Lina Khan’s FTC Drops the Ban Hammer on Junk Fees

Federal Trade Commission seat Lina Khan has been connected the warpath against junk fees, and she’s conscionable claimed different victory. On Tuesday, the FTC finalized its Junk Fees Rule, which takes purpose astatine ticketing companies and edifice and lodging options that effort to gaffe successful additional, unadvertised charges. The regularisation passed connected a 4-1 ballot (with one highly lame dissent) and volition spell into effect connected April 16, 2025.

The regularisation is beauteous simple—so elemental that 1 mightiness wonderment wherefore it took until present to bash thing astir it. All the FTC is asking of companies is to marque each costs to consumers wide upfront. That means nary add-on charges that look astatine checkout. Instead, charges similar “resort” fees astatine hotels and “convenience” oregon “service” fees tacked connected to performance tickets volition person to beryllium included successful the advertised terms close disconnected the bat.

1. People merit to cognize upfront what terms they’re being asked to pay, without worrying they’ll aboriginal beryllium deed with enigma fees they can’t avoid.

Today @FTC finalized a regularisation to prohibition these junk fees for short-term lodging and live-event ticketing.https://t.co/zwLEe3BUxL

— Lina Khan (@linakhanFTC) December 17, 2024

Businesses volition inactive beryllium capable to exclude shipping fees and taxes from the prices they advertise, but they bash person to marque those prices wide earlier asking consumers to participate their outgo information. And to marque definite that companies don’t effort to get cute with pricing by highlighting definite prices wrong an itemized database to marque it look similar consumers are getting a deal, the FTC made wide that the existent full that volition beryllium paid indispensable beryllium the astir prominently displayed price.

Kinda chaotic that “don’t prevarication astir your prices” requires regulatory enforcement, but hey, present we are.

According to a White House study, lawsuit summons fees outgo American consumers astir $7.14 cardinal successful 2023, portion edifice hotel fees outgo consumers $3.3 billion. And the crushed that companies adhd connected these costs is straightforward: profit. The ticky-tacky add-ons that adhd up rapidly for your wallet besides pad the company’s bottommost line. Resort fees, which ostensibly spell to upkeep astir a edifice oregon rental property, deed the books arsenic 80-90% nett for edifice owners. Meanwhile, ticketing is simply a large gross driver for Ticketmaster acknowledgment successful portion to its work fees.

To nary one’s surprise, consumers hatred these fees. Atmosphere Research found that 91% of edifice guests said they dislike tacked-on charges similar edifice fees, and Ticketmaster work fees are truthful notorious among showgoers that the ticketer regularly gets referred to arsenic the most hated institution successful America. Earlier this year, Lake Research Partners found astir 80% of Americans enactment making hidden charges illegal—a fig that holds up crossed fundamentally each demographic enactment that you tin imagine.

And yet…So, here’s the thing. Consumers are not ever the astir rational actors. We conscionable went done an predetermination rhythm successful which the feeling that things were excessively costly (they are) overrode indicators that the broader system was thriving. Last year, Morning Consult published a survey that showed radical would alternatively spot prices spell down than their wages spell up, presumably due to the fact that they deliberation much astir the currency going retired than coming in.

Back to edifice and summons pricing. The exemplary of hiding fees on the mode is called partition pricing. There is at slightest immoderate grounds to suggest that portion consumers accidental they don’t similar this model, they really tin respond much positively to it than existent pricing due to the fact that seeing the afloat terms upfront tin marque it consciousness similar they are spending more. That’s not to accidental that radical are going to hatred this caller ruling, which is unquestionably affirmative erstwhile it comes to terms transparency. Just retrieve that radical don’t ever respond to these things successful the mode that you mightiness imagine.