FTC Bans Hidden ‘Junk Fees’ for Hotels and Concert Tickets

The Biden administration took another step in its push to combat so-called junk fees as the US Federal Trade Commission mandated more price transparency for consumers shopping for live-event tickets and hotel rooms.

The FTC commissioners voted 4-1 to approve the new rule, the agency said in a statement Tuesday. Republican Andrew Ferguson, who is slated to take over as chair in the incoming Trump administration, was the lone dissenter.

“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,” said FTC Chair Lina Khan. She said the new rule will save Americans “billions of dollars and millions of hours in wasted time.”

In his statement Ferguson said he wasn’t objecting to the substance of the final rule, which he called an improvement over the original proposal. Instead he takes issue with the FTC moving ahead during the lame duck period.

“I dissent only on the ground that the time for rule-making by the Biden-Harris FTC is over,” he said.

Narrower Rule

The rule is far more narrow than the broad, economy wide measures the FTC had proposed last year. It also doesn’t bar any particular fees, but rather requires the disclosure of the full price up front.

Republican Commissioner Melissa Holyoak said in a statement that she is supporting the proposed rule because of its narrowed scope. “Had the commission ignored the serious legal questions presented by an economy-wide proposed rule, I would have voted against it,” she said.

According to the FTC, the rule will save consumers as much as 53 million hours each year spent searching for the true cost of tickets and lodging. That is equivalent to more than $11 billion over the next 10 years, the agency said.

The bipartisan support for the rule at the FTC will make it more difficult to overturn in the Trump administration. Any effort to rescind the rule would require the commissioners to vote again. Lawmakers could strike it down under the Congressional Review Act.

Aggressive Stance

The White House has taken an aggressive stance against junk fees, making it a key part of President Joe Biden’s economic policy. Earlier this year, the Consumer Financial Protection Bureau issued a rule capping late payment credit-card fees.

“We all know the experience of encountering a hidden fee at the very last stage of check out — these junk fees sneak onto your bill and companies end up making you pay more because they can,” Biden said in a statement. “Those fees add up, taking real money out of the pockets of Americans.”

Under Khan, the FTC has ramped up its regulatory authority, with mixed results. It proposed a sweeping ban against non-compete clauses in most employment contracts that was ultimately struck down in court. A separate rule making it easier for consumers to cancel recurring subscriptions and memberships was finalized in October.

The agency also sought to enact rules around data privacy, though those efforts stalled without further action.

To contact the reporter on this story:
Josh Sisco in San Francisco at jsisco6@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Steve Stroth, Peter Blumberg

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