The Federal Trade Commission (FTC) announced today its final Rule on Unfair and Deceptive Fees (the “Rule”), which targets drip pricing in the live-event tickets and short-term lodging industries. As Jeff Greenbaum noted, the FTC proposed a much broader, industry agnostic rule in October of 2023. In response, the Commission received over 60,800 comments from stakeholders representing a wide range of viewpoints and industries. Today, the FTC explained that it sought to "focus the final Rule on the industries in which the Commission first evaluated drip pricing…[where] the harms of bait-and-switch pricing and the misrepresentation of fees and charges are particularly pronounced…”

Key Requirements of the Rule

The central theme of the Rule? Transparency. Here’s what businesses must do:

1. In any offer, ad, or display:
   • Clearly and conspicuously disclose the total price a consumer will pay—other than government-imposed fees (e.g., taxes, etc.), shipping fees that reflect actual costs, or optional add-ons—more prominently than other pricing information.
2. Before consumers commit to pay:
   • Clearly and conspicuously disclose:
     • The nature, purpose, and amount of any excluded charges (like taxes, shipping, or optional fees).
     • The final maximum amount due, which must always appear most prominently of all.

The Rule not only applies to consumer transactions; business-to-business transactions are covered too!

State Laws Still Apply—And Can Go Further

The Rule doesn’t override state laws unless they’re inconsistent and, importantly, state laws offering greater protection are not considered inconsistent. Translation: if a state already has stricter rules on price transparency, compliance with state law(s) is still required.

For example, California’s “Honest Pricing Law” is currently in effect and makes it illegal to advertise, display or offer a price for a good or service that does not include all mandatory fees or charges other than either of the following: (i) Taxes or fees imposed by a government on the transaction; or (ii) Postage or carriage charges that will be reasonably and actually incurred to ship the physical good to the consumer. 

Minnesota has a similar law, set to take effect on January 1, 2025, which makes it a deceptive trade practice to advertise, display, or offer prices for goods or services that exclude fees that are unavoidable, required for purchase, or reasonably expected by consumers.

The Stakes Are High: $51,000+ Per Violation

Noncompliance with the FTC's new Rule could cost you, as the FTC can impose penalties exceeding $51,000 per violation. 

Even before issuing its final Rule, the FTC made clear that price transparency is a major enforcement priority. The Commission just announced a $25 million settlement with Grubhub over the food delivery platform allegedly advertising zero or low-fee food delivery, but tacking on additional “service” and “small order” fees for delivery that sometimes doubled or tripled diners’ expected delivery costs.

When Does the FTC’s Rule Take Effect?

The final Rule has been submitted to the Office of the Federal Register for publication. Once placed, businesses will have 120 days to comply. 

Will the Rule Be Challenged?

Notably, Andrew Ferguson (Trump's pick to be the FTC's new Chair) voted against the Rule and issued a dissenting statement, but appeared to object on procedural grounds as opposed to on the substance of the Rule itself. Trump could try to pull back the Rule for additional review, and Republicans, who will control Congress, might work to overturn the Rule through the legislative process. That said, there’s no guarantee of a challenge to the Rule, or that a challenge would succeed. 

The Bottom Line: Plan to Comply

For now, compliance is the smart move. Thus, businesses in the live-event ticketing and short-term lodging industries should review their pricing practices, including by:

• Auditing ads, websites, and purchase flows; and
• Training teams on proper price displays and disclosures.