WASHINGTON, D.C. — The Federal Trade Commission (FTC) has released a comprehensive guide to its Rule on Unfair or Deceptive Fees, which is set to take effect on May 12, 2025. The new regulation is designed to promote transparency and prevent pricing practices that mislead consumers, particularly in the live-event ticketing and short-term lodging industries.
The rule directly targets tactics such as bait-and-switch pricing, which hides additional fees until late in the purchasing process. These practices, the FTC noted, harm consumers by obscuring the actual cost of goods and services and disadvantage businesses committed to fair competition.
The release of Frequently Asked Questions (FAQs) aims to clarify how businesses and consumers are affected by the rule and to ensure compliance. The FAQs address various topics, including what types of businesses are covered, the basic obligations outlined in the rule, and examples of pricing practices it seeks to prevent.
Protecting Consumers and Enabling Fair Competition
The new regulation stems from a broader effort to increase price transparency, including meeting the principles outlined in Executive Order 13880, which focused on curbing exploitative practices in the live entertainment and ticketing market. The rule applies to all stages of the live-event ticketing process, including sales in the secondary ticketing market.
Its primary aim, however, is to ensure that consumers are informed of the total cost up front. It explicitly states that “businesses that advertise prices [must] tell consumers the whole truth up-front about total prices and fees.”
Though restrictive in terms of deceptive practices, the rule allows businesses flexibility in how they set prices. It does not prohibit specific fees, amounts, or pricing strategies as long as those fees are disclosed clearly and conspicuously before purchase.
Guidance for Businesses
The FTC has provided detailed guidance for understanding and meeting the rule’s requirements. Key topics addressed in the FAQs include:
- Definitions of businesses covered, such as live-event ticket sellers and short-term lodging platforms.
- Identification of mandatory charges that must be included in the total disclosed price.
- Clarification of which optional fees can be excluded provided they are add-ons clearly labeled as such.
- Instructions on how to present pricing information in a “clear and conspicuous” manner to avoid confusion.
- Examples of pricing misrepresentations that would constitute a violation of the rule.
The FAQs also describe the role of optional add-ons, like premium services or bundled offers, and outline how these charges should be communicated, ensuring that consumers understand what they are purchasing.
The guidance serves not just as a resource for larger businesses but as a formal compliance guide for small entities under the Small Business Regulatory Enforcement Fairness Act. It reflects the FTC staff’s interpretation of the rule and aims to make compliance attainable across all sizes of businesses within the affected industries.
Moving Forward
The FTC’s rule is expected to have significant implications for consumers and industries alike by establishing a standard for price transparency. It underscores the agency’s ongoing commitment to protecting consumers from deceptive practices while fostering a competitive marketplace that rewards honest business conduct.
As the May 2025 implementation date approaches, businesses will need to review their pricing strategies to align with the rule and avoid penalties for noncompliance. For consumers, the rule promises a more straightforward and informed purchasing process across the covered sectors, reducing the frustration of hidden or misleading fees.
For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and MSN.