A move aimed at increasing price transparency for consumers, the Federal Trade Commission (FTC) finalized a rule on December 17, 2024, that will require operators in the short-term lodging and live event ticketing industries to disclose the total price of their offerings, making any additional charges or fees clearly visible to the consumer. The rule, which is set to go into effect in April 2025, seeks to combat the widespread practice of “junk fees”—unexpected, mandatory surcharges that have long been a source of frustration for consumers.
The Problem with Hidden Fees
For years, consumers in industries such as hotels, vacation rentals, and live event ticketing have encountered unexpected fees that inflate the final price of their purchases. These charges—often related to amenities like WiFi, parking, phone calls, fitness centers, and even basic services like towel rentals—are frequently added on after the initial price has been advertised. These “junk fees” are typically not disclosed upfront and can significantly impact the consumer’s budget, as the total cost of the transaction is often buried in fine print or provided as an itemized list at the last stage of the purchasing process.
The new FTC rule aims to change that by requiring businesses in these sectors to present the total price, including all mandatory charges, as the most prominent price in all advertising materials. Although businesses can still itemize and break down these fees, the total price must be highlighted so that consumers are fully informed before committing to a purchase.
FTC Chair Lina Khan expressed the importance of the rule, stating, “People deserve to know up-front what they’re being asked to pay—without worrying that they’ll later be saddled with mysterious fees that they haven’t budgeted for and can’t avoid.” By enforcing this rule, the FTC estimates that consumers could save billions of dollars annually and countless hours spent trying to navigate opaque pricing practices.
The New Rule and Its Impact
The finalized rule has significant implications for the short-term lodging and live event ticketing industries. It mandates that businesses must display the total price—including all taxes, fees, and charges—prominently, ensuring that this figure stands out in advertisements and booking systems. While businesses are still allowed to list additional charges, such as cleaning fees for vacation rentals or service fees for tickets, the full, all-in price must be clearly visible before a consumer completes the transaction.
For example, if a hotel room is advertised for $100 per night, the new rule would require that the ad show a total price that includes any mandatory fees for WiFi, parking, or resort amenities—allowing the consumer to see the full cost upfront. This eliminates the common practice of luring customers in with a deceptively low price, only to surprise them later with substantial fees added to the final bill.
The rule also ensures that the total price is displayed in a way that is difficult for businesses to bury or overshadow. In previous pricing schemes, the final price could be hidden in small print or shown as an add-on during the final stages of the booking process. Under the new rule, the all-in total price must be the most prominent number, with itemizations or breakdowns of the additional fees listed separately but not in a way that diminishes the importance of the total.
Exclusion of the Rental Housing Sector
While the rule is a win for consumers in the short-term lodging and live event ticketing sectors, it does not extend to the rental housing industry—an outcome that many rental housing owners and organizations had feared. The National Apartment Association (NAA) welcomed this exclusion, stating that the rental housing sector is fundamentally different from the industries covered by the FTC’s rule.
Unlike hotels or ticket sales, which involve a one-time transaction, rental housing typically involves an ongoing, long-term contractual relationship between the landlord and tenant, often lasting a year or more. The NAA argued that the rental housing model is governed by extensive state and local regulations and that fees in rental agreements are generally more transparent due to the nature of the lease agreement.
Despite the exclusion, the NAA has vowed to remain vigilant, recognizing that future FTC efforts could target the rental housing sector. For now, the rule’s lack of applicability to the rental housing market is a relief for many operators, but they remain watchful of any potential changes in the future.
Support and Opposition
The rule has received broad support from various consumer advocacy groups and industry leaders who have long argued that hidden fees harm consumers and disrupt market fairness. The American Hotel & Lodging Association (AHLA) praised the FTC’s decision, with CEO Rosanna Maietta emphasizing that transparency is crucial for consumers, regardless of where or how they book their accommodations.
On the other hand, not everyone is in favor of the new regulation. Commissioner Andrew Ferguson, who is expected to be appointed as the next FTC chair by President-elect Donald Trump, was the sole dissenter in the 4-to-1 vote. Ferguson expressed concerns about the broader implications of the rule and its potential impact on the economy.
Future Implications
The new rule is a significant step toward addressing consumer concerns about hidden fees, but it also raises questions about the future of fee regulation. As the FTC prepares to implement the rule in April 2025, the real test will be in its enforcement and whether other industries, such as rental housing, will eventually fall under similar transparency requirements.
For now, short-term lodging and live event ticketing companies will need to overhaul their pricing strategies, ensuring they comply with the new rules. As the rule takes effect, businesses will likely face challenges in adapting to the new disclosure requirements, but the long-term benefits for consumers and the market as a whole could be substantial.
In conclusion, the FTC’s rule represents a significant shift in how businesses will advertise prices in the short-term lodging and live event ticketing industries. By forcing greater price transparency and discouraging the practice of hiding fees, the FTC is addressing a longstanding issue that affects millions of consumers every year. As the rule goes into effect, the hope is that it will lead to more fairness in pricing and a better overall experience for consumers.
Comentarios