The Federal Trade Commission on Tuesday issued long-awaited rules requiring companies to display the full price of a hotel room, concert ticket or sporting event up front to customers, rather than hiding any extra charges – often called “junk fees” – until the very end of the checkout process.
The new regulations seek to crack down on “bait and switch” pricing practices, according to FTC Chair Lina Khan, who said the agency has received a groundswell of complaints about service charges, amenity fees and a raft of other potentially obscure, last-minute additions to consumers’ bills.
The FTC’s rules still allow companies to impose fees, so long as they are clearly displayed. The agency also focused its prohibition on just the lodging and live-event industries, not the fuller array of firms – from airlines to internet giants – that have similarly stoked public anger.
While the FTC initially proposed broader regulations, Khan narrowed the agency’s scope in a bid to secure bipartisan support among her five-member commission, which approved the proposal on a 4-1 vote. The lone opponent was Andrew Ferguson, a Republican, whom President-elect Donald Trump intends to nominate to lead the FTC next year.
It is unclear how Ferguson would enforce the agency’s ban against hidden fees if he is confirmed by the Senate. In a dissenting statement, he blasted the agency for issuing rules “it will never enforce,” with Trump set to take office in January, but did not say how he might approach the issue as chairman.
In the meantime, Khan urged the FTC on Tuesday to consider ways to expand its oversight so that it improves pricing practices in other segments of the economy.
“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,” she said in a statement. “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.”
Khan first proposed rules targeting junk fees last October, after the agency collected thousands of complaints from consumers who expressed outrage about unwanted or unexpected charges on their apartment rentals, airline tickets, cable bills, hotel stays and more.
For many, the greatest source of ire seemed to involve concerts: Many Americans pilloried Ticketmaster and its parent company, Live Nation, for the service fees it often adds to tickets in the final stage of the checkout process. Those charges – on top of site outages, particularly during the first sales for Taylor Swift’s Eras tour in 2022 – sparked congressional hearings and legislation targeting the ticketing industry and its pricing practices.
Ticketmaster eventually agreed to display its fees more transparently as part of a voluntary industry deal brokered with the White House. The U.S. government later filed antitrust charges against Live Nation, citing its high fees as it asked a federal court to break up the company.
In targeting fees, the FTC crackdown reflects a broader campaign under President Joe Biden to try to tamp down rising prices at a time of stubbornly high inflation. Regulators at the Transportation Department have tried to improve transparency around airlines and baggage fees, for example, and watchdogs at the Consumer Financial Protection Bureau have looked to limit to penalties that Americans face for overdrawing their checking accounts or falling behind on their credit card bills.
“Wherever big corporations try to sneak fees onto bills, my administration has been fighting on behalf of American families to ban them,” Biden said in a statement Tuesday.
In response, though, lobbying groups for major airlines, banks and other industries have repeatedly challenged the government over its rules, in some cases delaying or imperiling any financial relief for Americans. Republicans in Congress, meanwhile, have signaled they could take action to repeal some of the regulations once party lawmakers assume the majority in the House and Senate in January.
(c) 2024, The Washington Post · Tony Romm