Biden Junk Fee Rule Holds Staying Power Under Trump Populism (2)

The Federal Trade Commission’s new restrictions on “junk fees” are well-positioned to survive the transition to President-elect Donald Trump and GOP lawmakers who ran as populists, even if companies subject to the rule sue to block it.

The final rule, announced Tuesday, bars live event ticket brokers, hotels, and other short-term lodging providers from hiding fees when listing prices. Instead, those companies will have to provide an all-in price so that customers aren’t surprised by the total at checkout.

The agency narrowed its proposal, which had called for a broad ban on fees. The final rule focuses on mandating disclosures from two industries—event ticketing and hotels—that have drawn the ire of the public and lawmakers from both parties, such as after a botched sale of Taylor Swift tickets.

Those changes and the lack of a price cap may give the rule some staying power, said John M. Yun, a professor at George Mason University’s Antonin Scalia Law School.

“On that dimension, it’s hard to argue that this is a bad thing, per se,” he said.

No Fee Limits

The FTC’s rule is part of a broader Biden administration effort to cut down junk fees.

But unlike the Consumer Financial Protection Bureau’s $5 cap on overdraft fees finalized last week, the FTC isn’t limiting how much companies can charge for resort fees at hotels or servicing fees for concert or sporting event tickets.

That allowed one Republican FTC commissioner, Melissa Holyoak, to support the rule.

“By narrowing the Final Rule to focus only on live-event ticketing and short-term lodging, the Commission marshals empirical evidence sufficient to demonstrate the prevalence of these unfair and deceptive practices,” Holyoak said in a written statement.

‘Common Sense’

The one dissent on the commission came from Andrew Ferguson, Trump’s choice to lead the FTC following the presidential transition.

Ferguson didn’t object to the rule on its merits, saying in a written statement that the rule addresses practices in industries where the FTC was able to find misconduct.

Ferguson objected instead to outgoing FTC Chair Lina Khan pushing the rule through in the Biden administration’s waning days.

The Trump administration “should have the opportunity to decide whether to adopt rules that it, not the Biden-Harris FTC, will be called upon to enforce,” Ferguson’s statement said.

Ferguson’s objection for political reasons gives consumer advocates hope that the rule will survive the Trump administration’s promised deregulatory push and a potential repeal using the Congressional Review Act.

The CRA allows simple majorities in both houses of Congress to vote to repeal a rule if the president signs off. Trump has indicated he will sign any CRA resolutions that hit his desk, as during his first administration.

The GOP-controlled House in the 118th Congress passed the No Hidden FEES Act (H.R. 6543) mandating hotel and short-term rental fee disclosures and the TICKET Act (H.R. 3950) targeting hidden ticket fees, making a CRA resolution unlikely. While those bills didn’t advance in the Senate, similar provisions were included in the continuing resolution House leaders released late Tuesday to avert a government shutdown.

“Corporate lobbyists and industry special interests may try to block this rule, but the effort to eliminate the practice of junk fees will continue in Washington and in dozens of states across the country where laws to eliminate them are gaining momentum,” said Lindsay Owens, executive director of Groundwork Collaborative, a Washington D.C.-based economic policy think tank.

The FTC said its rule will save American consumers up to 53 million hours each year that they otherwise would’ve spent searching for the true price of a ticket, hotel room, or vacation rental. That’s the equivalent of around $11 billion over a decade, the FTC said.

For an incoming Trump administration attempting to hit populist messages, the FTC’s junk fee rule may fit.

“It is a very common-sense rule,” said Christine Hines, the senior policy director at the National Association of Consumer Advocates. “People hate being nickel-and-dimed.”

Lawsuit Risk

Surviving the Trump administration’s deregulatory efforts is one thing. Overcoming the potential legal gantlet is another.

Several industry players most likely to challenge the FTC, including the US Chamber of Commerce, didn’t publicly comment shortly after the rule’s release Tuesday.

Some companies took their own initiative to disclose more information about costs upfront, amid the wave of public anger over fees following the Swift fiasco. Ticketmaster parent Live Nation Entertainment Inc. moved all of its concert venues and festivals to all-in pricing that includes fees, which the company says has boosted sales and benefited artists.

“We’ve led the industry by adopting all-in pricing at all Live Nation venues and festivals and applaud the FTC’s industry-wide mandate so fans will now be able to see the total price of a ticket right upfront no matter where they go to see a show or buy a ticket,” Live Nation said in a statement.

The American Hotel & Lodging Association said it supported both the FTC’s rule and the inclusion of fee transparency provisions in the stopgap spending measure slated to pass this week.

“For years, AHLA has been leading the charge to establish a single, federal standard for lodging fee display across the industry because consumers deserve to have transparency no matter where or how they book their stays,” AHLA President & CEO Rosanna Maietta said in a Tuesday statement.

The National Association of Ticket Brokers in a Wednesday statement said it supported the rule as finalized.

The Chamber led opposition to the initial proposal and has been willing to sue other agencies, such as the CFPB, over Biden administration priorities.

But the changes the FTC made to its proposal, along with substantive support from Republican commissioners, could shield the law from industry challenges to the rulemaking process, Hines said.

“These are also big industries so they will not be happy about it, but in terms of surviving whatever’s in its way, the rule should survive,” she said.