Earlier this month, the Federal Trade Commission (FTC) announced a final rule—dubbed the Junk Fees Rule—to address what it views as deceptive pricing practices that cause harm to consumers and that undercut other honest businesses in two specific industries. Specifically, the FTC describes its rule as one that will “prohibit bait-and-switch pricing and other tactics used to hide total prices and bury junk fees in the live-event ticketing and short-term lodging industries.” The FTC wants these types of businesses to display pricing information in a “timely, transparent, and truthful way” so that consumers can more easily comparison shop and also save significant amounts of money and wasted time.
The rule does not prohibit any type of fee, any amount of fee, or any specific pricing strategy. Instead, the FTC’s announcement explains that the rule requires things like the following:
- That businesses that advertise their pricing tell consumers the whole truth up-front about prices and fees.
- That businesses clearly and conspicuously disclose the true total price inclusive of all mandatory fees whenever they offer, display, or advertise any price of live-event tickets or short-term lodging.
- That businesses not misrepresent any fee or charge in any offer, display, or ad for live-event tickets or short-term lodging.
- That businesses display the total price more prominently than most other pricing information.
- That businesses that exclude allowable fees up front (e.g. shipping and taxes) to clearly and conspicuously disclose the nature, purpose, identity, and amount of those fees before consumers consent to pay.
For consumers of live-event ticketing and short-term lodging, this may be a cause for celebration. For advertisers, whether in these industries or not, it’s another reminder of the FTC’s power to impose rules to protect consumers and the need to keep up to date with all advertising and marketing practices.
The final rule is available here, and it is effective 120 days after publication in the Federal Register.