The Federal Trade Commission (FTC) has finally intervened to put an end to the burden of junk fees on various purchases, including live event tickets, hotels, and vacation rentals. The agency has just passed the Junk Fees Rule, a significant step that aims to eliminate the deceptive pricing strategies used by companies and online platforms.
If you’re a US-based citizen, you’re quite familiar with the term “Junk Fees.” You might encounter junk fees while canceling a membership, purchasing event tickets, or paying resort fees at hotels. These kinds of fees are not often transparently disclosed to customers but add up to the final price.
As the agency notes, businesses in the United States can no longer inflate the advertised price by piles of “resort,” “convenience,” or “service” fees. Under the new law, businesses are required to be more transparent by up-front disclosure of total price, including fees. Note that companies are not prohibited from imposing junk fees.
“The FTC’s rule will put an end to junk fees around live event tickets, hotels, and vacation rentals, saving Americans billions of dollars and millions of hours in wasted time. I urge enforcers to continue cracking down on these unlawful fees and encourage state and federal policymakers to build on this success with legislation that bans unfair and deceptive junk fees across the economy.”
The FTC also requires businesses to display the final price “more prominently” than other pricing information. “This means that the most prominent price in an ad needs to be the all-in total price,” the agency said.
Finally, if shipping costs or taxes are excluded from the advertised price, businesses must clearly disclose those fees before the consumer enters their payment information.
According to the estimates by the Council of Economic Advisers (CEA), junk fees amount to $90 billion annually in the United States, which also translates to over $650 per household per year on average.
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