United States, praised the FTC's new rule in a statement.
The company said, "We have been at the forefront of the industry by implementing all-inclusive pricing at all Live Nation venues and festivals, and we commend the FTC for its industry-wide directive, allowing fans to see the total ticket price upfront, regardless of where they choose to attend a show or purchase a ticket."
This new rule is part of a broader initiative by the FTC under President Biden's administration to combat hidden fees. Over the past three years, the FTC has taken action against companies such as Invitation Homes and Vonage for imposing junk fees on consumers. In October 2023, when the FTC introduced the initial proposal for the rule, President Biden expressed his intention to clamp down on concealed fees.
He stated during a speech in the Rose Garden, "People are tired of being exploited and made to feel like fools. These junk fees can add up to hundreds of dollars, burdening family budgets and making it more difficult to pay household bills." In the announcement on Tuesday, the FTC estimated that the junk fees rule would save consumers up to 53 million hours per year spent searching for the total cost of live-event tickets and short-term accommodations, estimating that the time saved would be worth more than $11 billion over the next decade.
Given that this latest junk fees rule was passed with bipartisan support, it may have a better chance of remaining in effect during the Trump administration. However, there have been other rules finalized by the FTC in the past year, including a ban on noncompete agreements, that have faced legal challenges from business trade associations. When these groups have been successful, the question arises as to whether the FTC will choose to appeal. If it does not, any rule in question would not be implemented.
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