Have you ever gone to buy tickets for a sports game, only to find the price balloon by the time you reach checkout? Thanks to so-called “resort,” “convenience,” “service,” or “processing” fees, the total cost can sometimes double. In response, the FTC has announced its Rule on Unfair or Deceptive Fees (often called “junk fees”), though its final version is more limited than initially expected. Under the new rule, businesses selling live-event tickets or short-term lodging must disclose the total price—including mandatory fees—upfront in their advertising. This covers tickets to concerts, sporting events, musicals, performing arts shows, and stays at hotels, motels, inns, and short-term rentals listed on platforms like Airbnb or VRBO. The rule applies to both consumer and business-to-business transactions.
The FTC’s reasoning aligns with its longstanding position that “price is material” to a consumer’s decision. The agency has been transparent that misrepresenting a good or service’s price is deceptive. Despite prior rules, statements, and enforcement actions, many companies still engage in widespread deceptive fee practices, making it harder for consumers to know the actual cost of an event or lodging. The FTC describes this pattern as a classic “bait-and-switch”—attracting customers with a low initial price, then revealing the higher cost after the consumer has invested time and effort. With 79% of surveyed consumers favoring the new rule, the FTC aims to restore honest pricing and level the playing field for “good actors” in these industries.
Issued under Section 18 of the FTC Act, the rule targets “drip pricing,” requiring businesses to disclose the total price (including mandatory ancillary goods or services) for live-event tickets or short-term lodging. This “Total Price” must be more prominent than any itemized breakdown. The rule also prohibits misrepresenting fees or charges. Only mandatory fees must be included in the total price; truly optional fees are excluded. The FTC declined to define “mandatory fees” broadly, stating that it would depend on the specific facts. Government-imposed and shipping charges may be listed separately, and credit card or processing surcharges can be excluded if customers are not forced to use that payment method. However, any credit card surcharge must be disclosed before the consumer agrees to pay.
The rule also forbids misrepresenting the nature, purpose, or amount of fees and their refundability. While the FTC does not dictate pricing, if the amount charged does not reflect the actual cost of the good or service, it may indicate that the fee’s purpose or nature was misrepresented.
Because this rule is issued under Section 18, the FTC can seek court-ordered consumer redress—something impossible under Section 13(b) after the Supreme Court’s AMG Capital Management decision. The rule also enables the FTC to pursue civil penalties against violators, providing multiple avenues of enforcement and, the agency hopes, more substantial incentives for businesses to comply.
Notably, the FTC narrowed the rule’s scope to live-event ticketing and short-term lodging rather than adopting a more industry-agnostic approach. The Commission determined that the evidence of deceptive pricing practices in these two sectors was substantial enough to warrant immediate action.
Finally, while state laws remain in place, they are only preempted to the extent that compliance with the FTC rule and the state law is impossible or would undermine the rule’s purpose. In cases where a state law offers lesser protection, businesses can easily comply with both. The FTC reaffirmed its commitment to working alongside states to curb unfair and deceptive pricing disclosures.
The rule will be effective 120 days after it is published in the Federal Register.
Key Takeaways for Businesses:
- Total Price Disclosure: If you sell live-event tickets or short-term lodging, you must display the total price (including all mandatory fees) upfront in advertising and offers. This total price should be more prominent than any itemized breakdowns.
- No Hidden or Misleading Fees: Any fees or charges must be accurately represented. Misrepresenting the nature, purpose, or amount of a payment or making it appear mandatory when it is not a risk violation.
- Optional vs. Mandatory Fees: Only mandatory fees must be included in the total price. Optional extras and surcharges (like specific payment processing fees) can be listed separately, but you must disclose them and ensure customers are not forced to use fee-adding options.
- Prominent and Honest Pricing: The FTC’s stance reinforces that price transparency and honesty in fee presentation are critical. Businesses that continue “bait-and-switch” tactics or fail to disclose total costs fully may face enforcement actions, customer redress, equitable monetary relief, and penalties.
- Compliance and Enforcement: This new rule allows the FTC to seek civil penalties and consumer redress more easily. Ensuring compliance now can help avoid costly legal and reputational consequences later.
The CommLaw Group Can Help!
Given the myriad of compliance questions, including how to advertise prices and comply with State and Federal requirements, The CommLaw Group has a team ready to answer your questions and help you navigate your business teams through changes to its advertising, operations, and practices.
Susan Duarte – Tel: 703-714-1318/ E-mail:sfd@commlawgroup.com
