The Federal Trade Commission (“FTC”) has announced its narrowed “Junk Fee” Rule that targets pricing practices in the short-term lodging and live-event ticketing industries.[1] The Rule results from the FTC’s efforts over the past year to ban so-called “bait-and-switch” pricing tactics to ensure that, “consumers searching for hotels or vacation rentals or seats at a show or sporting event will no longer be surprised by a pile of ‘resort,’ ‘convenience,’ or ‘service’ fees inflating the advertised price.”[2]

The Rule requires businesses to disclose total price, inclusive of all mandatory fees, whenever offering, displaying, or advertising the price of live-event tickets or short-term lodging.[3] This effectively bans “hidden” fees, as the total price must be prominently displayed upfront on any ticketing, hotel, or short-term rental website or marketing.

The Rule will go into effect 120 days after publication in the Federal Register.[4]

Who Does the Rule Apply To?

The Rule applies to businesses engaged in the sale of (1) live-event tickets or (2) short-term lodging, which includes hotels, motels, inns, and vacation rentals.[5]

Notably, this rule applies to both business-to-consumer and business-to-business transactions.

What Are the Key Aspects of the Rule?

1. Businesses must prominently disclose the total price and final payment price of goods and services.

The Rule requires that when offering, displaying, or advertising their goods or services, businesses display the “Total Price” more prominently than any other information relating to price.[6] “Total Price” is defined as the summation of costs for the goods or service, related fees, and mandatory purchases. Total Price does not include government charges (e.g., taxes), shipping charges, or charges for “optional ancillary goods or services.” [7] Ancillary goods and services are defined as any additional goods or services offered to a consumer as part of the same transaction.[8]

For example, if a live-event ticket is $100, the service charge is $5, and an optional T-Shirt is “$20,” the Total Price is $105 because the T-Shirt is an optional ancillary good.

However, where the “Final Amount” (which includes the Total Price and taxes, shipping charges, and costs of other goods) is displayed, the Final Amount must be just as or more prominently displayed than the Total Price.[9]

For example, if a live-event ticket is $100, the service charge is $5, shipping is $3, and taxes are $2, the Total Price is $105, and the Final Amount is $110. Therefore, $110 must be displayed just as or more prominently than $105.

2. Businesses must disclose the purpose of fees or charges not included in the Total Price.

Businesses must provide clear and conspicuous disclosure of the nature, purpose, and amount of any fee that is not included in the Total Price or Final Amount (e.g., shipping charges, taxes etc.).[10]

Clear and conspicuous disclosure is defined by the FTC as easily noticeable, difficult to miss, and easily understandable to ordinary consumers.[11]

Specific guidelines provided by the FTC include:

•  All communications must use language that is easily understandable and consistent.
•  Solely visual or audible communication. The disclosure must be presented through the same means as the communication. [12] Visual disclosures must stand out from accompanying text and audible disclosures (e.g., on a telephone call) must be delivered in a volume, speed, and cadence that can be easily understood. [13]
•  Both visual and audible communication (e.g., a television ad). Disclosures should be presented in both the visual and audible parts of the communication. [14]
•  Online communications. For communications on the Internet, mobile applications, or software, disclosure must be unavoidable.

3. Misrepresentations related to the purpose of a fee are prohibited.

The Rule prohibits misrepresenting (1) any fee or charge including the nature, purpose, amount, or refundability of such fee or charge and (2) the identity of the good or service for which the fee or charge is imposed. [15]

What are the penalties for noncompliance?

Once the rule is in effect, noncompliance will subject sellers to civil penalties of more than $51,744 per violation based on the FTC’s 2024 penalty thresholds.[16]

The Rule may also be used as a basis for enforcement of state unfair trade practice statutes.

For example, violations of the Rule may also be deemed violations of the Connecticut Unfair Trade Practices Act (“CUTPA”).  CUTPA, Conn. Gen. Stat. § 42-110a et seq., provides for government enforcement by the Commissioner of the Consumer Protection and the Attorney General, who possess the authority to obtain administrative (DCP) or court ordered (AG) injunctive relief, restitution and/or civil penalties. CUTPA also authorizes private persons, in appropriate circumstances, to obtain one or more of the following, including in the form of class actions: injunctive relief, compensatory damages, punitive damages, and a reasonable attorney’s fee.

The Road Ahead

Notably, Commissioner Ferguson, President-elect Donald Trump’s nominee for FTC Chair, dissented to the Rule on the grounds that it was inappropriate for the FTC to pass the Rule less than a month before the Biden administration leaves office.[17] Ferguson explained that his dissent was on “grounds having nothing to do with the merits of the Final Rule, or with its compliance.”[18]

Legislators across the country have been introducing bills to combat “junk fees” in various industries, and this Rule may accelerate that trend. For instance, in 2023, the FTC passed the Combating Auto Retail Scams (CARS) Rule, which mandates that auto-dealers comply with disclosure requirements and prohibits certain types of charges.[19] In 2024, California also passed a law making it an unfair and deceptive act to “advertise, display, or offer a price for a good or service that does not include all mandatory fees or charges other than taxes or fees imposed by a government on the transaction.”[20]

Wiggin and Dana possess extensive knowledge and experience in navigating both federal and state consumer protection laws and regulations, including the many Guides and Trade Regulation Rules adopted by the Federal Trade Commission.

Verbum Sat Sapienti Est.[21]

[1] Federal Trade Commission, Proposed text of Federal Register Publication, (December 17, 2024), https://www.ftc.gov/legal-library/browse/federal-register-notices/trade-regulation-rule-unfair-or-deceptive-fees

[2] Federal Trade Commission, Federal Trade Commission Announces Bipartisan Rule Banning Junk Ticket and Hotel Fees: Rule targets bait-and-switch pricing for live-event tickets and short-term lodging, (December 17, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/12/federal-trade-commission-announces-bipartisan-rule-banning-junk-ticket-hotel-fees

[3] 16 C.F.R. § 464.2-3

[4] Federal Trade Commission, Proposed text of Federal Register Publication, pg.1, (December 17, 2024), https://www.ftc.gov/legal-library/browse/federal-register-notices/trade-regulation-rule-unfair-or-deceptive-fees

[5] 16 C.F.R. § 464.1(8)

[6] 16 C.F.R. § 464.2(b)

[7] 16 C.F.R. § 464.1

[8] Id.

[9] 16 C.F.R. § 464.2(b)

[10] 16 C.F.R. § 464.2(c)

[11] 16 C.F.R. § 464.1(1)

[12] 16 C.F.R. § 464.1(1)

[13] 16 C.F.R. § 464.1(2)-(3)

[14] 16 C.F.R. § 464.1(1)

[15] 16 C.F.R. § 464.3

[16] 16 C.F.R. § 1.98(d) Note that, the FTC may announce a different penalty figure in 2025.

[17] Andrew N. Ferguson, Dissenting Statement of commissioner Andrew N. Ferguson Regarding the Unfair or Deceptive Fees Rulemaking, pg.1, (December 17, 2024), https://www.ftc.gov/legal-library/browse/cases-proceedings/public-statements/dissenting-statement-commissioner-andrew-n-ferguson-regarding-unfair-or-deceptive-fees-rulemaking.

[18] Id.

[19] 16 C.F.R. § 463

[20] California Senate Bill 478 (SB 478)

[21] “A Word to the Wise is Sufficient.”