The Federal Trade Commission is cracking down on hidden “junk fees,” issuing a rule that forces companies to disclose the whole cost of a service or event upfront.
The Junk Fees Rule, issued Tuesday, bans bait-and-switch pricing tactics used to disguise the total price of a product before checkout. The FTC says the new rule will make it easier for customers to compare prices on live events and short-term lodging.
“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,” FTC Chair Lina Khan said. “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.”
Under the rule, businesses must display the total cost in a “timely, transparent and truthful” position and must clearly disclose any additional fees before customers enter payment information.
The FTC launched an investigation into “junk fees” in 2022 and received over 12,000 complaints from customers detailing how the fees affected their spending. The commission proposed an official rule on hidden fees in October 2023 and received an additional 60,000 complaints.
The commission estimates the rule will save consumers around $11 billion over the next decade.
Tuesday’s announcement could be one of the final rulings under Ms. Khan’s leadership before President-elect Donald Trump enters the White House next month. He has nominated Andrew Ferguson, currently serving as an FTC commissioner, to replace Ms. Khan. Mr. Ferguson was the only commissioner to vote against Tuesday’s rule.
