The Federal Trade Commission (FTC) today announced a new rule that will prohibit apps and websites in the hotel and events industry from using hidden fees to engage in “bait and switch” pricing.
The agency found that it was common practice for companies to display a misleading price that was then inflated by hidden costs, such as booking fees and resort fees, that were only revealed during the checkout process …
Companies will not be prohibited from using the unwanted fees, but they will have to include them in headline prices that they show consumers at the outset, so the price shown up front is the total price you pay.
The FTC first began consulting on the issue in 2022 and received more than 12,000 comments about hidden fees and misleading prices. Another 60,000 comments were made after the agency announced its plans.
The FTC argues that disclosing real prices will make it easier to compare prices and prevent consumers from wasting time.
The Junk Fee Rule ensures that pricing information is provided in a timely, transparent, and truthful manner to consumers of live event tickets and short-term lodging — two industries whose pricing practices the Commission has specifically examined.
Consumers looking for hotels, vacation rentals, or seats at a show or sporting event will no longer be surprised by a bunch of “resort,” “amenity,” or “service” fees that inflate the advertised price. By requiring upfront disclosure of the total price, including fees, the rule will make it easier to compare prices, resulting in savings for consumers and a level competitive playing field […]
The FTC has estimated that the unwanted fees rule will save consumers up to 53 million hours a year wasted searching for total prices for live event tickets and short-term lodging.
In addition to apps and websites, the rule will also apply to advertisements, so businesses will not be allowed to advertise a price unless it includes all of the fees a customer would have to pay to actually make a reservation.
While the rule specifically targets the hospitality and events sectors, the FTC says it is already illegal for businesses in general to deceive customers about the actual prices of the goods and services they offer, so it will continue to use its enforcement powers in other areas.
The law will go into effect 120 days after publications.
Photo: Yvette de Wit on Unsplash
