As the public outcry against exorbitant ticket prices continues, the Federal Trade Commission (FTC) has stepped in with a new proposed rule banning hidden and “bogus” fees. The rule would require all businesses to disclose upfront the total cost of everything from concert tickets to utility bills.
The proposal comes after consumers have long complained about hidden fees from services like Ticketmaster and StubHub, which obfuscate the total cost of a ticket until the very end of the transaction. By showing a lower price on the initial listing, many websites lure customers in only to reveal the full cost of an item, fees and all, at the very last minute. Additionally, the purpose and function behind many of these fees are often poorly explained, if at all, something the FTC also seeks to remedy.
“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape. These junk fees now cost Americans tens of billions of dollars per year—money that corporations are extracting from working families just because they can,” FTC Chair Lina M. Khan said. “By hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront. The FTC’s proposed rule to ban junk fees will save people money and time, and make our markets more fair and competitive.”
The proposal states that the new rule would have “enforcement teeth.” The FTC will have the ability to secure funds on behalf of consumers harmed by companies skirting the policy, as well as impose monetary penalties on businesses that do not comply. Some states like New York, which has enacted its own laws mandating what is known as “all-in” upfront ticket pricing, have had trouble enforcing the statutes on ticket brokers, as a Rolling Stone investigation found.
Despite the failures of other initiatives, this latest push from the FTC will have support from the federal level. President Joe Biden has also championed tougher consumer protections limiting “junk fees,” an idea that has also seen bipartisan backing in Congress. Following Biden’s call for industry regulation, representatives from Ticketmaster and SeatGeek allegedly agreed to adopt all-in pricing during a meeting with the President back in June. Despite the promise, industry leaders from both the primary and secondary markets have long stated they will only adopt upfront pricing if it is mandated industry-wide, lest they give competitors who continue to hide their prices an economic edge.
“Accordingly, the proposed rule would prohibit businesses from advertising prices that hide or leave out mandatory fees,” the proposal states, “and … the rule would prohibit sellers from misrepresenting fees and require them to disclose upfront the amount and purpose of the fees and whether they are refundable.”
The FTC drafted this new rule after receiving over 12,000 comments from consumers detailing the economic impact of hidden and bogus fees. According to estimates from the FTC, this new proposal will save consumers more than 50 million hours per year of wasted time spent searching for the full price for tickets and short-term lodging alone. The agency contends that those time savings are equivalent to more than $10 billion over the next decade.
Once the notice has been published in the Federal Register, consumers will be able to submit comments electronically for 60 days. See the full proposal here.