FTC’s Rule on Unfair and Deceptive Fees -What Does it Mean for You?

 

Quick Answer:
The FTC’s Rule on Unfair and Deceptive Fees (“Junk Fee Rule”), effective May 12, 2025, requires live-event ticketing and short-term lodging businesses to include all mandatory fees—including unavoidable credit card surcharges—in upfront advertised prices. Violations carry penalties up to $53,088 per violation.

Key Takeaways

• Full price transparency is now a legal requirement for ticketing and lodging businesses.

• All businesses should avoid hidden or misleading fees to reduce FTC risk.

• State laws may demand even broader or stricter fee disclosure, beyond the federal rule.

• Consult legal guidance to ensure your pricing and disclosures comply everywhere you operate.

---

What Is the FTC Junk Fee Rule 2025?

The FTC’s Junk Fee Rule was enacted to eliminate “drip pricing” and bait-and-switch tactics that obscure the true cost of live tickets and short-term accommodations. Covered businesses must show the total price, including all fees that cannot be reasonably avoided, from the start—not just at checkout.

Even outside covered industries, the FTC can pursue any deceptive pricing practices under Section 5 of the FTC Act, putting retail, e-commerce, and service businesses at risk for misleading or hidden fees.

---

Industries Covered and Section 5 Risk

Directly Covered:

• Live-event ticketing: Concerts, sports, theater, comedy, performance venues

• Short-term lodging: Hotels, motels, vacation rentals, Airbnb/VRBO, boutique inns, bed & breakfasts

• Third-party platforms: Ticketmaster, StubHub, Expedia, Booking.com, and others

• Applies to B2B and B2C transactions.

Not Directly Covered (But Still At Risk):

• Retail stores, restaurants, and general e-commerce are not subject to the Rule, but are covered by broader Section 5 FTC authority on deceptive pricing and subject to state consumer protection laws.

---

FTC Junk Fee Rule Requirements

Mandatory Requirements for Covered Businesses

• Display total price upfront including all non-optional fees (except government taxes, shipping, and optional services)

• Avoid bait-and-switch tactics by showing complete costs from the start

• Disclose all optional fees, with clear descriptions, before accepting payment

• Show total price more prominently than all other price information

Mandatory Fees in Advertised Price

• Mandatory service fees

• Processing fees where no alternative payment method exists

• Resort, cleaning, or convenience fees

• Credit card surcharges if unavoidable

Fees Allowed to Be Excluded

• Government taxes and charges

• Shipping costs

• Truly optional services that customers choose to add

---

How the FTC Rule Affects Credit Card Surcharges and Payment Processing

Covered businesses must include unavoidable credit card surcharges as part of the advertised price (e.g., online ticket sales with no other payment method, cashless venues). If alternative payment methods are available (cash, check), surcharges may be disclosed separately, but must be clear and not hidden until checkout.

• Surcharges are “mandatory” when customers cannot reasonably avoid them (e.g., credit card is the only way to pay).

• Itemized surcharges are permitted if the total price remains most prominent, and all disclosures are clear, accurate, and timely.

---

Enforcement, Penalties, and State Laws

• Federal penalties: Up to $53,088 per violation; cumulative for repeated transactions.

• Enforcement actions: Refunds, required corrective changes, additional litigation risk.

• Section 5 FTC Act: Authority to pursue deceptive practices in all industries, beyond this Rule.

• State laws: States like California (SB 478), Minnesota, New York, Colorado, and Illinois may impose stricter requirements. Federal Rule does not override state law where state law provides greater consumer protection.

---

Compliance Steps for Small Businesses

• Audit pricing across websites, apps, and locations for mandatory fee inclusion

• Update all displays and checkout flows to show complete costs

• Review payment processing/credit card fee setup to distinguish mandatory vs. optional charges

• Document compliance, update staff training, and keep records of all disclosures

• Stay alert to stricter state and local laws affecting fees and surcharges

---

Risks and Impacts for All Business Models

• Non-covered businesses remain at risk for FTC action under the general prohibition against unfair or deceptive practices.

• Platforms and processors serving covered industries must optimize systems for transparent pricing.

• Small businesses should consult with legal counsel to avoid misrepresentation and ensure compliance.

---

Frequently Asked Questions (FAQ)

Does the FTC junk fee rule apply to all businesses?
No, it covers live-event ticketing and short-term lodging, but Section 5 gives the FTC broad power over any deceptive pricing practice in all sectors.

How are credit card processing fees treated?
Unavoidable surcharges must be included in the price. If alternatives exist, you must disclose such fees clearly before payment.

What about state fee laws?
You must comply with the stricter of federal or state law. States like California and Minnesota require all mandatory fees to be included in the advertised price, sometimes for any business.

What penalties apply for violating the Rule?
Up to $53,088 per violation, adjusted for inflation, plus possible refunds and ongoing enforcement action.

What if my surcharge isn’t mandatory?
If customers can reasonably opt out, disclose the surcharge separately, but fully, and before payment.

For the most up-to-date information, visit the FTC website here.

About IntelliPay

We help merchants optimize their payment processing through transparent interchange plus pricing, no junk fees, expert guidance, and reliable technology solutions. Our team combines deep industry knowledge with personalized service to ensure every client gets the best possible payment processing solution for their business.

The information provided on this page is for educational and informational purposes only. We make no representations or warranties regarding the completeness, accuracy, or security of this content, and all advice is provided “as is.” The content does not constitute legal, financial, or professional advice, and readers act on it at their own risk. We disclaim liability for any direct, indirect, or consequential damages resulting from the use or reliance upon this information. Please consult a legal professional.

---

Last updated: August 2025.

Sources: Federal Trade Commission official documentation, Federal Register publications, FTC FAQs on Rule on Unfair or Deceptive Fees, and civil penalty adjustment notices.