Is Your Company Prepared for the FTC’s Junk Fees Rule, Effective May 12?

On May 5, 2025, the Federal Trade Commission (FTC or “the Commission”) published FAQs aimed at providing consumers and businesses with information regarding the agency’s Rule on Unfair or Deceptive Fees (the “Junk Fees Rule” or “Rule”) banning so-called “junk fees,” which takes effect on May 12, 2025.

Covered Businesses

The FTC’s Junk Fees Rule requires any business that sells live-event tickets or short-term lodging (e.g., hotels, vacation homes, and other short-term rentals) to disclose clearly and conspicuously all mandatory fees associated with any good or service offered.

The FTC’s initial proposed rule applied to a wide range of businesses — including restaurants, food delivery services, and car rental companies, among others — but the final Junk Fees Rule narrows the scope and solely applies to any business that offers, displays, or advertises:

• Live-event tickets
  • Live-event tickets are for concerts, sporting events, music, theater, and other live performances that audiences watch as they occur.
    • Generally, pre-recorded audio and visual performances and film screenings are not live events covered by the Rule.
• Short-term lodging
  • Short-term lodging may include: temporary sleeping accommodations at a hotel, motel, inn, short-term rental, vacation rental, or other place of lodging; home shares and vacation rentals offered through platforms (e.g., Airbnb or VRBO); or discounted extended stays at a hotel.
  • Generally, the following would not be in scope of short-term lodging: long-term or other rental housing that involves an ongoing landlord-tenant relationship; short-term extensions to leases offered by rental housing providers; or temporary corporate housing offered by an apartment community under the same conditions as long-term leases.
  • The Rule doesn’t prescribe what length of stay qualifies as short-term and will depend on facts and circumstances.

Covered businesses include:

• Third-party platforms
• Resellers
• Travel agents

According to the FAQs, the Rule is intended to protect both individual and business consumers and applies broadly, regardless of disclosure method — whether online (including through a mobile application), in physical locations, or through some other means.

General Compliance Requirements

Generally, the Rule requires that a covered business:

• Must disclose “clearly and conspicuously” the “true total price inclusive of all mandatory fees” charged whenever a business “offer[s], display[s], or advertise[s] any price;”
• Must display the total price “more prominently” than “most other pricing information;”
• Must not misstate the cost or fees for any live-event tickets or short-term lodging; and
• Must not misstate the identity of any good or service offered.

According to the FAQ, covered businesses must disclose the total price upfront and prominently and must disclose excluded charges (i.e., taxes or other government charges, shipping charges, or optional charges) before asking for payment. Further, a covered business must be transparent about how much it’s charging and why, whether a fee is refundable, and must describe what fees are for, avoiding phrases like “convenience fees,” “service fees,” or “processing fees.”

Mandatory Fees that Must Be Disclosed

Businesses must include all fees or charges that people are required to pay, cannot reasonably avoid, or are ancillary goods or services that are required to be purchased in a given transaction. Additionally, businesses must disclose fees that are automatic, such as those charged via default billing, pre-checked boxes, or opt-out provisions, and cannot treat such fees as optional.

Credit Card Surcharges and other Payment Processing Fees

Businesses may charge or pass through credit card or other payment processing fees if otherwise permitted by law. However, if a business requires payment by credit card, the credit card fee is mandatory and must be included in the total price. If there’s another viable payment method (at the same location or platform) that does not incur a fee, then using the method that incurs a fee is optional, and the business need not include the fee upfront in the total price. However, the fee must still be disclosed in the final amount of payment before asking for payment and may not misrepresent the purpose or amount of the charge.

Final Considerations

The Junk Fees Rule largely echoes California’s Honest Pricing Law, which expanded the Consumer Legal Remedies Act (California Civil Code § 1750 et seq.), prohibiting advertising prices that don’t include all mandatory fees or charges or “drip pricing.” However, California’s Honest Pricing Law applies broadly across industries.

While increased focus on price transparency is certainly trending, many other federal and state requirements have long prohibited hidden or deceptive fees. The FTC has cracked down on deceptive practices under Section 5 of the Federal Trade Commission Act (FTCA). Under Section 5 of the FTCA, the FTC may regulate material misstatements, omissions, or practices likely to mislead consumers, as well as all states long-standing consumer protection laws prohibiting unfair or deceptive acts and practices (UDAP).

Covered businesses should evaluate their current pricing practices, and any future pricing strategies, to ensure compliance with the Junk Fees Rule as well as other related federal and state requirements related to payment disclosures.

Need Assistance?

If you have any questions relating to the FTC’s Junk Fees Rule, Foley’s Financial Services Regulatory Group is well versed in the FTC regulation as well as state laws and regulations impacting consumer payments and fees. Foley actively counsels clients on compliance issues (including drafting disclosures) related to such payments on a daily basis. For more information on any of the issues discussed, please contact any of the authors of this article or your Foley & Lardner attorney.