Dec. 17 (UPI) — In a political win for the Biden administration, the Federal Trade Commission on Tuesday approved its final policy rule to ban so-called junk fees for tickets and hotels.
The FTC approved publication of the final rule in a 4-1 vote. Commissioner Andrew Ferguson — a Republican and Biden appointee — was the one no vote.
It presumably will put an end to junk fees surrounding live event tickets, hotels and vacation rentals, “saving Americans billions of dollars and millions of hours in wasted time,” FTC Chair Lina M. Khan stated Tuesday in a release.
The new rule was developed and lead by the FTC’s Bureau of Consumer Protection and becomes effective 120 days after its publication in the Federal Register.
“People deserve to know up-front what they’re being asked to pay,” added Khan, “without worrying that they’ll later be saddled with mysterious fees that they haven’t budgeted for and can’t avoid.”
The bipartisan rule specifically targets the “bait-and-switch” pricing practices of live-event ticket and short-term lodging companies. However, officials noted how the rule does not prohibit the type or amount of fee nor does it target a specific pricing strategy.
FTC officials argue the “unfair” and “deceptive” pricing practices “harm consumers and undercut honest businesses.” Its “Junk Fees Rule” seeks to ensure pricing info will be presented in a “timely, transparent and truthful way” so shoppers are able to compare costs.
The move was seen as a political win for President Joe Biden as his term nears its end.
Tuesday’s action marks achievement of the Biden administration’s effort to ban a string of long-standing deceptive junk fee tactics used by business vendors to take advantage of American consumers.
In 2022, the commission initially launched the rule-making process by soliciting public input. More than 12,000 public comments returned in the first round and more than 60,000 additional respondents in a second round used in the final rule.
In a statement, President Joe Biden said Tuesday’s FTC vote builds on the work across his administration to ban junk fees, lower costs and save “many families hundreds of dollars each year.”
The White House pointed to lower overdraft and credit card late fees by the Consumer Financial Protection Bureau — the agency which tech billionaire and “DOGE” chief Elon Musk has called to abolish. Musk holds billions of dollars in taxpayer-funded government contracts. It also noted a U.S. Department of Transportation proposed ban on family seating fees which required upfront disclosure of baggage and change fees, and an FCC rule that ensures U.S. consumers see the full price and terms of internet service upfront.
“Wherever big corporations try to sneak fees onto bills, my administration has been fighting on behalf of American families to ban them,” the outgoing Democratic president wrote Tuesday in part.
FTC estimates the rule will save American consumers up to 53 million hours per year of wasted time spent in the search for total price of tickets and lodging in time savings equivalent to more than $11 billion over the next 10 years.
Per federal law, industries beyond live-event ticketing and hotel stays already are prohibited from deceiving consumers about fees and pricing. But on Tuesday, a former member of Biden’s National Economic Council took to social media to praise the move.
“Markets work when consumers can easily observe the full price,” Neale Mahoney, who was a special adviser for economic policy and is a current economics professor at Stanford University in California, wrote on Bluesky. “Mandatory back-end fees make it hard to comparison shop, blunting the forces of competition,” he added.
Meanwhile, Khan urged government enforcers on Tuesday to keep cracking down on “unlawful” fees and encouraged state and federal policymakers to “build on this success with legislation that bans unfair and deceptive junk fees across the economy.”
