What you need to know about the FTC’s crackdown on hidden fees
- Significant changes took effect May 12 for how prices are listed online for tickets, hotels, motels and vacation rentals.
- FTC isn't banning extra fees but consumers will need to be told prices upfront.
Since May 12, the price that concertgoers and sports fans initially see advertised for a ticket online should be the price that they actually end up paying. The same is true for those who are booking a hotel room or a rental for their summer vacation.
No more surprise fees. No more hidden fees. No more wondering what you'll really end up paying until the very end of the deal when you buy a ticket online for a sizzling concert this summer, like the Grand National Tour with rapper Kendrick Lamar and R&B singer SZA, or, say, book a stay in Boston.
"If a hotel requires guests to pay for towels, the hotel must include the towel fee in the total price," according to the Federal Trade Commission.
Sure, you still must ask how much it costs to park your car at a given hotel when you're trying to compare the cost of hotel stays. Such optional fees aren't disclosed in advance as part of the new rules.
But will this hotel suddenly charge you a $35 or $50 resort fee each night — sometimes called a destination fee — when you're staying one night at a downtown location? That extra cost won't be hiding in the closet. It will be required to be disclosed in advance under the new rules.
Ditto for a vacation rental that adds a cleaning fee that consumers must pay in addition to the nightly rate. Regulators say the cleaning fee must be included in the total price.
The rule doesn't say those fees can't be charged, but the consumer must be told about them upfront if they're mandatory and part of the final cost.
One dissenting vote at the FTC
The Federal Trade Commission voted 4-1 in December to require the upfront pricing. Republican commissioner Andrew Ferguson voted against the rule, saying that he wasn't against the measure. "I dissent only on the ground that the time for rulemaking by the Biden-Harris FTC is over," he wrote in a dissenting statement.
"The Democratic majority’s four-year regulatory assault on American businesses has hindered economic growth and increased costs to the American consumer," Ferguson said. Ferguson is now the new head of the FTC under President Donald Trump's administration.
How readily the FTC might move against corporations that don't embrace the new rules might be debatable. Businesses that violate any of the FTC rules could be ordered to bring practices into compliance, refund money back to consumers, and pay civil penalties.
On May 5, though, the FTC did roll out an FAQ that explains in detail what consumers can expect.
How to avoid bait-and-switch pricing
Hidden fees can be a huge problem for people who are trying to live within a budget. They essentially allow a business to hide the real cost for as long as possible and discourage true comparison shopping.
"It's baffling that some companies for years have tried to take advantage of people who are just trying to have a nice evening out or take a vacation by hitting them with gotcha fees," said Teresa Murray, who directs the Consumer Watchdog office for U.S. PIRG, a nonprofit advocacy group.
"Who would think this is a good way to treat customers so that they come back?"
The objective is to stop bait-and-switch pricing, where people see one price initially but then end up being slapped with a much higher price tag down the line once mandatory fees and charges are added into the final cost.
The Federal Trade Commission notes that the rule applies to any business that "offers, displays, or advertises live-event tickets or short-term lodging, including third-party platforms, resellers, and travel agents." Prerecorded performances and film screenings are generally not viewed as live events.
But the rule applies whether the company is selling tickets on behalf of the venue or promoter, such as with Ticketmaster, or a secondary seller, such as StubHub or SeatGeek.
What costs don't have to be included in upfront prices?
Under the new "Junk Fees Rule," businesses are allowed to exclude taxes, shipping charges and optional fees from the upfront pricing. For example, the cost of optional event insurance, which can reimburse you if you cannot attend an event, would not be in the upfront price.
So, the final price still could jump at checkout, especially if taxes aren't included.
And businesses are still allowed to use dynamic pricing strategies to adjust prices based on demand or inventory, so long as the pricing information is not misleading, the FTC noted.
How some platforms have reacted so far
Consumers and regulators put plenty of pressure on companies to stop playing games with pricing. And some platforms have begun putting some changes in place even before May 12.
Before the new rules went into place, I spotted that you could click on a button at some sites, such as Marriott hotels, to be quoted an upfront price that showed taxes and fees. The trick, though, is you had to spot that box and click on it to get such disclosures at the start.
In a statement sent to the Detroit Free Press, Marriott said that the first hospitality company made a change in May 2023 to "ensure non-government fees charged by hotels are upfront and included in the total price displayed to customers."
"This enhanced display has been in place for two years," according to the statement, "so guests are unlikely to notice a difference from what they see today on Marriott.com and our Marriott Bonvoy App."
Two years ago, Airbnb rolled out what it called an "optional toggle" that customers could choose to use to book travel to see a calculation that includes fees, excluding taxes.
Viewing the site on May 5, I easily spotted a red price tag indicating "prices include all fees."
Airbnb announced that new change April 21, which enables guests using the homestay booking site to see the total price with fees in search results. In some countries and regions, Airbnb notes, taxes are included in the total price displayed.
Taxes aren't included in the total price displayed in search for U.S. users. The total price, including taxes, is always displayed prior to checkout.
Total price is the default when searching for a rental, and there are no line items for fees. But if a consumer clicks "show breakdown" at checkout, the company notes, they can see the service fee in the breakdown.
You can see optional costs, such as the cost for buying optional, additional trip insurance, at checkout.
But a lack of transparency continued at many spots even in early May.
Just for fun, I tried seeing how Ticketmaster disclosed fees before the May 12 rule change. On May 5, I searched for tickets to the Cyndi Lauper: Girls Just Want to Have Fun Farewell Tour on Aug. 1 at Pine Knob Music Theatre in Clarkston, Michigan.
I found two tickets at $130.50 each, which would have added up to $261. But I only saw the $24.20 service fee for each ticket during the checkout process. That fee would add an extra $48.40 to this potential order. I was able to cancel the order, which would have cost $309.40 total.
Under the new rules, I should be able to know about those extra charges upfront.
I reached out to Ticketmaster to find out how the site will handle the new rules, but a spokesperson declined to comment by May 6. I also shared my experience on the website but received no response.
On May 7, the site had updated all tickets for the Cyndi Lauper event to show the all-in prices that included service fees upfront.
When I went back and priced the Cyndi Lauper tickets May 7, the experience was different where seats on the initial screen reflected one combined price for both the service fees and the standard ticket price. When you went to second screen, you'd see a breakdown of the ticket prices and the service fees. That experience May 7 seemed more in line with upfront disclosures.
In a statement sent to the Free Press on May 7, Ticketmaster said the company has been "advocating for all-in pricing as a nationwide standard for years and we applaud the FTC for making it a reality. Our site will absolutely be all-in."
Consumers could see more changes in the days ahead at various sites.
In a response to the Detroit Free Press, a SeatGeek spokesperson emailed a statement indicating that the ticket platform planned to be in compliance with the new rules on May 12.
"As part of this change, fans browsing all events on SeatGeek will see ticket prices that include all fees upfront, before they reach checkout," according to the statement.
Fees included in the ticket price will vary, according to SeatGeek, depending on the event and the type of ticket. "We’re proud to roll this out across our platform and encouraged to see the industry move in this direction," according to a SeatGeek spokesperson.
Companies are not allowed to misrepresent fees either. The FTC says a business must avoid vague phrases like “convenience fees,” “service fees,” or “processing fees.”
What's a mandatory fee and what isn't?
What are some examples of misrepresentations that may violate the new rule?
The FTC lists the example of a hotel that charges an “environmental fee” but doesn’t actually use the fee to promote environmental sustainability or conservation. Another example: A ticket seller says a “usage fee” is required by the government when it is not.
The new FAQ also highlights some potential issues with secondary ticket sellers. It would be viewed as a misrepresentation, for example, if a secondary ticket seller chooses to itemize all charges that make up the total price of a ticket. And then includes a “taxes and fees” charge at checkout that "inflates the actual government taxes and fees because it includes an amount that the ticket seller keeps as profit."
Murray said consumers still should watch out for some companies that might give the impression that some fees seem mandatory by giving them vague, official-sounding names and not making it obvious that people can opt out.
"This problem has existed for years," Murray said.
She recommends that consumers continue to read everything when they're booking a hotel room or buying a ticket to a live event. If there’s something you don’t understand, she said, ask what the fee is for and try to get that answer in writing. Ask if you can opt out of the fee.
Note the names of anyone you talk with. Keep a log on your phone, put a note on your calendar or send yourself an email of the day and time of day when you spoke with the person.
Never be afraid to walk away from the transaction. Pay by credit card for more consumer protections, not debit card. Keep copies of all receipts, agreements, emails, texts.
Under the new rule, a ticket selling platform, hotel, or vacation rental platform must tell the truth about any other fee-related information, such as if the fee is refundable.
Not getting whacked with a surprise fee could indeed make the summer fun, and maybe, more affordable.
Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.