The Federal Trade Commission announced on Tuesday a final rule to ban ticket sellers and hotels from tacking on hidden fees at checkout.
The hidden “service fees” or “resort fees” must be included in the total price of the ticket or hotel purchase up front. The 4-1 vote in favor of the rule was bipartisan. The FTC said it hopes the upfront disclosure will make comparison shopping easier and result in savings for consumers and a more level market.
“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 Chairwoman Lina Khan said. “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.”
The FTC began its rulemaking process for this final rule in 2022 and received some 12,000 public comments regarding hidden or misleading fees. Last year, the agency announced the proposed rule and received 60,000 more comments.
The FTC predicts this final rule will save consumers up to 53 million hours per year of wasted time.
President Joe Biden, whose administration has made targeting “junk fees” a priority, praised the move on Tuesday.
“We all know the experience of encountering a hidden fee at the very last stage of checkout — these junk fees sneak onto your bill, and companies end up making you pay more because they can,” he said. “Those fees add up, taking real money out of the pockets of Americans.”
Andrew Ferguson, the commissioner who voted against the rule, is President-elect Donald Trump’s selection to replace Khan as chairman of the FTC.
Ferguson said his dissent has nothing to do with the merits of the final rule but “only on the ground that the time for rulemaking by the Biden-Harris FTC is over.”
“This lame-duck Commission should give its regulatory pen a much-needed rest, focus on routine law enforcement, and prepare for an orderly transition,” he said.
The Public Interest Research Group, a consumer advocacy organization, also applauded the final rule but wished it had gone further to include fees on things such as airline tickets and cellphone bills.
“This isn’t about capping fees that businesses charge. It’s about requiring transparency,” said Teresa Murray, consumer watchdog director for PIRG. “Consumers deserve honesty, fairness, and the ability to make informed buying decisions.”
The latest final rule is part of a broader crackdown on corporate practices the administration deems unfair.
In October, the FTC announced another final rule that makes canceling a subscription just as easy as it was to sign up for. The “click-to-cancel” rule applies not only to subscription services but also to the ability to cancel things such as memberships efficiently.
In August, the White House announced a new multiagency initiative aimed at curbing the use of corporate practices that aggravate customers by wasting their time, such as long hold times to cancel subscriptions and the overuse of automated chatbots.
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The Consumer Financial Protection Bureau also announced new guidance last year to block large banks from charging excessive or “junk” fees for providing basic customer service.
The CFPB also announced a rule this year that would force most banks to cap credit card late fees at $8. The CFPB said fees cost consumers $14 billion per year and that the new rule would go far toward curbing that, saving consumers an estimated $10 billion annually.