FTC Rule on Unfair or Deceptive Fees to Take Effect on May 12, 2025

Key Takeaways

• FTC Rule on Unfair Fees: Effective May 12, 2025, the Rule mandates that businesses in live-event ticketing and short-term lodging disclose all mandatory fees upfront to ensure transparency and prevent deceptive pricing practices.
• Price Transparency Requirement: Businesses must clearly and conspicuously disclose the total price, including any fees, before a consumer completes their purchase.
• Flexibility for Businesses: The Rule does not prohibit any specific fees or pricing strategies but requires businesses to provide accurate pricing information upfront.
• Scope of the Rule: The regulation applies to live-event ticketing and short-term lodging sectors, addressing practices like hidden fees and bait-and-switch pricing.
• Small Business Compliance: The FTC's FAQs also offer guidance for small businesses, helping them understand and comply with the new pricing disclosure requirements.

Deep Dive

The Federal Trade Commission (FTC) is set to implement a new Rule on Unfair or Deceptive Fees, which will take effect on May 12, 2025. This regulation aims to combat deceptive pricing practices, including hidden fees and bait-and-switch tactics, in industries such as live-event ticketing and short-term lodging. The Rule seeks to ensure price transparency and protect consumers from misleading pricing strategies.

The FTC’s recent publication of Frequently Asked Questions (FAQs) offers critical guidance for businesses, providing clarity on how to comply with the new requirements. The Rule is designed to hold companies accountable for the total price they advertise, ensuring that fees and charges are disclosed upfront, minimizing the risk of misleading consumers.

At the core of the new rule is a focus on transparency. Businesses in the live-event ticketing and short-term lodging sectors must now provide clear, upfront disclosures regarding the full price of their products or services. This includes not only the base price but also any mandatory fees or charges associated with the transaction. The rule is aligned with President Trump’s Executive Order on Combating Unfair Practices in the Live Entertainment Market, which aims to bring greater fairness to the ticketing industry by addressing the opaque pricing structures often used in the secondary ticketing market.

While the rule does not prohibit any specific pricing strategies or the inclusion of fees, it does require businesses to be transparent about the total cost of a product or service. This move seeks to level the playing field for businesses that already adhere to fair pricing practices while protecting consumers from businesses that attempt to deceive or mislead them through hidden fees.

For businesses preparing for the rule’s implementation, several key areas require attention:

1. Scope of the Rule: The Rule applies to businesses in the live-event ticketing and short-term lodging industries. These sectors are specifically targeted due to the prevalence of misleading pricing tactics such as hidden fees and unclear price breakdowns.
2. Clear Pricing Requirements: Businesses must clearly disclose all mandatory fees and charges as part of the total price. These disclosures must be made "clearly and conspicuously" to ensure consumers are fully informed before making a purchase.
3. Exemptions and Add-Ons: The Rule specifies which fees can be excluded from the total price and how optional add-ons (such as additional services or upgrades) should be treated. Businesses should be aware of which charges must be included and which can be presented separately.
4. Examples of Non-Compliance: The FAQ document highlights several common misrepresentations that could violate the Rule, including practices where businesses advertise a low initial price but fail to disclose significant additional fees until later in the purchase process.
5. Small Business Guidance: The FAQs also serve as a compliance guide for small entities, outlining the Rule’s requirements in accessible language to ensure businesses of all sizes can meet the new standards without undue burden.

As the May 12, 2025, deadline approaches, businesses in the affected industries should take proactive steps to ensure their pricing practices align with the new Rule. This includes reviewing current pricing strategies, updating advertising practices, and training staff to properly disclose all required fees and charges.

For compliance teams, the Rule represents a critical opportunity to strengthen internal controls related to pricing transparency. Clear communication and documentation of pricing practices will be essential in defending against potential enforcement actions by the FTC, which has the authority to pursue violations of the Rule.

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