New FTC Rule To Ban Junk Fees, Provide Greater Consumer Transparency

By Joe O’Leary

December 19 @ 5:00 am

The Federal Trade Commission recently announced its finalization of a new rule that would prevent hotels, rental properties and live event ticketers from springing “junk fees” on shoppers that spike overall costs right before they check out.

Under the FTC’s new rule, which is slated to go into effect in the spring of 2025, these sought-after, often-expensive items cannot advertise one price, then bait-and-switch the buyer at the last minute. The rule prevents sellers from notifying buyers of “convenience” fees, cleaning costs and other costly fees right before a purchase is finalized; instead they need to be advertised upfront in the overall cost of the product in question.

Increasing outcry over junk fees has boiled for a few years now. The Biden administration started focusing on the issue in 2022, and after widespread frustration when tickets for Taylor Swift’s billion-dollar “Eras Tour” went on sale, the issue inspired lawmakers nationwide, and various state legislatures have imposed laws to ban junk fees.

In Connecticut, Senate Democrats proposed new rules related to junk fees as part of Senate Bill 3, which passed the state Senate but was not raised for a vote in the House. The bill would have ended the practice of junk fees by requiring an approach similar to the FTC’s new rule, though it would have included more businesses.

“Last year, we came so close to preventing junk fees from frustrating Connecticut consumers,” said Connecticut Senate Majority Leader Bob Duff. “I’m heartened to know the FTC is focused on this issue as well. Junk fees waste time and money for people who are just trying to make a simple purchase. They should be outdated, and thanks to this important action, they will be.”

According to U.S. News and World Report, junk fees take a variety of forms, with concert tickets, hotels and vacation rentals representing just some of the most common examples. Other forms that have drawn ire in past years include fees charged by airlines to seat families together and the all-too-common out-of-network ATM fee. These fees are usually revealed at the last moment, when a consumer is about to make a purchase, with the assumption that the consumer will accept the additional costs in the process of completing that purchase.

Under the FTC’s new rule, the only fees that can be disclosed later are taxes, shipping and fees for optional goods and services selected by a consumer. It will also apply to business-to-business transactions.

The FTC said the new rule will apply to all businesses, meaning tickets to concerts, sporting events, musicals and performing arts shows will be covered, as will rentals through platforms including Airbnb, VRBO, hotels and other rentals. It does not apply to long-term rentals.

FTC Chair Lina Khan told ABC News that the rule is intended above all else to emphasize transparency and honesty in the business environment. The FTC said that the final rule is expected to save consumers up to 53 million hours in time saved, as junk fees often spur shoppers to seek other tickets or products from other companies.