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The Federal Trade Commission passed a rule banning so-called junk fees Tuesday. Businesses that sell tickets to live events or offer short-term lodging, such as hotels or vacation rentals, will have until the spring to begin showing consumers fees and final prices “up front,” before they pay for something.
The final rule “is narrower than what the FTC proposed in 2023,” CNBC reported, which “would have broadly banned hidden and deceptive fees regardless of industry.”
According to the commission, the new rule will improve competition by making it easier for consumers to comparison shop, “saving Americans billions of dollars and millions of hours in wasted time,” Commissioner Lina Khan said in a press release.
What it requires. The new rule says that:
- Businesses must “clearly and conspicuously disclose the true total price,” including fees, in any offer or advertisement for tickets or short-term lodging.
- In ads, they need to feature “the all-in total price” more prominently than prices not including fees.
- While the rule does let businesses wait until later in a transaction to disclose fees for shipping, taxes, and add-on purchases, they have to include them “before consumers consent to pay,” i.e., “before the consumer enters their payment information.”
The FTC can “seek civil penalties in court…to ensure that violators do not retain the profits they earn by engaging in the unfair or deceptive pricing practices prohibited by the rule.” The commission may also seek them “even in cases when it is difficult to quantify consumer harm.”
Here’s the full text for the lawyers.
Compliance deadline. The final rule will take effect 120 days after it’s published in the Federal Register, which usually only takes a few business days, so companies will probably have until sometime in the second half of April—barring any holdups.
About those holdups. “President-elect Donald Trump could seek to withdraw the rule for further review,” CNBC reported. Trump announced last week that his choice to replace Khan is current Commissioner Andrew Ferguson, who was the only no-vote on the measure. Congress can also pass a law vacating the rule. Republicans will control both chambers in January after the GOP gained a Senate majority in November’s elections.