New FTC Rule Aims to Eliminate Hidden Fees for Concerts, Sports, Hotels, and Rentals
Starting May 12, a new Federal Trade Commission (FTC) rule mandates upfront pricing for online ticket purchases for live events and short-term lodging, including hotels and vacation rentals. This rule seeks to eliminate the frustration of surprise fees that inflate the final cost at the end of the transaction. Concertgoers, sports fans, and vacationers should now see the total price, including mandatory fees, displayed upfront before proceeding to checkout.
The new rule directly addresses the common practice of businesses advertising a base price and then adding hidden fees later in the process. These fees often mask the true cost, making it difficult for consumers to compare prices and make informed decisions. Under the new regulations, any mandatory fees, such as hotel towel fees or vacation rental cleaning fees, must be included in the initially advertised price.
While the rule aims to provide greater price transparency, it doesn’t eliminate all additional costs. Optional fees, like parking at a hotel or event insurance, are not required to be disclosed upfront. Similarly, taxes and shipping charges can still be added at checkout. Businesses can also continue to use dynamic pricing strategies, adjusting prices based on demand or inventory, as long as the pricing information is not misleading.
The FTC voted 4-1 in favor of the new rule in December. Republican commissioner Andrew Ferguson dissented, not opposing the rule itself but objecting to the timing of the regulation under the Biden-Harris administration. Ferguson, now head of the FTC under President Trump, argued that the administration’s regulatory actions had hindered economic growth and increased costs for consumers.
The FTC’s commitment to enforcing the new rule remains to be seen. Companies that violate the rules could face orders to comply, refund money to consumers, and pay civil penalties. The FTC released an FAQ on May 5 to provide consumers with detailed information about the new requirements.
Consumer advocates applaud the new rule, citing the detrimental impact of hidden fees on budgeting and price comparison. Teresa Murray, director of the Consumer Watchdog office for U.S. PIRG, criticized companies for exploiting consumers with "gotcha fees." She emphasized that upfront pricing promotes fair competition and prevents bait-and-switch tactics.
The FTC’s rule applies broadly to any business that offers, displays, or advertises live-event tickets or short-term lodging, including third-party platforms, resellers, and travel agents. It covers both companies selling tickets on behalf of venues or promoters, such as Ticketmaster, and secondary sellers, such as StubHub or SeatGeek. However, prerecorded performances and film screenings are generally not considered live events and are therefore not covered by the rule.
The new regulation, dubbed the "Junk Fees Rule," allows businesses to exclude taxes, shipping charges, and optional fees from the upfront price. For example, event insurance, which provides reimbursement for missed events, would not be included in the initial price display. Consumers should still be prepared for price increases at checkout due to taxes and other optional add-ons.
Some companies have already begun implementing changes in anticipation of the new rule. Marriott hotels, for instance, claim to have started displaying all-in prices, including non-government fees, in May 2023. Airbnb introduced an optional toggle that allows customers to see a total price calculation that includes fees, excluding taxes. While Airbnb displays the total price by default, users can still view a breakdown of the service fee at checkout.
Despite these early adopters, transparency remained inconsistent across platforms before the rule’s implementation. A test search on Ticketmaster on May 5 for Cyndi Lauper farewell tour tickets revealed service fees only during the checkout process, adding a significant amount to the initial ticket price. As of May 7, Ticketmaster had updated its site to display all-in prices, including service fees, upfront. SeatGeek also announced plans to comply with the new rules, displaying ticket prices that include all fees upfront before checkout.
The FTC also prohibits companies from misrepresenting fees. Vague terms like "convenience fees," "service fees," or "processing fees" are discouraged. The FTC provides examples of misrepresentation, such as a hotel charging an "environmental fee" without using the funds for environmental purposes or a ticket seller claiming a "usage fee" is government-mandated when it is not. The FTC also cautions secondary ticket sellers against inflating government taxes and fees to include a profit margin.
Consumer advocates advise continued vigilance even with the new rule in place. Teresa Murray recommends consumers be wary of fees with official-sounding names that may appear mandatory. She urges consumers to inquire about the purpose of any unclear fees, request written explanations, and ask about opt-out options. She also recommends documenting communications with company representatives and paying with credit cards for added consumer protection.
The new rule also requires transparency regarding other fee-related information, such as whether a fee is refundable. By eliminating hidden fees and promoting upfront pricing, the FTC aims to create a more transparent and fair marketplace for live events and short-term lodging. The result could be a less frustrating, and potentially more affordable, summer for consumers.
