FTC's Junk Fee Crackdown Now in Effect: What It Means for Travelers

Take that junk fees. 

A new FTC rule banning historically deceptive practices surrounding travel industry junk fees took effect May 12.

The rule specifically addresses the annoying surprise fees that inevitably show up on your final tab when booking short-term lodging, such as hotels and vacation rentals, as well as the similar fees tacked on to the final price of a ticket for live events such as concerts, sporting events and more.

The new measure requires businesses in each industry to clearly and conspicuously disclose all fees associated with a purchase up front, rather then slipping them in at the end of the purchase journey.

In particular, the FTC’s final rule surrounding junk fees bans four unpopular pricing practices:

• Failing to disclose “clearly and conspicuously” the “true total price inclusive of all mandatory fees” charged whenever a business “offer[s], display[s], or advertise[s] any price;”
• Failing to display the total price “more prominently” than “most other pricing information;”
• Misstating the cost or fees for any live-event tickets or short-term lodging;
• Misstating the identity of any good or service offered


  
  

“The Rule prohibits bait-and-switch pricing and other tactics used to hide total prices and mislead people about fees in the live-event ticketing and short-term lodging industries,” the FTC says in a post on its website. “These unfair and deceptive pricing practices can harm consumers and undercut businesses trying to compete fairly on price.”

It’s important to note however, that the rule is a disclosure rule, not a substantive rule. 

Translation: The ruling won't save you any money. It simply covers how prices must be displayed. But it does not bar companies from charging the junk fees in the first place or govern how much the fees can be.

As the law firm Morgan Lewis explained on its website the “rule neither caps the amount that a covered business may charge for any good or service nor bars businesses from itemizing various fees, provided such fees are clearly and conspicuously disclosed at the outset of the transaction and do not ‘overshadow’ the total price.”

The FTC suggests that this approach “preserves flexibility for businesses by not prohibiting any type or amount of fee or specific pricing strategies.”

“Rather, it requires that businesses that advertise prices tell consumers the whole truth up-front about total prices and fees,” adds the FTC.

Additionally, while the new rule strictly applies to live-event ticketing and short-term lodging only, the FTC has warned companies in other industries of the broad authority provided by the new measure under Section 5 of the deceptive pricing practices.

The new rule also authorizes civil penalties of up to $51,744 per violation—a cap adjusted annually for inflation.

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