FTC Issues Final Rule on Junk Fees for Hotel and Event Prices, Complementing Rise of State Action

On December 17, 2024, the Federal Trade Commission (FTC) finalized a new rule targeting deceptive pricing practices in live-event ticketing and short-term lodging. The rule, known as the Junk Fees rule, was approved with a 4-1 vote and is set to go into effect 120 days after its publication in the Federal Register (~April 2025).

The Junk Fees rule mandates that businesses clearly display the total price upfront, including all fees, and prohibits the concealment of additional charges until the final stages of the checkout process. Advertised prices must be transparent in pricing instead of tacking on convenience and service fees at the end of a purchase. It’s important to note that junk fees will still exist, but will be communicated clearly at the start of a purchase. Fees commonly affected by this rule include service fees, convenience fees, resort fees, and others. The rule’s press release also cautions that industries not covered by the Junk Fees rule are not off the hook, noting that bait and switch pricing ​“such as drip pricing and misleading fees” will continue to be pursued through ​“case-by-case enforcement.”

Under the rule, businesses must prominently disclose the full, inclusive price whenever they advertise or display prices for live-event tickets or short-term lodging. Any fees or charges must be accurately represented in such promotions. Additionally, businesses must ensure the total price is the most visible figure in advertisements, with itemized breakdowns allowed but not overshadowing the all-inclusive price. More specifically, “where the final amount of payment for the transaction is displayed,” the final payment amount must be disclosed more prominently than, or as prominently as, the ​“total price.” Moreover, the total amount, inclusive of shipping and taxes, must be displayed as prominently as the prior price that excluded these elements on the payment page. Additionally, the rule mandates that both the final payment amount and a clear and conspicuous disclosure of any fees excluded from the total price, such as shipping and taxes, be provided, including details about the nature, purpose, identity, and amount of each fee.The Rule also requires that both this final payment amount and the ​“nature, purpose, identity, and amount” of any fee excluded from the total price, such as shipping or taxes, be clearly and conspicuously disclosed.

The final rule applies to all businesses—whether corporations, partnerships, associations, or individuals—offering, displaying, or advertising live-event tickets and short-term lodging. This includes franchised businesses and B2B transactions. The rule covers tickets to concerts, sporting events, musicals, and other live performances, as well as short-term lodging such as stays offered through platforms like Airbnb or VRBO, hotel stays, motels, inns, and vacation rentals. While the rule does not define short-term lodging by a specific duration, the Commission has clarified that it does not apply to long-term rental housing.

The rule extends to advertisements across various platforms, including online, mobile apps, physical locations, or other channels.

This rule is more narrowly focused than the FTC’s 2023 proposal, which aimed to broadly eliminate hidden “junk” fees across all industries. The FTC proposed the rule in Oct. 2023 after soliciting feedback and receiving 12,000 responses on how hidden and misleading fees can affect personal spending and competition. The Commission received a subsequent 60,000 comments that it considered in its ruling.

The FTC projects the rule will save consumers 53 million hours annually that would otherwise be spent searching for total prices, alongside an estimated $11 billion in savings over the next decade.

State-Level Junk Fee Laws

The new federal FTC rule sets a baseline but does not prevent states from implementing stricter laws. As a result, businesses may face a patchwork of regulations depending on where they operate. Some experts worry that this complex regulatory landscape could discourage businesses from advertising prices altogether, potentially leading to more confusion and less transparency for consumers.

Several states have already enacted or are exploring laws to regulate junk fees. For example, California’s Senate Bill 478, effective July 2024, amends the California Consumers Legal Remedies Act to prohibit advertising or offering prices for goods or services without including all mandatory fees. Minnesota’s”junk fees” law, HF 3438, which takes effect on January 1, 2025, requires businesses to incorporate all mandatory fees into their advertised prices, including those that must be paid to complete a purchase or that a reasonable consumer would expect to be included.

Companies must assess which fees are mandatory and must be disclosed, using as a guideline the fees a customer cannot reasonably avoid. Both California and Minnesota have excluded taxes from the required total price and do not require shipping fees to be included, although each state frames these exemptions differently.

Although these state laws apply within their own jurisdictions, their influence may extend beyond state borders. Nationally operating companies often run multi-state campaigns and may adopt California and Minnesota’s standards to avoid legal complications. Consequently, these stricter state regulations may effectively become de facto national standards.

With more states jumping on the bandwagon against deceptive “junk fees” and drip-pricing, there is a growing risk of conflicting state regulations. States such as Connecticut and New York have introduced multiple bills addressing mandatory fee disclosures in 2024 that did not advance to enactment; in addition to requirements similar to California’s law, an Illinois bill introduced this year went even further by requiring businesses to explain the nature and purpose of any excluded fees from the total advertised price.

Before the introduction of specific junk fee laws, state attorneys general primarily relied on their broad authority over unfair and deceptive trade practices under state consumer protection laws to address issues like drip pricing and hidden fees. However, states are now taking a more proactive and creative approach to tackling these deceptive practices. For instance, in November 2023, Massachusetts Attorney General Andrea Joy Campbell proposed new regulations that would require businesses to clearly disclose the full price of a product upfront, provide straightforward information on whether fees are optional or mandatory, and streamline the process for canceling trial offers and recurring charges. These proposed regulations, issued under the Attorney General’s rulemaking power under the Massachusetts Consumer Protection Act, are currently still under review.

More info on the FTC Junk Fee rule can be found here.

More info on California’s junk fees law can be found here.

More info on Minnesota’s junk fees law can be found here.

Have questions about the federal FTC junk fees rule? Please contact Amanda Anderson, 4As VP of Government Relations.