FTC Finalizes Rule Banning Surprise 'Junk Fees' At Hotels

The Federal Trade Commission finalized a rule Tuesday to ban tactics used to hide total prices and bury so-called junk fees in the short-term lodging and live event ticketing industries.

The finalized rule requires operators in those industries to disclose the total price of their offerings and be transparent about all charges, though it doesn't prohibit specific fees or pricing strategies, according to the release.

The rule doesn't mandate the same disclosures in any other industry, although apartment and single-family rental owners had feared they would be roped in. 

“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,” FTC Chair Lina Khan said in a release. “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.”

The FTC rule requires businesses to display the total price more prominently than most other pricing information. In advertisements, the most prominent price must be the all-in total. Itemization and breakdowns are fine, but they should not overshadow the actual total, the FTC said in the release.

Junk fees refer to unexpected but mandatory surcharges for things like WiFi, phone calls, fax machines, fitness centers and parking.

The American Hotel & Lodging Association praised the FTC's decision to require more fee transparency. 

“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 and CEO Rosanna Maietta said in a release. 

The rule will become effective 120 days after it is published in the Federal Register, which would be April 2025 at the earliest, according to Multifamily Dive.

However, a Republican-led House, Senate and presidency could invalidate FTC rules, Reuters reported. 

Commissioner Andrew Ferguson, who President-elect Donald Trump has said he will appoint to succeed Khan as FTC chair following his inauguration, was the sole dissenter in the 4-to-1 vote.

The rental housing industry's exclusion from the rule is a “significant development,” according to a press release from the National Apartment Association.

“[The] rental housing transaction fundamentally differs from a typical hotel or live event ticket transaction because the landlord-tenant relationship involves an ongoing contractual relationship, typically at least a year-long commitment,” the organization said. “It is subject to extensive regulation at the state and local level and is uniquely characterized by a series of transactions as opposed to a single-point transaction.”

The organization said it would remain vigilant for future FTC efforts to regulate industry operations.