FTC Bans Hidden Fees for Hotel and Vacation Rental Bookings
The U.S. Federal Trade Commission (FTC) passed a rule on Tuesday to prohibit bait-and-switch pricing and other tactics used to hide total prices for hotels and short term rentals as well as live-event ticketing. The agency says that these unfair and deceptive pricing practices harm consumers and undercut honest businesses.
“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 M. Khan.
Consumers searching for hotels or vacation rentals will no longer be surprised by a pile of “resort,” “convenience,” or “service” fees inflating the advertised price. By requiring up-front disclosure of total price including fees, the rule will make comparison shopping easier, resulting in savings for consumers and leveling the competitive playing field.
This new rule does not prohibit any type or amount of fee, nor does it prohibit any specific pricing strategies. Rather, it simply requires that businesses that advertise their pricing tell consumers the whole truth up-front about prices and fees.
Here are the details of the rule, as published by the FTC:
- The Junk Fees Rule requires that businesses clearly and conspicuously disclose the true total price inclusive of all mandatory fees whenever they offer, display, or advertise any price of live-event tickets or short-term lodging. Businesses cannot misrepresent any fee or charge in any offer, display, or ad for live-event tickets or short-term lodging.
- In addition, the rule requires businesses to display the total price more prominently than most other pricing information. This means that the most prominent price in an ad needs to be the all-in total price—truthful itemization and breakdowns are fine but should not overshadow what consumers want to know: the real total.
- Finally, the rule requires businesses that exclude allowable fees up front to clearly and conspicuously disclose the nature, purpose, identity, and amount of those fees before consumers consent to pay. For instance, businesses that exclude shipping or taxes from the advertised price must clearly and conspicuously disclose those fees before the consumer enters their payment information.
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