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Rule2024-30293

Trade Regulation Rule on Unfair or Deceptive Fees

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Published

January 10, 2025

Effective

May 12, 2025

Issuing agencies

Federal Trade Commission

Abstract

The Federal Trade Commission ("FTC" or "Commission") is issuing a final trade regulation rule entitled "Rule on Unfair or Deceptive Fees" ("rule" or "final rule") and Statement of Basis and Purpose addressing certain unfair or deceptive practices involving fees or charges for live-event tickets and short-term lodging: bait- and-switch pricing that hides the total price by omitting mandatory fees and charges from advertised prices; and misrepresenting the nature, purpose, amount, and refundability of fees or charges. The final rule specifies that it is an unfair and deceptive practice for businesses to offer, display, or advertise any price of live-event tickets or short-term lodging without clearly, conspicuously and prominently disclosing the total price. The rule also requires businesses to clearly and conspicuously make certain disclosures before a consumer consents to pay. The rule further specifies that it is an unfair and deceptive practice for businesses to misrepresent any fee or charge in any offer, display, or advertisement for live-event tickets or short-term lodging.

Full Text

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[Federal Register Volume 90, Number 6 (Friday, January 10, 2025)]
[Rules and Regulations]
[Pages 2066-2167]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-30293]

[[Page 2065]]

Vol. 90

Friday,

No. 6

January 10, 2025

Part II

Federal Trade Commission

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16 CFR Part 464

Trade Regulation Rule on Unfair or Deceptive Fees; Final Rule

Federal Register / Vol. 90 , No. 6 / Friday, January 10, 2025 / Rules
and Regulations

[[Page 2066]]

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FEDERAL TRADE COMMISSION

16 CFR Part 464

RIN 3084-AB77

Trade Regulation Rule on Unfair or Deceptive Fees

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') is
issuing a final trade regulation rule entitled ``Rule on Unfair or
Deceptive Fees'' (``rule'' or ``final rule'') and Statement of Basis
and Purpose addressing certain unfair or deceptive practices involving
fees or charges for live-event tickets and short-term lodging: bait-
and-switch pricing that hides the total price by omitting mandatory
fees and charges from advertised prices; and misrepresenting the
nature, purpose, amount, and refundability of fees or charges. The
final rule specifies that it is an unfair and deceptive practice for
businesses to offer, display, or advertise any price of live-event
tickets or short-term lodging without clearly, conspicuously and
prominently disclosing the total price. The rule also requires
businesses to clearly and conspicuously make certain disclosures before
a consumer consents to pay. The rule further specifies that it is an
unfair and deceptive practice for businesses to misrepresent any fee or
charge in any offer, display, or advertisement for live-event tickets
or short-term lodging.

DATES: This rule is effective May 12, 2025.

ADDRESSES: Copies of this document are available on the Commission's
website, <a href="http://www.ftc.gov">www.ftc.gov</a>.

FOR FURTHER INFORMATION CONTACT: Janice Kopec or Annette Soberats,
Division of Advertising Practices, Bureau of Consumer Protection,
Federal Trade Commission, 202-326-2550 (Kopec), 202-326-2921
(Soberats), <a href="/cdn-cgi/l/email-protection#d4bebfbba4b1b794b2a0b7fab3bba2"><span class="__cf_email__" data-cfemail="d5bfbebaa5b0b695b3a1b6fbb2baa3">[email&#160;protected]</span></a>, <a href="/cdn-cgi/l/email-protection#5e3f2d313c3b2c3f2a2d1e382a3d70393128"><span class="__cf_email__" data-cfemail="660715090403140712152600120548010910">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Statement of Basis and Purpose

Table of Contents

I. Background
A. Advance Notice of Proposed Rulemaking
B. Notice of Proposed Rulemaking
C. Informal Public Hearing
II. The Legal Standard for Promulgating the Rule
A. Prevalence of Acts or Practices Addressed by the Rule
B. Manner and Context in Which the Acts or Practices Are
Deceptive or Unfair
C. The Economic Effect of the Rule
III. Section-by-Section Analysis
A. Sec. 464.1: Definitions
1. Ancillary Good or Service
2. Business
3. Clear(ly) and Conspicuous(ly)
4. Covered Good or Service
5. Government Charges
6. Pricing Information
7. Shipping Charges
8. Total Price
(a) Mandatory Fees
(b) Maximum Total
(c) Itemization
(d) Exclusions From Total Price
(e) Intersection With IRS Requirements
B. Sec. 464.2 Hidden Fees Prohibited
1. Sec. 464.2(a)
(a) Contingent Fees
(b) Ticket Service Fees
(c) Credit Card and Other Payment Processing Surcharges
(d) Dynamic Pricing and National Advertising
(e) Rebates, Bundled Pricing, and Other Discounts: Compliance
When Promotional Pricing Models Have Different Fees
(f) Online Marketplaces
2. Sec. 464.2(b)
3. Sec. 464.2(c)
C. Sec. 464.3 Misleading Fees Prohibited
D. Sec. 464.4 Relation to State Laws
E. Sec. 464.5 Severability
IV. Challenges to the FTC's Legal Authority To Promulgate the Rule
A. Major Questions Doctrine
1. The Rule Does Not Address a Major Question
(a) The Commission Has a Long History of Addressing Unfair or
Deceptive Acts or Practices Related to Pricing Information
(b) Commenters' Claims About the Scope of the Acts or Practices
Covered by the Rule Are Inapplicable or Overstated
2. Congress Provided the Commission With a Clear Grant of
Authority To Promulgate This Rule
B. Non-Delegation Doctrine
C. First Amendment
1. Comments
2. Legal Standard
3. The Rule's Disclosure Requirements Are Constitutional Under
Zauderer
4. The Rule Does Not Prohibit Truthful Speech
5. The Rule's Treatment of Credit Card Fees and Government
Charges Does Not Violate the First Amendment
D. Commission Structure
E. Administrative Procedure Act
V. Final Regulatory Analysis Under Section 22 of the FTC Act
A. Concise Statement of the Need for, and Objectives of, the
Final Rule
B. Alternatives to the Final Rule the Commission Considered,
Reasons for the Commission's Determination That the Final Rule Will
Attain Its Objectives in a Manner Consistent With Applicable Law,
and the Reasons the Particular Alternative Was Chosen
C. The NPRM's Preliminary Regulatory Analysis
D. Significant Issues Raised by Comments, the Commission's
Assessment and Response, and Any Changes Made as a Result
1. Comments on Costs
(a) Public Comments: Estimated Costs Are Too Low
(b) Public Comments: Unquantified Costs to Firms
(c) Public Comments: Unquantified Costs to Consumers
(d) Public Comments: Unquantified Costs to Third Parties
(e) Public Comments: Costs From Incorporating Contingent Fees
Into Total Price
2. Comments on Benefits
(a) Public Comments: Benefits Are Too High
(b) Public Comments: Unquantified Benefits
3. Comments on the Economy-Wide Break-Even Analysis
(a) Public Comments: Break-Even Analysis Has Incorrect
Assumptions or Contains Errors
(b) Public Comments: Break-Even Analysis Is Not Enough To
Justify an Economy-Wide Rule
(c) Public Comments: Break-Even Analysis Is Satisfactory
E. Economic Regulatory Analysis of the Final Rule's Costs and
Benefits
1. Economic Rationale for the Final Rule
(a) Shrouded Pricing as a Cause of Market Failure
(b) Shrouded Pricing as a Source of Biased Expectations
2. Economic Effects of the Final Rule
(a) General Benefits of the Final Rule
i. Reductions in Search Costs
ii. Reductions in Deadweight Loss
(b) Welfare Transfers
(c) General Costs of the Final Rule
3. Quantified Welfare Effects
(a) Quantified Compliance Costs
(b) Break-Even Analysis
i. Sensitivity Analysis: Assume Higher Wage Rates
(c) Quantified Benefits and Costs: Live-Event Ticketing Industry
i. Live-Event Ticketing: Estimated Benefits of the Final Rule
(a) Consumer Time Savings When Shopping for Live-Event Tickets
(b) Additional Unquantified Benefits: Reductions in Deadweight
Loss and Abandoned Transactions
ii. Live-Event Ticketing: Estimated Costs of the Final Rule
iii. Live-Event Ticketing: Net Benefits
iv. Live-Event Ticketing: Uncertainties
(d) Quantified Benefits and Costs: Short-Term Lodging Industry
i. Short-Term Lodging: Estimated Benefits of the Final Rule
(a) Search Statistics
(b) U.S. Hotels and Home Shares
(c) Foreign Hotels and Home Shares With U.S.-Facing websites
(d) All Hotels and Home Shares
(e) Additional Unquantified Benefits: Reductions In Deadweight
Loss and Abandoned Transactions
ii. Short-Term Lodging: Estimated Costs of the Final Rule
(a) Panel A: U.S. Hotels and Home Share Hosts
(b) Panel B: Foreign Hotels and Home Share Hosts

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(c) Panel C: All Hotels and Home Share Hosts (US + Foreign)
iii. Short-Term Lodging: Net Benefits
iv. Short-Term Lodging: Uncertainties
4. Economic Evaluation of Alternatives
5. Summary of Results
6. Appendix A: Model of Market Distortion Caused by Drip Pricing
7. Appendix B: Short-Term Lodging Industry Minutes per Listing
Calculations
(a) Low-End Estimate of Minutes per Listing Calculation
(b) High-End Estimate of Minutes per Listing Calculation
VI. Paperwork Reduction Act
A. Disclosures Related to Final Sec. 464.2(a) Through (c)
1. Number of Respondents
2. Estimated One-Time Hour Burden
3. Estimated One-Time Labor Costs
4. Estimated One-Time Non-Labor Costs
5. Projected Labor Costs Likely Overestimated
B. Prohibited Misrepresentations Under Final Sec. 464.3
VII. Regulatory Flexibility Act--Final Regulatory Flexibility
Analysis
A. Statement of the Need for, and Objectives of, the Rule
B. Significant Issues Raised by Comments, the Commission's
Assessment and Response, and Any Changes Made as a Result
C. Comment by the Small Business Administration, Office of
Advocacy, the Commission's Assessment and Response, and Any Changes
Made as a Result
D. Description and Estimate of the Number of Small Entities To
Which the Rule Will Apply
E. Description of the Projected Reporting, Recordkeeping, and
Other Compliance Requirements
F. Discussion of Significant Alternatives the Commission
Considered That Would Accomplish the Stated Objectives of the Final
Rule and That Would Minimize Any Significant Economic Impact of the
Final Rule on Small Entities
VIII. Congressional Review Act

I. Background

When shopping for a good or service, consumers want to know: how
much? It is a bedrock principle of FTC law that price is material to a
consumer's decision about whether to purchase a good or service.
Consumers look for prices to comparison shop and to weigh what a good
or service might be worth. Most consumers also rely on price to answer
critical budgeting questions such as: Can I afford this hotel or short-
term rental for my upcoming vacation? Can I afford these concert
tickets? Unfortunately, consumers face widespread and growing unfair
and deceptive fee practices that make it much harder to find out: how
much will this cost?
There is nothing new about businesses using bait-and-switch tactics
to reel in and deceive consumers. The Commission has a long history of
bringing enforcement actions against these unfair and deceptive
practices. Quoting a misleading, artificially low price and then adding
in mandatory fees and other charges throughout the buying process--a
practice known today as drip pricing--is a quintessential example of
bait-and-switch pricing and is a practice that falls squarely within
the scope of the Commission's long history of work to protect
consumers. While today this practice goes by a different name, the
playbook has not changed: lure in consumers with a low price, then hit
them with a higher price after they have invested in the transaction
and sunk time and effort into trying to buy a good or service for an
illusory price. Behavioral and economic research explains that
piecemeal numbers and explanations cannot cure the deception or
mitigate the harms to consumers when businesses employ these pricing
tactics. Often consumers finish the transaction without an accurate
understanding of the total price of goods or services.
In recent years, bait-and-switch pricing has garnered widespread
public attention. Consumers have cried foul when they discovered the
cost of their hotel stays were significantly higher than expected due
to a mandatory, hidden ``resort fee,'' typically charged for services
that consumers expected to be a part of staying in a hotel. Consumers
have also complained when they tried to purchase tickets to a live
event, only to find out that the quoted ticket price almost doubled by
the time they reached the final checkout page. Consumers have
confronted a host of mysterious, mandatory, ``convenience,''
``processing,'' or ``service'' charges that are either non-descript or
otherwise misleading. These practices are frustrating for consumers
when they shop for travel and entertainment especially because these
purchases can be significant expenditures. This rulemaking record is
replete with individual stories of consumers inundated by bait-and-
switch pricing and misleading fees and charges.
For example, an individual commenter lamented the pervasiveness of
bait-and-switch pricing tactics across everyday purchases:

Like almost every American consumer, I have had to pay these
``junk fees'' in various circumstances. I consider myself reasonably
well informed, yet have been surprised by them, because they keep
[c]ropping up in unexpected places. Like many, I've experienced them
in hotels, with car rentals and telecom providers. In these
instances, the consumer has no real recourse, as the bargaining
power is wholly unequal. However, these fees are now impacting every
aspect of commerce. ``Convenience'' fees have impacted me with food
service. ``Facility'' fees charges at fitness facilities. Credit
card fees in excess of the actual interchange fees being charged at
restaurants. It's endless, ubiquitous and makes it extremely
difficult for consumers to make informed decisions.\1\
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\1\ FTC-2023-0064-0886 (Individual Commenter).

As another individual commenter aptly put it, ``It's one thing to
be on guard when walking down a dark alley, but being on guard every
time you want to take a vacation, go to a concert, fly home to see a
sick loved one--that's just not fair.'' \2\
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\2\ FTC-2023-0064-1576 (Individual Commenter).
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It is no surprise that, once bait-and-switch pricing tactics are
used by some businesses to obscure the cost of a good or service, they
tend to spread. Businesses that want to compete on the true price of
their offering are undercut by businesses that use hidden or misleading
fees to display an artificially low price. As studies confirm, in such
instances, consumers cannot shop for price effectively. This forces
businesses into a race to the bottom and results in more and more
businesses using hidden and misleading fees to remain competitive. When
these types of fees are eventually revealed, consumers are left
frustrated with a new and unexpected higher price and misleading fees
and charges that prevent them from having a real understanding of what
they are getting in return for these additional fees.
The Rule on Unfair or Deceptive Fees addresses these problems
directly in the live-event ticketing industry and the short-term
lodging industry, which includes temporary sleeping accommodations at a
hotel, motel, inn, short-term rental, vacation rental, or other place
of lodging. These two industries have engaged in bait-and-switch
pricing tactics for years. The rule ensures that when businesses
advertise a price for live-event tickets or short-term lodging, it is
the total price, and when they explain a fee or charge, the description
is truthful. In simple terms: tell consumers the real price and do not
lie about the fees or charges. The final rule does this by addressing
two specific and prevalent unfair and deceptive practices: (1) bait-
and-switch pricing that hides the total price of live-event tickets and
short-term lodging by omitting mandatory fees and charges from
advertised prices, including through drip pricing, and (2)
misrepresenting the nature, purpose, amount, and refundability of fees
or charges. The rule has two main

[[Page 2068]]

components. First, the final rule requires businesses that offer a
price for live-event tickets or short-term lodging to disclose the
total price, inclusive of most mandatory charges, and to make sure that
the total price is disclosed more prominently than other pricing
information, except the final amount of payment. Second, the final rule
prohibits misrepresentations about fees or charges in any offer,
display, or advertisement for live-event tickets and short-term
lodging.
The final rule is tailored to target these specific unfair and
deceptive pricing practices, while preserving flexibility for live-
event ticket and short-term lodging businesses. The rule does not
prohibit any one type of fee, nor does it prohibit specific pricing
practices such as itemization of fees or dynamic pricing. The rule does
not require that all fees be included when offering a price--just
mandatory ones. The rule gives businesses discretion to list optional
fees selected by the consumer and government and shipping charges
separately. The discretion to set prices remains squarely with
businesses; the rule simply requires that they tell consumers the truth
about prices for live-event tickets and short-term lodging.

A. Advance Notice of Proposed Rulemaking

The Commission published, on November 8, 2022, an advance notice of
proposed rulemaking (``ANPR'') \3\ under the authority of section 18 of
the Federal Trade Commission Act (``FTC Act'') \4\ to address certain
unfair or deceptive acts or practices involving fees. The ANPR
described the Commission's history of taking law enforcement action
against, and educating consumers about, unfair or deceptive practices
relating to fees, and it asked a series of questions to help inform the
Commission about whether such practices are prevalent and, if so,
whether and how to proceed with a notice of proposed rulemaking
(``NPRM''). The Commission was particularly interested in the following
practices that it identified as the subjects of investigations,
enforcement actions, workshops, research, and consumer education: (a)
misrepresenting or failing to disclose clearly and conspicuously, on
any advertisement or in any marketing, the total price of any good or
service for sale; (b) misrepresenting or failing to disclose clearly
and conspicuously, on any advertisement or in any marketing, the
existence of any fees, interest, charges, or other costs that are not
reasonably avoidable for any good or service; (c) misrepresenting or
failing to disclose clearly and conspicuously whether fees, interest,
charges, products, or services are optional or required; (d)
misrepresenting or failing to disclose clearly and conspicuously any
material restriction, limitation, or condition concerning any good or
service that may result in a mandatory charge in addition to the cost
of the good or service or that may diminish the consumer's use of the
good or service, including the amount the consumer receives; (e)
misrepresenting that a consumer owes payments for any product or
service the consumer did not agree to purchase; (f) billing or charging
consumers for fees, interest, goods, services, or programs without
express and informed consent; (g) billing or charging consumers for
fees, interest, goods, services, or programs that have little or no
added value to the consumer or that consumers would reasonably assume
to be included within the overall advertised price;[thinsp]and (h)
misrepresenting or failing to disclose clearly and conspicuously, on
any advertisement or in any marketing, the nature or purpose of any
fees, interest, charges, or other costs.
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\3\ Advance notice of proposed rulemaking; request for public
comment: Unfair or Deceptive Fees Trade Regulation Rule Commission
Matter No. R207011, 87 FR 67413 (Nov. 8, 2022). The ANPR and other
documents pertaining to this rulemaking are available on the FTC web
page, Rulemaking: Unfair or Deceptive Fees, <a href="https://www.ftc.gov/legal-library/browse/rules/rulemaking-unfair-or-deceptive-fees">https://www.ftc.gov/legal-library/browse/rules/rulemaking-unfair-or-deceptive-fees</a>.
\4\ 15 U.S.C. 57a(b)(2). Section 18 authorizes the Commission to
promulgate, modify, or repeal trade regulation rules that define
with specificity acts or practices that are unfair or deceptive in
or affecting commerce within the meaning of section 5(a)(1) of the
FTC Act, 15 U.S.C. 45(a)(1).
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The Commission specifically sought public comment on the prevalence
of such practices and the costs and benefits of a rule that would
require upfront inclusion of mandatory fees whenever consumers are
quoted a price, including by asking a series of questions to solicit
data and commentary. The Commission took comments for sixty days,
extended the comment period by an additional thirty days,\5\ and
carefully considered the more than 12,000 comments received.\6\
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\5\ Notice; extension of public comment period: Unfair or
Deceptive Fees Trade Regulation Rule, 88 FR 4796 (Jan. 25, 2023).
\6\ Publicly posted comments are available to view through
<a href="http://Regulations.gov">Regulations.gov</a> under Docket ID FTC-2022-0069 at <a href="https://www.regulations.gov/docket/FTC-2022-0069/comments">https://www.regulations.gov/docket/FTC-2022-0069/comments</a>.
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B. Notice of Proposed Rulemaking

Based on the substance of the comments received in response to the
ANPR, as well as the Commission's history of enforcement and other
information, on November 9, 2023, the Commission published an NPRM,
which proposed an industry-neutral rule that would prohibit
misrepresenting the total price of goods or services by omitting
mandatory fees from advertised prices and misrepresenting the nature
and purpose of fees.\7\ The NPRM described the comments received in
response to the ANPR and examined the Commission's prior enforcement
actions and other responses concerning unfair and deceptive fees. In
the NPRM, the Commission stated that it has reason to believe that
certain unfair or deceptive acts or practices involving fees are
prevalent, specifically: (1) misrepresenting the total price of goods
and services by omitting mandatory fees from advertised prices and (2)
misrepresenting the nature and purpose of fees. After discussing the
comments and explaining its considerations in developing a proposed
rule, the Commission also posed specific questions for comment and
provided explanation of the proposed rule text. Finally, the NPRM set
out the Commission's proposed regulatory text.\8\ The Commission took
public comments for sixty days, and extended the comment period for an
additional thirty days.\9\
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\7\ Notice of proposed rulemaking; request for public comment:
Trade Regulation Rule on Unfair or Deceptive Fees, 88 FR 77420 (Nov.
9, 2023). In accordance with section 18(b)(2)(C) of the FTC Act, 15
U.S.C. 57a(b)(2)(C), on October 10, 2023, the Commission sent
notices to the House Committee on Energy and Commerce and the Senate
Committee on Commerce, Science and Transportation seeking comment
concerning the utility and scope of the trade regulation rule
proposed in the NPRM and including the full text of the NPRM.
\8\ NPRM, 88 FR 77483.
\9\ Notice of proposed rulemaking; extension of public comment
period: Trade Regulation Rule on Unfair or Deceptive Fees, 89 FR 38
(Jan. 2, 2024).
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In response to the NPRM, the Commission received over 60,800
comments from stakeholders representing a wide range of viewpoints and
industries.\10\ These stakeholders

[[Page 2069]]

included numerous individual consumers and consumer groups who
described examples and experiences with the unfair and deceptive fee
practices identified by the Commission. Commenters also included a
range of business owners, trade associations, and other industry
groups; academics; and government officials and agencies from all
levels of government. While some commenters raised concerns and
recommended specific modifications to, or exemptions from, the
Commission's proposal, the overwhelming majority of commenters strongly
supported the Commission's proposed rule.
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\10\ Publicly available comments are available to view through
<a href="http://Regulations.gov">Regulations.gov</a> under Docket ID FTC-2023-0064 at <a href="https://www.regulations.gov/document/FTC-2023-0064-0001/comment">https://www.regulations.gov/document/FTC-2023-0064-0001/comment</a>. As noted on
<a href="http://Regulations.gov">Regulations.gov</a>, not every comment is made publicly available. For
example, ``[a]gencies may redact or withhold certain Comment
Submissions . . . , such as those containing . . . duplicate/near
duplicate examples of a mass-mail campaign. Therefore, the total in
the Number of Comments Posted Box may be lower than the total in the
Comments Received Box.'' See <a href="https://www.regulations.gov/faq">https://www.regulations.gov/faq</a>,
Frequently Asked Questions, General FAQs, Find Dockets, Documents,
and Comments FAQs, answer to How are Comments counted and posted to
<a href="http://Regulations.gov">Regulations.gov</a>?. In this rulemaking, <a href="http://Regulations.gov">Regulations.gov</a> identified ten
mass-mail campaigns as part of the total number of comments received
of over 60,800. One mass-mail campaign alone accounted for close to
48,200 comments, and all mass-mail campaigns combined accounted for
more than 57,400 comments. Because comments within each mass-mail
campaign are highly similar, only representative comments of each
mass-mail campaign are publicly posted on <a href="http://Regulations.gov">Regulations.gov</a>. In
addition to representative mass-mail comments, the more than 3,300
comments that <a href="http://Regulations.gov">Regulations.gov</a> did not identify as belonging to a
mass-mail campaign are publicly posted. The Commission received and
considered all filed comments, including all mass-mail comments.
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The proposed rule received widespread support in comments from
Federal,\11\ State, and local \12\ elected officials; State Attorneys
General; \13\ Federal,\14\ State, and local \15\ government agencies;
public policy and consumer advocates,\16\ including housing advocates
\17\ and advocates for the incarcerated or formerly incarcerated; \18\
university public policy advocates and clinics; \19\ academics; \20\
legal services providers; \21\ and industry members from a broad range
of market sectors, including online merchants,\22\ live-event
ticketing,\23\ and hotels and other short-term lodging.\24\ These
commenters supporting the rule confirmed the prevalence of hidden and
misrepresented fees throughout the economy, across large and small
industries subject to the Commission's jurisdiction, ranging, for
example, from travel, live events, restaurants, delivery, rental
housing, and correctional services to carpet cleaning, dietary
supplements, moving companies, and gyms. These commenters supported the
rule for its benefits to both consumers and honest businesses.
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\11\ See, e.g., FTC-2023-0064-3135 (U.S. Senate, Sen. Robert P.
Casey, Jr.); FTC-2023-0064-3271 (U.S. Senate, Sen. Amy Klobuchar);
FTC-2023-0064-2858 (U.S. House of Representatives, Rep. Maxwell
Alejandro Frost, Rep. Jimmy Gomez, Rep. Barbara Lee, Rep. Rashida
Tlaib, Rep. Kevin Mullin, Rep. Dwight Evans, Rep. Judy Chu, Rep.
Greg Casar, Rep. Dan Goldman, Rep. Salud Carbajal).
\12\ See, e.g., FTC-2023-0064-1411 (Arizona House of
Representatives, Rep. Analise Ortiz); FTC-2023-0064-2938 (Colorado
House of Representatives, Rep. Naquetta Ricks); FTC-2023-0064-2926
(Florida House of Representatives, Rep. Rita Harris); FTC-2023-0064-
3081 (Florida House of Representatives, Rep. Anna V. Eskamani); FTC-
2023-0064-3103 (Florida House of Representatives, Rep. Angela
Nixon); FTC-2023-0064-3117 (Maryland House of Delegates, Del. Julie
Palakovich Carr); FTC-2023-0064-2341 (Massachusetts House of
Representatives, Rep. Lindsay Sabadosa); FTC-2023-0064-3072
(Michigan Senate and House of Representatives, Sen. Darrin
Camilleri, Sen. Mary Cavanagh, and Rep. Betsy Coffia); FTC-2023-
0064-3079 (Montana State Senate, Senate Democratic Caucus, Sen. Pat
Flowers, Sen. Susan Webber, Sen. Andrea Olsen, Sen. Edie
McClafferty, Sen. Jen Gross, Sen. Janet Ellis, Sen. Shane Morigeau,
Sen. Ellie Boldman, Sen. Ryan Lynch, Sen. Christopher Pope, Sen.
Mike Fox, Sen. Denise Hayman, Sen. Willis Curdy, and Sen. Mary Ann
Dunwell); FTC-2023-0064-3184 (New York Senate, Sen. Michael
Gianaris); FTC-2023-0064-3123 (Syracuse, New York, City Auditor
Alexander Marion); FTC-2023-0064-3149 (North Carolina House of
Representatives, Rep. Julie von Haefen); FTC-2023-0064-3237 (North
Carolina House of Representatives, Rep. Pricey Harrison).
\13\ See, e.g., FTC-2023-0064-3150 (Attorney General of the
State of California); FTC-2023-0064-3215 (Attorneys General of the
States of North Carolina and Pennsylvania, along with Attorneys
General of the States or Territories of Arizona, Colorado,
Connecticut, Delaware, District of Columbia, Hawaii, Illinois,
Maine, Michigan, Minnesota, New Jersey, New York, Oklahoma, Oregon,
Vermont, Washington, and Wisconsin).
\14\ See, e.g., FTC-2023-0064-3134 (U.S. Department of
Transportation, Federal Motor Carrier Safety Administration); FTC-
2023-0064-3187 (U.S. Department of Justice, Antitrust Division).
\15\ See, e.g., FTC-2023-0064-1519 (New York City Department of
Consumer and Worker Protection); FTC-2023-0064-2883 (District of
Columbia, Office of the People's Counsel); FTC-2023-0064-3196 (South
Carolina Department of Consumer Affairs).
\16\ See, e.g., FTC-2023-0064-1028 (Complex Trauma Project);
FTC-2023-0064-2885 (AARP); FTC-2023-0064-3104 (Truth in Advertising,
Inc.); FTC-2023-0064-3160 (Consumer Federation of America on behalf
of itself and 51 other national and State consumer advocacy groups,
authored by American Economic Liberties Project, Consumer Action,
Consumer Federation of America, National Association of Consumer
Advocates, National Consumer Law Center, National Consumers League,
U.S. Public Interest Research Group); FTC-2023-0064-3162 (BBB
National Programs, Inc.); FTC-2023-0064-3191 (Community Catalyst and
32 other organizations focused on health care and consumer
protection issues); FTC-2023-0064-3205 (Consumer Reports); FTC-2023-
0064-3216 (Demand Progress Education Fund); FTC-2023-0064-3218
(National Consumer Law Center); FTC-2023-0064-3242 (William E.
Morris Institute for Justice); FTC-2023-0064-3246 (Coalition for App
Fairness); FTC-2023-0064-3248 (DC Jobs With Justice on behalf of
Fair Price, Fair Wage Coalition); FTC-2023-0064-3259 (National
Women's Law Center); FTC-2023-0064-3270 (Consumer Federation of
America, National Consumer Law Center, and National Association of
Consumer Advocates); FTC-2023-0064-3290 (U.S. Public Interest
Research Group Education Fund); FTC-2023-0064-3302 (Public Citizen).
\17\ See, e.g., FTC-2023-0064-1431 (McPherson Housing
Coalition); FTC-2023-0064-2851 (Housing Action Illinois); FTC-2023-
0064-3102 (Corporation for Supportive Housing); FTC-2023-0064-3235
(National Housing Law Project).
\18\ See, e.g., FTC-2023-0064-2915 (Voice of the Experienced);
FTC-2023-0064-2696 (Safe Return Project); FTC-2023-0064-3253
(Fortune Society); FTC-2023-0064-3260 (Formerly Incarcerated,
Convicted People & Families Movement, in collaboration with the
Partnership for Just Housing); FTC-2023-0064-3283 (National Consumer
Law Center, Prison Policy Initiative, and advocate Stephen Raher).
\19\ See, e.g., FTC-2023-0064-1939 (Tzedek DC, David A. Clarke
School of Law, University of the District of Columbia); FTC-2023-
0064-2888 (Housing Policy Clinic, University of Texas School of
Law); FTC-2023-0064-3146 (Institute for Policy Integrity, New York
University School of Law); FTC-2023-0064-3255 (Carrie Floyd,
Clinical Teaching Fellow, Veterans Legal Clinic, and Mira Edmonds,
Clinical Assistant Professor of Law, Civil-Criminal Litigation
Clinic, University of Michigan Law School); FTC-2023-0064-3275
(Berkeley Center for Consumer Law & Economic Justice, University of
California, Berkeley School of Law, and Consumer Law Advocates,
Scholars & Students Network); FTC-2023-0064-3268 (Housing & Eviction
Defense Clinic, University of Connecticut School of Law).
\20\ See, e.g., FTC-2023-0064-1294 (James J. Angel, Ph.D., CFP,
CFA, Professor, Georgetown University, McDonough School of
Business); FTC-2023-0064-1467 (Richard J. Peltz-Steele, Chancellor
Professor, University of Massachusetts Law School).
\21\ See, e.g., FTC-2023-0064-2862 (Legal Aid Foundation of Los
Angeles); FTC-2023-0064-2892 (Community Legal Services of
Philadelphia); FTC-2023-0064-2920 (Colorado Poverty Law Project);
FTC-2023-0064-3090 (Atlanta Legal Aid Society, Inc.); FTC-2023-0064-
3225 (CED Law); FTC-2023-0064-3278 (Southeast Louisiana Legal
Services).
\22\ See, e.g., FTC-2023-0064-2840 (Indie Sellers Guild); FTC-
2023-0064-2901 (E-Merchants Trade Council, Inc.).
\23\ See, e.g., FTC-2023-0064-2856 (National Football League);
FTC-2023-0064-3108 (Christian L. Castle, Esq.; Mala Sharma,
President, Georgia Music Partners; and Dr. David C. Lowery, founder
of musical groups Cracker and Camper Van Beethoven, and a lecturer
at the University of Georgia Terry College of Business); FTC-2023-
0064-3122 (Vivid Seats); FTC-2023-0064-3195 (League of American
Orchestras on behalf of itself and Association of Performing Arts
Professionals, Carnegie Hall, Dance/USA, Folk Alliance
International, Future of Music Coalition, National Performance
Network, OPERA America, PAVA--Performing Arts Venues Alliance,
Performing Arts Alliance, and Theatre Communications Group); FTC-
2023-0064-3212 (TickPick, LLC); FTC-2023-0064-3230 (Future of Music
Coalition); FTC-2023-0064-3250 (National Independent Talent
Organization); FTC-2023-0064-3266 (StubHub, Inc.); FTC-2023-0064-
3292 (National Association of Theatre Owners); FTC-2023-0064-3304
(Recording Academy); FTC-2023-0064-3306 (Live Nation Entertainment
and its subsidiary Ticketmaster North America); FTC-2023-0064-3105
(Charleston Symphony); FTC-2023-0064-3241 (National Association of
Ticket Brokers).
\24\ See, e.g., FTC-2023-0064-3077 (Far Horizons Travel); FTC-
2023-0064-3094 (American Hotel & Lodging Association); FTC-2023-
0064-3106 (American Society of Travel Advisors, Inc.); FTC-2023-
0064-3204 (Expedia Group); FTC-2023-0064-3244 (Vacation Rental
Management Association).
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Individual consumers overwhelmingly supported the rule. Out of
60,853 total comments received, a mass mailing of close to 48,186
consumer commenters stated that they supported ``the FTC's efforts to
protect American consumers and crack down on unscrupulous businesses
that tack on junk fees at the end of the purchasing process,'' and
urged the Commission ``to pass this rule to not only save consumers
tens of billions of dollars each year, but to level the playing field
for honest businesses who are transparent about their costs and

[[Page 2070]]

fees.'' \25\ Other mass mailings contained similar comments in support.
In a mass mailing of about 344 comments, consumer commenters made near-
identical statements to the aforementioned mass mailing and added:
``Junk fees are monies a business tacks on at the end of the purchasing
process instead of being transparent about the full price upfront.
These fees are common when people are purchasing airline and concert
tickets, booking hotel rooms, paying utility bills, and renting
apartments.'' \26\ A mass mailing submitted by about 315 consumer
commenters stated, ``I support cracking down on hidden junk fees that
cost Americans billions of dollars each year.'' \27\ A mass mailing by
about nineteen consumer commenters stated, ``For too long, individuals
have been subjected to misleading practices, such as the omission of
mandatory fees from advertised prices and misrepresentation of the
nature and purpose of fees. These practices not only erode trust but
also hinder informed decision-making by consumers.'' \28\ A mass
mailing by about thirteen consumer commenters simply urged: ``Stop junk
fees!'' \29\ Additional comments from individual consumers also
supported the rule.
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\25\ See, e.g., FTC-2023-0064-0962, FTC-2023-0064-1186, FTC-
2023-0064-1219, FTC-2023-0064-1230, FTC-2023-0064-1826, FTC-2023-
0064-1827, FTC-2023-0064-1933, FTC-2023-0064-1946.
\26\ See, e.g., FTC-2023-0064-2290.
\27\ See, e.g., FTC-2023-0064-3156.
\28\ See, e.g., FTC-2023-0064-2962.
\29\ See, e.g., FTC-2023-0064-2964.
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Other commenters opposed the rule, sought exemptions from the rule,
or expressed concern about the rule's definitions or application to
specific pricing scenarios. They included a Federal government agency;
\30\ national business groups and public policy advocates,\31\
including tax groups and advisors; \32\ academics; \33\ representatives
from auto dealers and service providers; \34\ app-based delivery
platforms; \35\ financial and real estate settlement services; \36\
franchised businesses; \37\ representatives of housing providers,\38\
including apartment associations \39\ and a housing advertising
platform; \40\ hospitality groups, including hotel \41\ and restaurant
associations; \42\ funeral and cemetery providers; \43\ gaming
associations; \44\ telecommunications providers; \45\ live-event
venues; \46\ a law firm; \47\ providers of communications services to
incarcerated people; \48\ and other sectors.\49\ The commenters argued
that the FTC failed to establish the prevalence of the defined unfair
and deceptive practices and failed to conduct an adequate cost-benefit
analysis, and that the proposed rule would interfere with established
pricing models, could not be applied to all pricing scenarios, would
overlap with other laws and regulations, or would exceed the FTC's
rulemaking authority or jurisdiction.
---------------------------------------------------------------------------

\30\ U.S. Small Bus. Admin., Office of Advocacy, Re: Trade
Regulation Rule on Unfair or Deceptive Fees FTC-2023-0064-0001,
<a href="https://advocacy.sba.gov/wp-content/uploads/2024/03/Comment-Letter-Trade-Regulation-Rule-on-Unfair-or-Deceptive-Fees.pdf">https://advocacy.sba.gov/wp-content/uploads/2024/03/Comment-Letter-Trade-Regulation-Rule-on-Unfair-or-Deceptive-Fees.pdf</a>.
\31\ See, e.g., FTC-2023-0064-2367 (Small Business Majority);
FTC-2023-0064-2887 (Progressive Policy Institute); FTC-2023-0064-
2919 (National Automatic Merchandising Association); FTC-2023-0064-
3028 (Competitive Enterprise Institute); FTC-2023-0064-3016
(National Federation of Independent Business, Inc.); FTC-2023-0064-
3127 (U.S. Chamber of Commerce); FTC-2023-0064-3128 (Merchants
Payments Coalition); FTC-2023-0064-3137 (Chamber of Progress); FTC-
2023-0064-3140 (Merchant Advisory Group); FTC-2023-0064-3145
(Association of National Advertisers, Inc.); FTC-2023-0064-3147
(American Land Title Association); FTC-2023-0064-3173 (Center for
Individual Freedom); FTC-2023-0064-3186 (National LGBT Chamber of
Commerce and National Asian/Pacific Islander American Chamber of
Commerce & Entrepreneurship); FTC-2023-0064-3208 (FreedomWorks);
FTC-2023-0064-3267 (National Retail Federation).
\32\ See, e.g., FTC-2023-0064-3100 (Civitas Advisors, Inc.);
FTC-2023-0064-3126 (Tax Foundation); FTC-2023-0064-3258 (National
Taxpayers Union Foundation).
\33\ See, e.g., FTC-2023-0064-2891 (Mary Sullivan, George
Washington University, Regulatory Studies Center); FTC-2023-0064-
3264 (Mark J. Perry, Ph.D., Professor Emeritus of Economics at
University of Michigan-Flint and Senior Fellow Emeritus at the
American Enterprise Institute).
\34\ See, e.g., FTC-2023-0064-3121 (National Independent
Automobile Dealers Association); FTC-2023-0064-3189 (National
Automobile Dealers Association); FTC-2023-0064-3206 (Motor Vehicle
Protection Products Association, Guaranteed Asset Protection
Alliance, and Service Contract Industry Council); FTC-2023-0064-3276
(Automotive Service Association).
\35\ See, e.g., FTC-2023-0064-3263 (Flex Association); FTC-2023-
0064-3202 (TechNet).
\36\ See, e.g., FTC-2023-0064-1425 (Iowa Bankers Association);
FTC-2023-0064-1941 (Independent Bankers Association of Texas); FTC-
2023-0064-2574 (BattleLine LLC via Investor Protection Initiative);
FTC-2023-0064-2893 (America's Credit Unions); FTC-2023-0064-3119
(Money Services Business Association, Inc.); FTC-2023-0064-3138
(Independent Community Bankers of America); FTC-2023-0064-3139
(American Bankers Association and Consumer Bankers Association);
FTC-2023-0064-3142 (American Escrow Association); FTC-2023-0064-3144
(Mortgage Bankers Association); FTC-2023-0064-3168 (American
Financial Services Association); FTC-2023-0064-3182 (Massachusetts
Bankers Association).
\37\ See, e.g., FTC-2023-0064-3141 (Coalition of Franchisee
Associations); FTC-2023-0064-3211 (American Association of
Franchisees & Dealers); FTC-2023-0064-3294 (International Franchise
Association).
\38\ See, e.g., FTC-2023-0064-3066 (Norhart, Inc.); FTC-2023-
0064-3115 (National Association of Residential Property Managers);
FTC-2023-0064-3116 (Manufactured Housing Institute); FTC-2023-0064-
3133 (National Multifamily Housing Council and National Apartment
Association); FTC-2023-0064-3152 (Building Owners & Managers
Association, Council for Affordable & Rural Housing, Housing
Advisory Group, Institute of Real Estate Management, Manufactured
Housing Institute, National Apartment Association, National
Association of Home Builders, National Association of Residential
Property Managers, National Leased Housing Association, National
Multifamily Housing Council, and Real Estate Roundtable).
\39\ See, e.g., FTC-2023-0064-2981 (Apartment & Office Building
Association of Metropolitan Washington); FTC-2023-0064-3042 (Nevada
State Apartment Association); FTC-2023-0064-3044 (San Angelo
Apartment Association); FTC-2023-0064-3045 (Chicagoland Apartment
Association); FTC-2023-0064-3089 (Apartment Association of Northeast
Wisconsin and Fox Valley Apartment Association); FTC-2023-0064-3111
(Houston Apartment Association); FTC-2023-0064-3172 (New Jersey
Apartment Association); FTC-2023-0064-3296 (Bay Area Apartment
Association); FTC-2023-0064-3311 (Greater Cincinnati Northern
Kentucky Apartment Association); FTC-2023-0064-3312 (Tulsa Apartment
Association); FTC-2023-0064-3313 (Property Management Association of
Michigan).
\40\ FTC-2023-0064-3289 (Zillow Group).
\41\ See, e.g., FTC-2023-0064-3262 (Skyscanner); FTC-2023-0064-
3293 (Travel Technology Association).
\42\ See, e.g., FTC-2023-0064-2918 (Elite Catering + Event
Professionals); FTC-2023-0064-3078 (Washington Hospitality
Association); FTC-2023-0064-3080 (UNITE HERE); FTC-2023-0064-3101
(High Road Restaurants); FTC-2023-0064-3180 (Independent Restaurant
Coalition); FTC-2023-0064-3197 (American Beverage Licensees); FTC-
2023-0064-3203 (American Pizza Community); FTC-2023-0064-3219
(Georgia Restaurant Association); FTC-2023-0064-3300 (National
Restaurant Association).
\43\ See, e.g., FTC-2023-0064-3065 (Carriage Services, Inc.);
FTC-2023-0064-3130 (International Cemetery, Cremation & Funeral
Association); FTC-2023-0064-3210 (Service Corporation
International).
\44\ See, e.g., FTC-2023-0064-2886 (American Gaming
Association); FTC-2023-0064-3120 (Arizona Indian Gaming
Association).
\45\ See, e.g., FTC-2023-0064-3261 (National Association of
Broadcasters); FTC-2023-0064-2884 (NTCA--The Rural Broadband
Association); FTC-2023-0064-3143 (ACA Connects--America's
Communications Association); FTC-2023-0064-3233 (NCTA--The internet
& Television Association); FTC-2023-0064-3234 (CTIA--The Wireless
Association); FTC-2023-0064-3295 (USTelecom--The Broadband
Association).
\46\ See, e.g., FTC-2023-0064-3033 (The Rebel Lounge, Lucky Man
Concerts LLC, PHX Fest, RelentlessBeats LLC).
\47\ FTC-2023-0064-3238 (Gibson, Dunn & Crutcher LLP).
\48\ See, e.g., FTC-2023-0064-3236 (NCIC Inmate Communications);
FTC-2023-0064-3284 (Global Tel*link Corporation d/b/a ViaPath
Technologies).
\49\ See, e.g., FTC-2023-0064-2906 (National Association of
College & University Business Officers, American Council on
Education); FTC-2023-0064-3217 (Bowling Proprietors' Association of
America); FTC-2023-0064-3249 (Marine Retailers Association of the
Americas); FTC-2023-0064-3251 (National RV Dealers Association);
FTC-2023-0064-3269 (IHRSA--The Health & Fitness Association). Towing
& Recovery Association of America, Inc. submitted a late comment,
which the Commission considered in its discretion and makes
available at <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/R207011TRAAComment.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/R207011TRAAComment.pdf</a>.
---------------------------------------------------------------------------

Members of the restaurant industry voiced opposition to the
proposal. A mass mailing from about 4,650

[[Page 2071]]

restaurant owners criticized the rule as a one-size-fits-all approach
that would be unworkable for the restaurant industry. In addition,
members of the rental housing industry also submitted comments in
opposition to the proposed rule. A mass mailing from about 3,781
members of the rental housing industry stated that it is virtually
impossible to predict and disclose in advertisements total prices that
include all mandatory fees that residents could incur during lease
terms. The Commission does not address the specific issues raised by
these industries and others that fall outside the scope of this final
rule.\50\
---------------------------------------------------------------------------

\50\ See, e.g., FTC-2023-0064-2953, FTC-2023-0064-2961, FTC-
2023-0064-2972; FTC-2023-0064-2971.
---------------------------------------------------------------------------

C. Informal Public Hearing

On March 27, 2024, the Commission published an initial notice of
informal hearing, which also served as the final notice of informal
hearing (``Informal Hearing Notice'').\51\ The Informal Hearing Notice
was published in accordance with section 18(b)(1) of the FTC Act, 15
U.S.C. 57a(b)(1), which requires the Commission to provide an
opportunity for an informal hearing in section 18 rulemaking
proceedings. The Informal Hearing Notice identified eight commenters to
the NPRM that requested an informal hearing in accordance with the
requirements of 16 CFR 1.11(e), as well as nine additional commenters
that requested the opportunity to make an oral presentation if the
Commission was to hold an informal hearing at others' requests. A
number of commenters, including several who requested an informal
hearing, proposed potential disputed issues of material fact for the
Commission's consideration.\52\ The Commission reviewed these potential
issues and concluded in its Informal Hearing Notice that there were no
disputed issues of material fact to resolve at the hearing.
---------------------------------------------------------------------------

\51\ Initial notice of informal hearing; final notice of
informal hearing; list of Hearing Participants; requests for
submissions from Hearing Participants: Trade Regulation Rule on
Unfair or Deceptive Fees, 89 FR 21216 (Mar. 27, 2024).
\52\ See, e.g., FTC-2023-0064-3127 (U.S. Chamber of Commerce);
FTC-2023-0064-3143 (ACA Connects); FTC-2023-0064-3139 (American
Bankers Association and Consumer Bankers Association); FTC-2023-
0064-3294 (International Franchise Association); FTC-2023-0064-3233
(NCTA--The internet & Television Association).
---------------------------------------------------------------------------

On April 24, 2024, the Commission conducted an informal public
hearing. In the Informal Hearing Notice, which was formally approved by
vote of the Commission, the Commission's Chief Presiding Officer, the
Chair, designated the Honorable Jay L. Himes, an Administrative Law
Judge for the Federal Trade Commission, to serve as the presiding
officer of the informal hearing. Seventeen interested parties were
identified in the Informal Hearing Notice,\53\ and six of them made
documentary submissions in support of their hearing testimony.\54\
Fifteen interested parties made presentations,\55\ and two did not
appear at the hearing.\56\ The majority of interested parties that
appeared spoke in support of the proposed rule. However, several voiced
opposition to the rule, explained perceived problems with the proposed
rule text, or argued that the Commission incorrectly concluded that
there were no disputed issues of material fact raised in response to
the NPRM.
---------------------------------------------------------------------------

\53\ The interested parties were: ACA Connects--America's
Communication Association; American Bankers Association and Consumer
Bankers Association; U.S. Chamber of Commerce; NCTA--The internet &
Television Association; International Franchise Association;
BattleLine LLC; IHRSA--The Global Health & Fitness Association;
National Taxpayers Union Foundation; Consumer Federation of America,
representing a coalition of 52 national and state consumer advocacy
groups; Consumer Federation of America with National Consumer Law
Center and National Association of Consumer Advocates; Community
Catalyst, representing a coalition of 33 health and consumer
protection advocacy groups; National Housing Law Project,
representing a coalition of 39 housing justice advocacy
organizations; National Consumer Law Center, Prison Policy
Initiative, and Stephen Raher; Formerly Incarcerated, Convicted
People & Families Movement; Truth in Advertising, Inc.; National
Consumer Law Center; and Fair Price, Fair Wage Coalition.
\54\ The interested parties that made documentary submissions in
connection with the informal hearing were: National Taxpayers Union
Foundation; Community Catalyst; National Housing Law Project;
Consumer Federation of America; U.S. Chamber of Commerce; and NCTA--
The internet & Television Association. Each of the documentary
submissions is posted in the Informal Hearing Documents folder
available at <a href="https://www.ftc.gov/legal-library/browse/rules/rulemaking-unfair-or-deceptive-fees">https://www.ftc.gov/legal-library/browse/rules/rulemaking-unfair-or-deceptive-fees</a>.
\55\ Transcript, Informal Hearing on Proposed Trade Regulation
Rule on Unfair or Deceptive Fees (Apr. 24, 2024), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/transcript-deceptive-fees.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/transcript-deceptive-fees.pdf</a>.
\56\ American Bankers Association and Consumer Bankers
Association and the U.S. Chamber of Commerce did not appear at the
Informal Hearing despite being given the opportunity to do so.
---------------------------------------------------------------------------

II. The Legal Standard for Promulgating the Rule

The Commission is promulgating 16 CFR part 464 (``final rule'' or
``rule'') pursuant to section 18 of the FTC Act, 15 U.S.C. 57a, which
authorizes the Commission to promulgate, modify, and repeal trade
regulation rules that define with specificity acts or practices in or
affecting commerce that are unfair or deceptive within the meaning of
section 5(a)(1) of the FTC Act, 15 U.S.C. 45(a)(1).\57\ Whenever the
Commission promulgates a rule under section 18(a)(1)(B), the rule must
include a Statement of Basis and Purpose (``SBP'') that addresses: (1)
the prevalence of the acts or practices addressed by the rule; (2) the
manner and context in which the acts or practices are unfair or
deceptive; and (3) the economic effect of the rule, taking into account
the effect on small businesses and consumers.\58\ The Commission
summarizes in this section its findings regarding each of these
requirements.
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\57\ See 15 U.S.C. 57a(a)(1)(B).
\58\ 15 U.S.C. 57a(b)(3). In addition, section 22(b)(2) of the
FTC Act, 15 U.S.C. 57b-3(b)(2), requires the Commission to prepare a
final regulatory analysis, which it discusses in section V.
---------------------------------------------------------------------------

Substantial evidence exists supporting the prevalence of bait-and-
switch pricing and misleading fees and charges economy-wide as well as
in the live-event ticketing and short-term lodging industries. As
documented by the rulemaking record, the Commission's work on these
pricing issues for over a decade, and the complementary actions of the
Commission's local, State, and international counterparts, these
specific practices are widespread across the economy and are harmful to
consumers and honest businesses. Nevertheless, the Commission has
decided, in its discretion, to focus this final rule on the industries
in which the Commission first evaluated drip pricing--live-event
ticketing and short-term lodging--and have a long history of harming
consumers and honest competitors.
The Commission notes that the harms of bait-and-switch pricing and
the misrepresentation of fees and charges are particularly pronounced
in industries such as these, in which most transactions occur online.
Consumers trying to comparison shop across multiple websites, or even
on the same website, when deciding what tickets to purchase or where to
travel are unable to do so effectively because some businesses hide the
true total price and instead force consumers to go to different sites
and click through multiple web pages for each offer to learn the true
total price.
Consumer harm is also pronounced in these industries because the
offered goods and services are often identical (as is the case with
live-event tickets), or nearly identical (as is the case with competing
short-term lodging offers in a particular destination and for a
particular star rating), and the most salient feature is the total
price, which is shrouded from consumers. Indeed, for some consumers,
hotel rooms are interchangeable so long as the location, star rating,
and reviews are similar

[[Page 2072]]

across offers, and what matters most is the total price.
In the future, the Commission may address these unfair and
deceptive practices across industries as discussed in the NPRM. For
now, however, the Commission will address unfair and deceptive pricing
practices in other industries using its existing section 5 authority.

A. Prevalence of Acts or Practices Addressed by the Rule

As discussed herein, and in the NPRM, the Commission finds that
unfair or deceptive pricing practices involving bait-and-switch pricing
and misleading fees or charges are prevalent throughout the economy and
affect, or have the potential to affect, virtually every purchasing
transaction a consumer undertakes, including decisions about basic
goods or services; where to live, dine, stay, or travel; and what
events to attend. Specifically, the Commission finds that the following
unfair or deceptive practices relating to fees are prevalent generally
throughout the economy and specifically in the live-event ticketing and
short-term lodging industries: (1) bait-and-switch pricing practices
that hide the total price of goods or services by omitting mandatory
fees and charges from advertised prices, including through drip
pricing, and (2) misrepresenting the nature, purpose, amount, and
refundability of fees or charges.
Section 18 of the FTC Act instructs that the Commission may
determine that unfair or deceptive acts or practices are prevalent if:
``it has issued cease and desist orders regarding such acts or
practices'' or ``any other information available to the Commission
indicates a widespread pattern of unfair or deceptive acts or
practices.'' \59\ In support of its preliminary finding that these
practices are prevalent, the NPRM cited enforcement evidence, including
prior work by the Commission, complementary actions by State Attorneys
General, private lawsuits, and international actions to address unfair
or deceptive pricing practices, as well as comments received in
response to the ANPR.\60\ The NPRM also described legislative and
regulatory action taken by multiple States to address unfair or
deceptive fees.
---------------------------------------------------------------------------

\59\ 15 U.S.C. 57a(b)(3).
\60\ NPRM, 88 FR 77435; see also, e.g., FTC-2022-0069-6099
(ANPR) (Consumer Reports discussed its WTFee?! Survey, 2018
Nationally-Representative Multi-Mode Survey of hidden fees in
multiple sectors of the economy and the prevalence of unfair or
deceptive fees practices.); FTC-2022-0069-6095 (ANPR) (Consumer
Federation of America noted that the Washington Attorney General's
Hidden Fee Survey showed that consumers experienced unexpected fees
in a wide range of industries.); FTC-2022-0069-6113 (ANPR) (UnidosUS
cited surveys or studies by itself, the Financial Health Network,
and the Center for Responsible Lending that documented the impact of
fees related to financial services products.).
---------------------------------------------------------------------------

To support its prevalence determination herein as to the economy
generally, and as to the live-event ticketing and short-term lodging
industries specifically, the Commission reiterates that it has a long
history of enforcement actions, as well as a plethora of other
information, indicating a widespread pattern of bait-and-switch pricing
practices, including drip pricing and misleading fees or charges. In
addition, the Commission's prevalence determination is further
supported by the Commission's workshops and warning letters relating to
bait-and-switch pricing and misleading fees or charges; the behavioral
and economic research documenting consumer harm from these practices;
and consumer surveys and reports. The Commission also relies on the
great majority of the more than 60,800 comments filed in response to
the NPRM--one of the largest number of comments filed in any Commission
rulemaking to date--including comments by consumers, consumer groups,
academics, businesses, and government officials highlighting the
prevalence of these unfair and deceptive practices and urging the
Commission to promulgate a final rule to combat them.
As explained in the NPRM, the Commission has a long history of
enforcement actions targeting unfair and deceptive bait-and-switch
pricing tactics concerning hidden fees \61\ and misrepresentations
regarding the nature and purpose of fees.\62\ The takeaway

[[Page 2073]]

from this enforcement history is clear--businesses cannot hide or
misrepresent the true cost of a good or service or mislead consumers
about the nature, purpose, amount, or refundability of fees or charges.
Some commenters suggested consent orders are not cease-and-desist
orders that the Commission can rely upon to support a finding of
prevalence, but that is incorrect. The FTC Act makes clear when it
intends to exclude consent orders from the ambit of ``cease and desist
orders,'' and does not do so in section 18.\63\
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\61\ See, e.g., Complaint ]] 4-5, 106-14, FTC v. Invitation
Homes, Inc., No. 24-cv-04280 (N.D. Ga. Sept. 24, 2024) (alleging
that defendant, among other deceptive and unfair practices,
deceptively advertised monthly home rental prices that omitted and
used confusing and buried language about mandatory fees); Complaint
]] 39-46, FTC v. Vonage Holdings Corp., No. 3:22-cv-6435 (D.N.J.
Nov. 3, 2022) (alleging in part that defendant charged undisclosed
large cancellation fees); Complaint ]] 42-44, 50, United States v.
Funeral Cremation Grp. of N. Am., LLC (``Legacy Cremation Servs.''),
No. 0:22-cv-60779 (S.D. Fla. Apr. 22, 2022) (alleging defendants
advertised artificially low prices for cremation services which
ultimately included undisclosed additional charges and, in some
cases where consumers contested these charges, defendants refused to
return remains); Complaint ] 9, FTC v. Liberty Chevrolet, Inc.
(``Bronx Honda''), No. 1:20-cv-03945 (S.D.N.Y. May 21, 2020)
(alleging defendants advertised low sales prices but later told
consumers they were required to pay additional charges including
certification charges); Complaint ] 13, FTC v. NetSpend Corp., No.
1:16-cv-04203 (N.D. Ga. Apr. 11, 2017) (alleging in part that
defendant charged maintenance and usage fees to consumers who were
unable to use all, or even a portion of, the funds of their prepaid
debit cards); see also Complaint ]] 24-25, 29, 40-42, FTC v. AT&T
Mobility LLC, No. 3:14-cv-04785 (N.D. Cal. Oct. 28, 2014) (alleging
defendant did not adequately disclose the limitations of defendant's
data plan offerings and subsequently charged high cancellation fees
for consumers who chose to end their contracts); Complaint ]] 1, 26,
39-40, FTC v. Millennium Telecard, Inc., No. 2:11-cv-02479 (D.N.J.
May 2, 2011) (alleging defendants deceptively marketed prepaid
credit calling cards by failing to adequately disclose fees that
substantially limited the number of minutes consumers had
purchased); Complaint ] 15, FTC v. CompuCredit Corp., No. 1:08-cv-
01976 (N.D. Ga. June 10, 2008) (alleging in part that defendants
misrepresented the credit limits on various credit cards and failed
to disclose fees charged upfront).
\62\ See, e.g., Complaint ]] 4-5, 106-14, 118-23, Invitation
Homes, Inc., No. 24-cv-04280 (alleging that defendant, among other
deceptive and unfair practices, misled consumers about fees by using
confusing and buried language); Complaint ]] 39-46, Vonage Holdings
Corp., No. 3:22-cv-6435; Complaint ]] 61-63, FTC v. Benefytt Techs.,
Inc., No. 8:22-cv-1794 (M.D. Fla. Aug. 8, 2022) (alleging in part
that defendants bundled and charged fees for unwanted products with
sham health insurance plans); Complaint ]] 17-20, FTC v. Passport
Auto Grp., Inc., No. 8:22-cv-02670 (D. Md. Oct. 18, 2022) (alleging
in part that defendants advertised vehicle prices that did not
include redundant fees ranging from hundreds to thousands of dollars
for inspection, reconditioning, preparation, and certification);
Complaint ]] 3, 33, 41, FTC v. N. Am. Auto. Serv., Inc. (``Napleton
Auto''), No. 1:22-cv-01690 (E.D. Ill. Mar. 31, 2022) (alleging
defendants charged consumers for additional products and services
without their consent and misrepresented the fees as mandatory,
resulting in artificially low advertised prices); Complaint ]] 50-
51, <a href="http://Amazon.com">Amazon.com</a>, Inc. (``Amazon Flex''), No. C-4746 (FTC June 9,
2021) (alleging respondents falsely represented that 100% of tips
would go to the driver in addition to the pay respondents offered
drivers); Complaint ]] 37-39, FTC v. Lead Express, Inc., No. 2:20-
cv-00840 (D. Nev. May 11, 2020) (alleging in part that defendants
did not clearly and conspicuously disclose material information
related to the total amount of payments related to loans and also
withdrew significantly more than the stated total cost of the loan
from consumers' accounts); Complaint ]] 9-10, FTC v. FleetCor Techs,
Inc., No. 1:19-cv-05727, 2019 WL 13081514 (N.D. Ga. Dec. 20, 2019)
(alleging defendants charged consumers arbitrary and unexpected fees
related to pre-paid fuel cards without consumers' consent);
Complaint ]] 4, 30-32, 36-37, FTC v. BCO Consulting Servs., Inc.,
No. 8:23-cv-00699 (C.D. Cal. Apr. 24, 2023) (alleging defendants
enticed consumers with false promises to alleviate student loan debt
despite not applying any payments to the student loan balances and
collecting illegal advance fees without providing any services);
Complaint ]] 31-36, FTC v. OMICS Grp. Inc., No. 2:16-cv-02022 (D.
Nev. Aug. 25, 2016) (alleging in part defendants misrepresented the
publishing process of academic papers and only disclosed large
publishing fees after notifying consumers that their papers had been
approved for publication); Complaint ]] 12, 23-25, FTC v. Lending
Club Corp., No. 3:18-cv-02454 (N.D. Cal. Apr. 25, 2018) (alleging
defendant charged consumers an upfront fee based on a percentage of
the loan requested that was not clearly and conspicuously disclosed;
this hidden fee caused loans received to be substantially smaller
than advertised); Complaint ] 37, FTC v. T-Mobile USA, Inc., No.
2:14-cv-00967 (W.D. Wash. July 1, 2014) (alleging defendant added
unauthorized third-party charges to the telephone bills of
consumers); Amended Complaint ]] 21-22, FTC v. Websource Media, LLC,
No. 4:06-cv-01980 (S.D. Tex. June 21, 2006) (alleging defendants
placed charges on consumer telephone bills despite representations
that there would be no charges or obligations); FTC v. Mercury Mktg.
of Del., Inc., No. 00-cv-3281, 2004 WL 2677177, *1 (E.D. Pa. Nov.
22, 2004) (finding defendants billed consumers without their consent
after misleading consumers about introductory internet packages);
Complaint ]] 25-27, FTC v. Stewart Fin. Co., No. 1:03-cv-02648 (N.D.
Ga. Sept. 4, 2003) (alleging in part that defendants package
undisclosed add-on products with consumer loans and in some cases
describe those add-on products as mandatory); Complaint ]] 19-21,
24, FTC v. Hold Billing Serv., Ltd., No. SA-98-CA-0629-FB (W.D. Tex.
July 16, 1998) (alleging defendants had previously added third-party
charges to consumers' phone bills without permission by using
sweepstakes entry forms as contracts to authorize charges);
Complaint ]] 18, 33, 56-58, FTC v. Lake, No. 8:15-cv-
00585&ndash;CJC-JPR (C.D. Cal. Apr. 14, 2015) (alleging defendants
misrepresented that trial loan payments or reinstatement fee
payments would be held in escrow and refunded to the consumer if the
loan modification was not approved); FTC v. Hope for Car Owners,
LLC, No. 2:12-CV-778-GEB-EFB, 2013 WL 322895, at *3-4 (E.D. Cal.
Jan. 24, 2013) (finding that the FTC sufficiently stated a claim for
misrepresentation of the refundability of vehicle loan modification
fees and entering default judgment); Amended Complaint ]] 38-39, 58-
60, FTC v. U.S. Mortg. Funding, Inc., No. 9:11-cv-80155-JIC (S.D.
Fla. July 26, 2011) (alleging defendants misrepresented that an
upfront loan modification fee was refundable); FTC v. Nat'l Bus.
Consultants, Inc., 781 F. Supp. 1136, 1143 (E.D. La. 1991) (finding
that ``defendants' misrepresentations regarding the ease with which
the `performance deposit' could be refunded composed a large part of
the various and sundry misrepresentations'').
\63\ Compare 15 U.S.C. 45(m) (excluding consent orders from the
type of cease and desist orders that could support an action for
civil penalties under 15 U.S.C. 45(m)(1)(B)) and 108 Stat. 1691
(1994) (amending 15 U.S.C. 45(m) to add ``other than a consent
order'' after the term ``cease and desist order'') with 15 U.S.C.
57a(b)(3) (stating that the Commission may make a determination of
prevalence if ``it has issued cease and desist orders regarding such
acts or practices or any other information available to the
Commission indicat[ing] a widespread pattern of unfair or deceptive
acts or practices''). Even if consent orders and the investigations
that lead up to them are not ``cease and desist orders,'' in making
a determination of prevalence, the Commission can still rely upon
them as ``other information.''
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In addition to the Commission's enforcement actions, for more than
a decade, the Commission has engaged with the public and issued
guidance to industry on issues related to bait-and-switch tactics,
including drip pricing, and the misrepresentation of fees or charges.
The Commission first engaged with the public on the concept of drip
pricing in 2012 by convening a conference, titled ``The Economics of
Drip Pricing,'' to bring together economists and marketing academics to
``examine the theoretical motivation for drip pricing and its impact on
consumers, empirical studies, and policy issues pertaining to drip
pricing.'' \64\ Several psychological theories were discussed at this
conference, and these theories explain why consumers cannot reasonably
avoid making errors when the total price is not revealed upfront.\65\
Following the workshop, Commission staff sent warning letters to hotels
and online travel agents that were not adequately disclosing resort
fees or including those fees in the total price.\66\ These hotels and
online travel agents were employing drip pricing tactics as well as
another bait-and-switch pricing tactic, partitioned pricing, to
inadequately disclose resort fees and hide the total price of a hotel
stay. Partitioned pricing consists of dividing a price into multiple
components without ever disclosing the total and leaving consumers to
figure out the true total price on their own. Hotels, for example,
might separately list the room rate and ``resort fee'' but never add
them up and quote an all-inclusive total price. In 2017, the
Commission's Bureau of Economics published a report that reviewed the
existing literature on drip pricing and partitioned pricing and
examined the costs and benefits of disclosing hotel resort fees.\67\
The report found that ``[u]nless the total price is disclosed up front,
separating resort fees from the room rate is unlikely to result in
benefits that offset the likely harm to consumers.'' \68\ Specifically,
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\64\ Fed. Trade Comm'n, The Economics of Drip Pricing (May 21,
2012), <a href="https://www.ftc.gov/news-events/events/2012/05/economics-drip-pricing">https://www.ftc.gov/news-events/events/2012/05/economics-drip-pricing</a>.
\65\ See, e.g., Fed. Trade Comm'n, The Economics of Drip
Pricing: Conference Transcript 76-111 (May 21, 2012), <a href="https://www.ftc.gov/sites/default/files/documents/public_events/economics-drip-pricing/transcript.pdf">https://www.ftc.gov/sites/default/files/documents/public_events/economics-drip-pricing/transcript.pdf</a>.
\66\ Press Release, Fed. Trade Comm'n, FTC Warns Hotel Operators
that Price Quotes that Exclude ``Resort Fees'' and Other Mandatory
Surcharges May Be Deceptive (Nov. 28, 2012), <a href="https://www.ftc.gov/news-events/news/press-releases/2012/11/ftc-warns-hotel-operators-price-quotes-exclude-resort-fees-other-mandatory-surcharges-may-be">https://www.ftc.gov/news-events/news/press-releases/2012/11/ftc-warns-hotel-operators-price-quotes-exclude-resort-fees-other-mandatory-surcharges-may-be</a>.
\67\ Mary Sullivan, Fed. Trade Comm'n, Economic Analysis of
Hotel Resort Fees 4 (2017), <a href="https://www.ftc.gov/system/files/documents/reports/economic-analysis-hotel-resort-fees/p115503_hotel_resort_fees_economic_issues_paper.pdf">https://www.ftc.gov/system/files/documents/reports/economic-analysis-hotel-resort-fees/p115503_hotel_resort_fees_economic_issues_paper.pdf</a>.
\68\ Id.

separating mandatory resort fees from posted room rates without
first disclosing the total price is likely to harm consumers by
increasing the search costs and cognitive costs of finding and
choosing hotel accommodations. Forcing consumers to click through
additional web pages to see a hotel's resort fee increases the cost
of learning the hotel's price. Separating the room rate from the
resort fee increases the cognitive costs of remembering the hotel's
price. When it becomes more costly to search and evaluate an
additional hotel, a consumer's choice is either to incur higher
total search and cognitive costs or to make an incomplete, less
informed decision that may result in a more costly room, or
both.\69\
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\69\ Id.

The report observed that hotels could eliminate these costs to
consumers by including the resort fee in the advertised price; bundling
the same resort services with the room and charging the same total
price; listing the components of the total price separately, as long as
the total price is the most prominently disclosed price; or changing to
unbundled, optional resort services which would not be included in the
advertised price.\70\ Finally, the report did not find ``any benefits
to consumers from separately-disclosed mandatory resort fees that could
not be achieved by first listing the total price and then disclosing
the resort fee.'' \71\
---------------------------------------------------------------------------

\70\ Id.
\71\ Id.
---------------------------------------------------------------------------

In 2019, the Commission hosted a workshop and issued a staff
perspective report that examined pricing and fees in the live-event
tickets market.\72\ The report observed,
---------------------------------------------------------------------------

\72\ Fed. Trade Comm'n, ``That's the Ticket'' Workshop: Staff
Perspective 4 (May 2020), <a href="https://www.ftc.gov/system/files/documents/reports/thats-ticket-workshop-staff-perspective/staffperspective_tickets_final-508.pdf">https://www.ftc.gov/system/files/documents/reports/thats-ticket-workshop-staff-perspective/staffperspective_tickets_final-508.pdf</a>.

On most primary and resale platforms, the ticket price a consumer
first sees is not what the consumer will pay. Mandatory fees, such as
`venue' and `ticket processing' fees, bulk up the price-often by as
much as thirty percent . . . . The late disclosure of fees increases
search costs for consumers and makes it harder to comparison shop.\73\
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\73\ Id.

The report remarked that ``[a]ll of the workshop panelists who
discussed the fees issue, including each participating ticket seller
that does not currently provide upfront all-in pricing, favored
requiring all-in pricing through federal legislation or rulemaking.''
\74\
---------------------------------------------------------------------------

\74\ Id.
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The Commission's finding of prevalence is further supported by the
complementary enforcement actions brought by its law enforcement
partners, most of which have resulted in orders prohibiting bait-and-
switch pricing and misrepresenting fees and charges in the short-term
lodging, live-event ticketing, delivery services, rental cars, travel,
and tax filing preparation services

[[Page 2074]]

industries.\75\ Indeed, a group of State Attorneys General wrote in
support of a finding of prevalence of these practices across
industries, including event ticket sellers, and hotels and other short-
term lodging providers.\76\ They have attempted to address some, but
not all, of these fees in their own States.\77\ The State Attorneys
General cited a number of cases across industries demonstrating that
bait-and-switch pricing and misleading fees are ``a chronic, prolific
problem confronting many consumers across numerous sectors of the
economy.'' \78\ Further, they agreed with the Commission's assertion
that ``charges that misrepresent their nature and purpose are unfair
and deceptive because they mislead consumers and make it more difficult
for truthful businesses to compete on price.'' \79\ The Commission
takes note of legislative and regulatory efforts in Minnesota,
California, Pennsylvania, New York, Massachusetts, and North Carolina
to combat hidden and misleading fees \80\ which further support its
finding of prevalence.
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\75\ See, e.g., Complaint ] 3, Rhode Island v. UPP Global, LLC,
No. PC-2024-04453 (R.I. Super. Ct. Aug. 13, 2024) (alleging in part
that defendant charges a fee as a tax, fails to disclose prices
until after consumers have elected to use defendant's service, and
advertises hourly prices and then requires consumers to pay for
multiple hours at a minimum); Complaint ]] 3-4, District of Columbia
v. StubHub, Inc., No. 2024-CAB-004794 (D.C. Super. Ct. July 31,
2024) (alleging defendant uses drip pricing and entices consumers to
shop for tickets by displaying artificially low prices and revealing
mandatory fees later in the checkout process which defendant also
misrepresents the purpose of); Consent Decree ]] 10-24, Arizona v.
Cox Enterprises, Inc., No. CV-2023-019752 (Ariz. Sup. Ct. Jan. 2,
2024) (alleging defendants failed to disclose additional fees to
consumers who purchased services through long-term contracts based
on ``price-lock'' guarantee); Assurance of Voluntary Compliance ] 2,
Texas v. Marriott Int'l, Inc., No. 2023-CI09717 (Tex. Dist. Ct. May
16, 2023) (alleging defendant misrepresented various fees, including
resort fees, and did not include all mandatory fees in the
advertised room rate in violation of the Texas Deceptive Trade
Practices Act); Plaintiff's Original Pet. ] 1, Texas v. Hyatt Hotels
Corp., No. C2023-0884D (TX. Dist. Ct. May 15, 2023) (alleging
defendant did not include mandatory fees in advertised room rates in
violation of the Texas Deceptive Trade Practices Act); Consent Order
] 20, District of Columbia v. Grubhub Holdings, Inc., No. 2022 CA
001199 B (D.C. Super. Ct. Jan. 4, 2023) (alleging in part that
defendants misrepresented menu prices to consumers and deceptively
advertised that consumers could ``order online for free'');
Assurance of Voluntary Compliance ] 4, Commonwealth v. Omni Hotels
Mgmt., GD-23-013056 (Pa. Commw. Ct. Nov. 9, 2023) (alleging
defendants failed to advertise room prices including mandatory fees,
misleading consumers); Assurance of Voluntary Compliance ] 2,
Commonwealth v. Choice Hotels Intl., Inc., GD-23-011023 (Pa. Commw.
Ct. Sept. 21, 2023) (alleging defendants failed to advertise room
prices including mandatory fees misleading consumers); Assurance of
Voluntary Compliance ]] 1-5, Commonwealth v. RYADD, Inc., No. 2022-
07262 (Pa. Commw. Ct. Sept. 8, 2022) (alleging defendants failed to
advertise ticket prices including service fees and failed to clearly
disclose an itemization of the total cost); Complaint ] 1,
Commonwealth v. Mariner Finance, LLC, No. 2:22-cv-03235-MAK (E.D.
Pa. Sept. 6, 2022) (alleging defendant charged consumers for hidden
add-on products without consumer knowledge and in some cases after
explicit rejection); Consent Order ] 6, District of Columbia v.
Maplebear, Inc., No. 2020 CA 003777B (D.C. Super. Ct. Aug. 19, 2022)
(prohibiting defendant from misrepresenting the nature and purpose
of fees applied to consumers' orders); Assurance of Voluntary
Compliance ] 2, Commonwealth v. Marriott Int'l, Inc., No. GD-21-
014016 (Pa. Ct. C.P. Nov. 16, 2021) (alleging defendant
misrepresented its room rates by failing to include items such as
mandatory fees in its pricing); Consent Order ] 3.1-3.18, Drivo LLC,
N.J. Div. Consumer Aff. (Sept. 16, 2020) (prohibiting unfair and
deceptive practices relating to damage fees and third party
reservation fees for rental vehicles); Press Release, Off. Minn.
Att'y Gen., Attorney General Ellison Obtains Relief for More than
30,000 Comcast/Xfinity Customers (Jan. 15, 2020) (alleging in part
that defendants misrepresented prices for their services and added
services without consumer consent), <a href="https://www.ag.state.mn.us/Office/Communications/2020/01/15_ComcastXfinity.asp">https://www.ag.state.mn.us/Office/Communications/2020/01/15_ComcastXfinity.asp</a>; Press Release,
Off. Minn. Att'y Gen., Attorney General Ellison Obtains Nearly $9
Million Settlement with CenturyLink for Overcharging Minnesota
Customers (Jan. 8, 2020) (alleging defendant misrepresented the
price of its services and used a complex pricing scheme to mislead
consumers), <a href="https://www.ag.state.mn.us/Office/Communications/2020/01/08_CenturyLinkSettlement.asp">https://www.ag.state.mn.us/Office/Communications/2020/01/08_CenturyLinkSettlement.asp</a>.; Assurance of Voluntary Compliance
]] 1-12, Commonwealth v. Event Ticket Sales, LLC, No. 201101873 (Pa.
Commw. Ct. Nov. 19, 2020) (alleging defendants failed to advertise
ticket prices including service fees and failed to clearly disclose
an itemization of the total cost); Assurance of Voluntary Compliance
] 7, CenturyLink, Inc., No. 19-CV-56401 (Or. Cir. Ct., 2019)
(alleging defendants charged undisclosed fees and failing to
disclose all mandatory fees and charges); Agreed Final J. ] 8, Texas
v. Guided Tourist, LLC, No. D-1-GN-19-001618 (Tex. Dist. Ct. Mar.
26, 2019) (enjoining defendant from advertising ticket prices other
than the total ticket price, including all mandatory fees);
Settlement Agreement ] 8(b)-(c), Florida v. Dollar Thrifty Auto.
Grp., Inc., No. 16-2018-cv-005938 (Fla. Cir. Ct., Jan. 14, 2019)
(alleging in part that defendant misrepresented optional charges as
mandatory and did not sufficiently disclose toll-related fees).
Additionally, Intuit recently entered a multistate settlement of
allegations that it misrepresented its tax filing products would
come at no cost. Assurance of Voluntary Compliance, Commonwealth v.
Intuit Inc., No. 220500324 (Pa. Ct. C.P. May 4, 2022).
\76\ FTC-2023-0064-3215 (Attorneys General of the States of
North Carolina and Pennsylvania, along with Attorneys General of the
States or Territories of Arizona, Colorado, Connecticut, Delaware,
District of Columbia, Hawaii, Illinois, Maine, Michigan, Minnesota,
New Jersey, New York, Oklahoma, Oregon, Vermont, Washington, and
Wisconsin). The Attorneys General also pointed to prevalence of
these practices in residential leasing, payday lending, internet
applications, online shopping, automobile rentals, carpet cleaners,
dietary supplement sellers, moving companies, gyms, travel
companies, outlet stores, and online auctions.
\77\ Id. (The Attorneys General highlighted actions each has
taken in their own states to address financial services fees, hotel
fees, live-event ticket fees, rental housing fees, auto rental fees,
and telecommunication fees.)
\78\ Id.
\79\ Id.
\80\ N.Y. Arts & Cult. Aff. Law sec. 25.01-25.33 (McKinney 2023)
(Effective Jun. 30, 2022) (requiring that the sellers and resellers
of live-event tickets disclose the total cost of a ticket, upfront,
and clearly and conspicuously disclose the amount of the price that
is made up of fees and other charges); An Act Ensuring Transparent
Ticket Pricing, H. 259, 193rd Gen. Court (Mass. 2023) (proposed
legislation requiring in part that the sellers and resellers of
live-event tickets disclose the total cost inclusive of all
ancillary fees that must be paid and the portion of the ticket price
that represents a service charge or any other fee or surcharge);
H.B. 714 (2023-2024 Session) (N.C. 2023) (proposed legislation that
requires, among other things, that providers of short-term lodging
and live-event ticketing clearly display the total price of goods
and services inclusive of mandatory fees a consumer would incur
during a transaction); see also 2023 Minn. H.B. 3438 (Enacted May
20, 2024) (stating that it is a deceptive trade practice for a
business to not include all mandatory fees or surcharges when
advertising, displaying or offering a price for goods or services);
Cal. S.B. 478 (2023-2024 Regular Session) (Enacted Oct. 7, 2023)
(amending the California Consumer Legal Remedies Act to state that
it is unlawful to advertise, display, or offer a price for a good or
service that does not include all mandatory fees or charges other
than taxes or fees imposed by a government on the transaction); Cal.
S.B. 1524 (2023-2024 Regular Session) (clarifying and amending S.B.
478 to include that additional fees such as service charges for food
services businesses including bars and restaurants could appear
separately so long as they were displayed on the menu); H.B. 636
(2023-2024) (Pa. 2023) (Engrossed Oct. 19, 2023) (proposed
legislation amending the Pennsylvania Unfair Trade Practices and
Consumer Protection Law to require the disclosure of all mandatory
fees and charges included in the advertised and displayed price of
any good or service); Conn. Gen. Stat. sec. 53-289a (2023)
(requiring conspicuous disclosure in the advertisement of total
price of live-event tickets including service charges); Conn. Gen.
Stat. sec. 53-289a (2023) (requiring conspicuous disclosure in the
advertisement of total price of live-event tickets including service
charges); SB 329 (2024 Reg. Sess.) (Md.) (requiring all-in pricing
throughout the purchase process of a live-event ticket); SB 329
(2024 Reg. Sess.) (Md.) (requiring all-in pricing throughout the
purchase process of a live-event ticket); 1510 Mass. Reg. 5 (Dec. 8,
2023) (Proposed Regulations 940 C.M.R. 38.00: Unfair and Deceptive
Fees) (proposed regulation stating that it is an unfair and
deceptive practice to misrepresent or fail to disclose at the time
of initial presentation of the price of any product the total price
of that product inclusive of all fees, interest, charges, or other
expenses necessary or required in order to complete the
transaction).
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Comments submitted by Federal and State elected officials echoing
the widespread practice of misleading consumers about total prices and
fees or charges further strengthen the Commission's prevalence finding.
For example, U.S. Senator Amy Klobuchar stated that she held a hearing
focusing on the lack of transparency in the live-event ticketing
industry as well as a hearing on fees in the rental housing market that
prevent renters from having meaningful opportunities to compare
prices.\81\ U.S. Senator Robert Casey discussed a report released on
January 24, 2024, ``Additional Charges May Apply: How Big Corporations
Use

[[Page 2075]]

Hidden Fees to Nickel, Dime, and Deceive American Families,'' tracking
the variety of junk fees facing Pennsylvania families, including in the
short-term lodging industry.\82\ A group of Congressional
representatives raised concerns regarding misleading fees and a lack of
price transparency in the rental housing market.\83\ Concerns over
unfair and deceptive pricing were also raised by a variety of State
legislators and officials.\84\ There has also been significant
bipartisan interest in passing legislation targeting fees in the live-
event ticketing and short-term lodging industries.\85\
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\81\ FTC-2023-0064-3271 (U.S. Senate, Sen. Amy Klobuchar).
\82\ FTC-2023-0064-3135 (U.S. Senate, Sen. Robert P. Casey, Jr.
noted that his report ``details how corporations use hidden fees to
deceive consumers and increase corporate profits, which leaves
families paying more than they should and puts honest businesses at
a disadvantage.'') The report is available at <a href="https://www.casey.senate.gov/imo/media/doc/greedflation_junk_fees3.pdf">https://www.casey.senate.gov/imo/media/doc/greedflation_junk_fees3.pdf</a>.
\83\ FTC-2023-0064-2858 (U.S. House of Representatives, Rep.
Maxwell Alejandro Frost, Rep. Jimmy Gomez, Rep. Barbara Lee, Rep.
Rashida Tlaib, Rep. Kevin Mullin, Rep. Dwight Evans, Rep. Judy Chu,
Rep. Greg Casar, Rep. Dan Goldman, and Rep. Salud Carbajal stated
that the rule would help eliminate some of the barriers to those
seeking rental housing as renters ``often face ambiguous or
misleading fees'' and ``bring much needed transparency to the rental
housing market.'').
\84\ FTC-2023-0064-2341 (Massachusetts House of Representatives,
Rep. Lindsay Sabadosa); FTC-2023-0064-1411 (Arizona House of
Representatives, Rep. Analise Ortiz); FTC-2023-0064-3072 (Michigan
Senate and House of Representatives, Sen. Darrin Camilleri, Sen.
Mary Cavanagh, and Rep. Betsy Coffia); FTC-2023-0064-3079 (Montana
State Senate, Senate Democratic Caucus, Sen. Pat Flowers, Sen. Susan
Webber, Sen. Andrea Olsen, Sen. Edie McClafferty, Sen. Jen Gross,
Sen. Janet Ellis, Sen. Shane Morigeau, Sen. Ellie Boldman, Sen. Ryan
Lynch, Sen. Christopher Pope, Sen. Mike Fox, Sen. Denise Hayman,
Sen. Willis Curdy, and Sen. Mary Ann Dunwell); FTC-2023-0064-3103
(Florida House of Representatives, Rep. Angela Nixon); FTC-2023-
0064-3123 (Syracuse, New York, City Auditor Alexander Marion); FTC-
2023-0064-3117 (Maryland House of Delegates, Del. Julie Palakovich
Carr); FTC-2023-0064-3149 (North Carolina House of Representatives,
Rep. Julie von Haefen); FTC-2023-0064-3237 (North Carolina House of
Representatives, Rep. Pricey Harrison).
\85\ See, e.g., Transparency In Charges for Key Events Ticketing
Act (``TICKET Act''), H.R. 3950, sec. 2, 118th Cong. (as engrossed
in the House, May 15, 2024) (among other provisions, requiring
ticket sellers, including secondary markets and exchanges, to
clearly and conspicuously disclose the total ticket price for an
event in any advertisement and each time the ticket is displayed in
the purchasing process, and to provide an itemized list of the base
ticket price and each fee or charge prior to completion of the
purchase; violations of the TICKET Act would be treated as violation
of a rule defining an unfair or deceptive act or practice under
section 18(a)(1)(B) of the FTC Act); No Hidden Fees on Extra
Expenses for Stays Act of 2023 (``No Hidden FEES Act of 2023''),
H.R. 6543, sec. 2(a), 118th Cong. (as engrossed in the House, June
11, 2024) (among other provisions, prohibiting providers of short-
term lodging, including providers of a website or other centralized
platform that advertises or otherwise offers the price of a
reservation for short-term lodging, from advertising, displaying,
marketing, or otherwise offering for sale, including through a
direct offering, third-party distribution, or metasearch referral, a
price of a reservation that does not include each mandatory fee;
violations of sec. 2(a) would be treated as violation of a rule
defining an unfair or deceptive act or practice under section
18(a)(1)(B) of the FTC Act).
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The Commission also takes notice of the work of its international
counterparts, as well as private lawsuits in the United States
concerning unfair and deceptive fee practices. Regulatory actions in
Canada, Australia, the European Union, and the United Kingdom with
respect to such conduct include paragraph 74.01(1.1) of the Canadian
Competition Act,\86\ the Australian Competition and Consumer Protection
Act of 2010,\87\ EU Directive 2005/29/EC of the European Parliament and
of the Council,\88\ and the UK Digital Markets, Competition and
Consumers Act 2024.\89\ In addition, private lawsuits filed against
businesses in the live-event ticketing, short-term lodging, banking,
and delivery service industries challenging these practices lend
further support to the Commission's prevalence determination.\90\
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\86\ Competition Act, R.S.C., 1985, c. C-34, ] 74.01(1.1) (Can.)
(providing with respect to ``drip pricing'' that ``the making of a
representation of a price that is not attainable due to fixed
obligatory charges or fees constitutes a false or misleading
representation''), <a href="https://laws.justice.gc.ca/eng/acts/C-34/FullText.html">https://laws.justice.gc.ca/eng/acts/C-34/FullText.html</a>.
\87\ Competition and Consumer Act 2010, Vol. 4, Sched. 2, Ch. 3,
P. 3-1, Sec. 48, Ch. 4, P. 4-1, Sec. 166 (Austl.) (prohibiting
``mak[ing] a representation with respect to an amount that, if paid,
would constitute a part of the consideration for the supply of the
goods or services unless the person also specifies, in a prominent
way and as a single figure, the single price for the goods or
services''), <a href="https://www.legislation.gov.au/C2004A00109/latest/text">https://www.legislation.gov.au/C2004A00109/latest/text</a>.
\88\ Directive 2005/29/EC of the European Parliament and of the
Council of 11 May 2005 concerning unfair business-to-consumer
commercial practices in the internal market, art. 7, 2005 O.J. (L
149) (providing that it is a misleading commercial practice to
engage in ``bait advertising'' or offering products at a specified
price if not able to provide the products at that price for a period
and in quantities reasonable with regard to the product, the scale
of advertising of the product and the price offered), <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32005L0029">https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32005L0029</a>; see also
Directive 2011/83/EU of the European Parliament and of the Council
of 25 October 2011 on consumer rights, art. 5 and art. 6, 2011 O.J.
(L 304), <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32011L0083&qid=1726109600968">https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32011L0083&qid=1726109600968</a>. Additionally, a 1998
Directive required that the selling price should be indicated for
all products referred to in the Article, which means a price that is
the final price for a unit of the product including VAT and all
other taxes. See Directive 98/6/EC of the European Parliament and of
the Council of 16 February 1998 on consumer protection in the
indication of the prices of products offered to consumers, 1998 O.J.
(L 80), <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A31998L0006&qid=1726109951386">https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A31998L0006&qid=1726109951386</a>.
\89\ Digital Markets, Competition and Consumers Act 2024, c. 13,
sec. 230 (providing that an invitation to purchase omits material
information if it omits the total price of the product or, if the
nature of the product prevents all or a part of the total price from
reasonably being calculated in advance, how the price (or that part
of it) will be calculated), <a href="https://www.legislation.gov.uk/ukpga/2024/13/section/230">https://www.legislation.gov.uk/ukpga/2024/13/section/230</a>. Reports preceding this legislation included: UK
Department for Business & Trade, Estimating the Prevalence and
Impact of Online Drip Pricing (2023), <a href="https://assets.publishing.service.gov.uk/media/64f1ebd7a78c5f000dc6f448/estimating-the-prevalence-and-impact-of-online-drip-pricing.pdf">https://assets.publishing.service.gov.uk/media/64f1ebd7a78c5f000dc6f448/estimating-the-prevalence-and-impact-of-online-drip-pricing.pdf</a>; and
UK Department for Business & Trade, Government response to
consultation on ``Smarter Regulation: Consultation on Improving
Price Transparency and Product Information for Consumers'' (2023),
<a href="https://www.gov.uk/government/consultations/smarter-regulation-improving-price-transparency-and-product-information-for-consumers/outcome/government-response-to-consultation-on-smarter-regulation-improving-consumer-price-transparency-and-product-information-for-consumers#introduction">https://www.gov.uk/government/consultations/smarter-regulation-improving-price-transparency-and-product-information-for-consumers/outcome/government-response-to-consultation-on-smarter-regulation-improving-consumer-price-transparency-and-product-information-for-consumers#introduction</a>.
\90\ See, e.g., Class Action Complaint ]] 2-3, Abdelsayed v.
Marriot Int'l, Inc., No. 3:21-cv-00402-JLS-AHG (S.D. Cal. Mar. 5,
2021) (alleging defendant misled consumers into believing that hotel
rooms were cheaper that they actually were by engaging in drip
pricing that baited consumers with lower prices and adding charges,
such as resort fees, amenity fees, and destination fees, throughout
the vending process); Complaint ]] 1, 3-5, Travelers United v. MGM
Resorts Int'l, Inc., No. 2021-CA-00477-B (D.C. Super. Ct. Feb. 18,
2021) (alleging defendant misled consumers into believing hotel
rooms were cheaper that they actually were by using drip pricing
that hid resort fees from advertised daily room rates); Class Action
Complaint ]] 18, 31, 43, 69-71, Lee v. Ticketmaster LLC, No. 3:18-
cv-05987-VC (N.D. Cal. Sept. 28, 2018) (alleging, in part, that
defendants were unjustly enriched through service charges added to
resale tickets); Second Amended Class Action Complaint ]] 1-2, Wang
v. StubHub, Inc., No. CGC-18564120 (Cal. Super. Ct. Feb. 25, 2019)
(alleging defendant intentionally hid additional fees in order to
advertise artificially low-ticket prices); Class Action Complaint ]]
1-3, 33-34, Holl v. United Parcel Service, Inc., No. 4:16-cv-05856-
HSG (N.D. Cal., Oct. 11, 2016) (alleging defendant created a bait
and switch by falsely advertising low published rates that were
later inflated); (Truth in Advertising, Inc., submitted information
about its tracking of class action cases related to unfair and
deceptive fees, including cases involving event ticket sellers
charging and misrepresenting the purpose of ``junk fees'' and hotels
advertising a low base rate for rooms and then charging consumers
more than the advertised rate by imposing additional fees.); see
also Second Amended Class Action Complaint ]] 5-7, Hecox v.
DoorDash, Inc., No. 1:23-cv-01006-JRR (D. Md. Sept. 5, 2023)
(alleging in part that defendant employed deceptively named fees
misleading consumers to believe the fees were for delivery personnel
or for government imposed fees); Class Action Complaint ]] 7-16,
Ramirez v. Bank of Am., N.A., No. 4:22-cv-00859-YGR (N.D. Cal., Feb.
10, 2022) (alleging misrepresentations about the refundability of
fees); Class Action Complaint ]] 27, 36, 46-51, Cross v. Point and
Pay LLC, No. 6:16-cv-01182 (M.D. Fla., June 29, 2016) (alleging
defendant made representations about its services and fees that
contained false, misleading, and deceptive and unfair statements and
omissions about fees for online payment processing services); Class
Action Complaint ]] 1-2, 9-12, DeSimone v. LOOK Brands, LLC, No. 23-
cv-11144 (S.D.N.Y. Dec. 22, 2023) (alleging defendant failed to
disclose the total cost of movie ticket prices, inclusive of all
fees, in violation of New York state law); Class Action Complaint ]]
1-2, 9-15, Jones v. Regal Cinemas, Inc., No. 23-CV-11145 (S.D.N.Y.
Dec. 22, 2023) (alleging defendant failed to disclose total cost of
movie ticket prices, inclusive of all fees, in violation of New York
state law); see also FTC-2022-0069-6042 (ANPR).

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[[Page 2076]]

The Commission takes notice of additional indications of prevalence
identified in response to the NPRM. Commenters to the NPRM noted that
unfair or deceptive pricing practices exist economy-wide.\91\ For
instance, Consumer Reports conducted a nationally representative survey
and found that many consumers experienced unexpected fees in a variety
of industries and that more than two-thirds of Americans report paying
more in hidden fees now than they did five years ago.\92\ Similarly,
Consumer Federation of American submitted an extensive compilation of
stories from consumers about their experiences with junk fees that
recounted hidden and misleading fees being applied across a wide range
of industries.\93\ Truth in Advertising, Inc. provided a sampling of
consumer complaints it had received over the years and noted the
pervasiveness of hidden and misleading fees in multiple industries,
including event ticket sales, hotel and travel companies, short-term
lodging, internet apps, automobile rentals, communication services,
carpet cleaning, auto/truck sales, dietary supplement orders, food
services, airlines, moving services, credit unions and banks, payday
lending services, gym memberships, outlet stores, sports betting, and
online auctions.\94\ Public Citizen commented about ``the widespread
use of the deceptive practice of charging undisclosed fees by major
industries . . . including communication carriers, air carriers, ticket
sales, auto dealers, credit card companies, cable giants, and property
owners,'' as well as ``event ticketing, hotels, funeral homes,'' and
other industries.\95\ Additionally, AARP pointed to a myriad of
confusing fees charged by assisted living facilities.\96\ Commenters
also noted that instances of unfair and deceptive fees or charges have
increased over time.\97\
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\91\ See, e.g., FTC-2023-0064-3216 (Demand Progress Education
Fund noted that consumers face surprise or ``bogus'' fees across
industries, including rental housing, cell phone service, utilities,
and ticketing, and cited a Consumer Reports study finding that 85%
of Americans have dealt with fees of this nature.).
\92\ FTC-2023-0064-3205 (Consumer Reports noted the prevalence
of unexpected fees in live entertainment or sporting events, hotels,
telecommunication services, gas or electric utilities, air travel,
credit cards, auto loans and purchases, and personal banking
services.).
\93\ FTC-2023-0064-3160 (Consumer Federation of America
submitted the compilation as Appendix B to its comment.).
\94\ FTC-2023-0064-3104 (Truth in Advertising, Inc.).
\95\ FTC-2023-0064-3302 (Public Citizen).
\96\ FTC-2023-0064-2885 (AARP argued these fees are not well
understood by potential residents and that renters are charged
``many superfluous fees, including application fees, credit check
fees, pet fees, excessive late fees, utility-related fees, mail
sorting fees, inspection fees, convenience fees, common area fees,
guest fees, trash fees, notice fees, security deposit fees, check
cashing fees, cleaning or repair fees, and other mandatory fees for
services that a renter does not need or want.'').
\97\ See, e.g., FTC-2023-0064-3290 (U.S. Public Interest
Research Group Education Fund commented that consumers have faced
more unfair and deceptive fees as consumers ``have become accustomed
to online transactions.''); FTC-2023-0064-3090 (Atlanta Legal Aid
Society, Inc. noted the ubiquity of unfair and deceptive fees and
that these types of fees in the rental housing context have been
steadily rising for years.).
---------------------------------------------------------------------------

Commenters also raised concerns about the prevalence of hidden fees
in specific industries such as live-event ticketing and short-term
lodging. The American Society of Travel Advisors, Travel Technology
Association, and a travel agent observed that, despite increased
scrutiny over hotel resort fees, there remains little uniformity in
pricing practices, and bait-and-switch pricing remains an issue.\98\
Multiple commenters raised continued concerns over hidden fee pricing
practices in the live-event ticketing market. TickPick, LLC observed
the ``widespread'' deceptive practice of bait-and-switch pricing
rampant in this industry. Chamber of Progress noted that deceptive and
unfair fees are ``rampant in some industries and pose clear threats to
consumers,'' including ``hotel stays, live sports or concert tickets,
and airline tickets.'' Future of Music Coalition commented that they
have worked to ``deal[ ] with the scourge of junk fees in various parts
of the economy,'' including live touring. The Charleston Symphony
affirmed that ``requiring sellers to disclose the total price clearly
and conspicuously[ ] addresses a pressing issue in the nonprofit
performing arts sector.'' \99\
---------------------------------------------------------------------------

\98\ FTC-2023-0064-3106 (American Society of Travel Advisors
stated that resort fees are disclosed in a highly inconsistent
manner, even between hotels doing business under the same brand
name.); FTC-2023-0064-3293 (Travel Technology Association commented
that hotels have been known to surprise guests at check-in with
these fees and ``guests have no reasonable recourse but to pay
them.''); FTC-2023-0064-3077 (Far Horizons Travel, by its owner, a
travel agent of almost 40 years, called hotel fees ``out of
control'' and stated: ``I am appalled by these fees and how much
they have risen over the years. . . . They say it's for extra
amenities but that is not always the case and more often not the
case at all.'').
\99\ FTC-2023-0064-3212 (TickPick, LLC); FTC-2023-0064-3137
(Chamber of Progress); FTC-2023-0064-3230 (Future of Music
Coalition); FTC-2023-0064-3105 (Charleston Symphony).
---------------------------------------------------------------------------

Despite the overwhelming evidence supporting the prevalence of
bait-and-switch pricing and misleading fee practices economy-wide, a
minority of commenters argued that the Commission has failed to meet
its burden of establishing prevalence. Some commenters contended that
the Commission's evidence focuses on a small number of problematic
industries and does not demonstrate prevalence in every single industry
across the economy.\100\ Some commenters similarly contended that the
proposed rule was an attempt to impose a ``one-size-fits-all'' solution
on distinct industries, not all of which are engaging in unfair or
deceptive practices, and thus the proposed rule is overbroad and not
supported by the requisite evidence of prevalence.\101\
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\100\ FTC-2023-0064-3143 (ACA Connects--America's Communication
Association argued that the NPRM contained no meaningful discussion
of prevalence of unfair or deceptive pricing disclosures with
respect to communication services.); FTC-2023-0064-3186 (National
LGBT Chamber of Commerce and the National Asian/Pacific Islander
American Chamber of Commerce & Entrepreneurship argued that
``prepared food and grocery delivery applications . . . have
demonstrated transparency and accessibility, providing clear
explanations about fees.''); FTC-2023-0064-3292 (National
Association of Theatre Owners argued that the NPRM failed to
demonstrate prevalence with respect to the theatre industry,
identifying only fifty comments received in response to the ANPR
that reference movie theatre convenience fees.); FTC-2023-0064-3238
(Gibson, Dunn & Crutcher LLP argued that the Commission has failed
to reliably demonstrate the prevalence of unfair or deceptive fees
across any industry or sector.); FTC-2023-0064-3233 (NCTA--The
Internet & Television Association argued that the only mention of
telecommunication fees is anecdotal, and the Commission has failed
to show prevalence with respect to any NCTA member.); FTC-2023-0064-
3263 (Flex Association stated that ``[t]he Commission has not
pointed to evidence of any prevalent consumer harm that justifies
imposing new pricing and disclosure rules on app-based delivery
platforms.''); FTC-2023-0064-3130 (International Cemetery, Cremation
& Funeral Association argued that over the last several reviews of
the Funeral Rule the Commission has not found evidence of widespread
consumer abuse among cemeteries or third-party suppliers.).
\101\ FTC-2023-0064-3258 (National Taxpayers Union Foundation);
FTC-2023-0064-3173 (Center for Individual Freedom argued that the
Commission was overly reliant on lodging, ticketing, and restaurants
in justifying an economy-wide rule.); FTC-2023-0064-3251 (National
RV Dealers Association argued the proposed rule ``is an
overextension from this drip pricing concern, and not only strays
from the FTC's traditional areas of concern but also risks impeding
the normal business operations and innovation across a multitude of
sectors.'').
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First, the Commission disagrees that it must find that the unfair
or deceptive act or practice is widespread within every individual
context or industry to issue a rule targeting a specific practice
across industries. To begin with, the Commission's prevalence findings
need only have ``some basis or evidence'' to show ``the practice the
FTC rule seeks to regulate does indeed occur.'' \102\ While many trade
regulation rules promulgated under section 18 focus on a particular
industry, as discussed in

[[Page 2077]]

section IV.A.1, others apply to specific practices across industries
regardless of product or service, such as the Cooling-Off Period for
Door-to-Door Sales Rule (the ``Cooling-Off Rule''), the Rule on the
Preservation of Consumers' Claims and Defenses (the ``Holder Rule''),
the Rule on Retail Food Store Advertising and Marketing Practices (the
``Unavailability Rule''), the mail, Internet, or Telephone Order
Merchandise Rule (the ``Mail Order Rule''), the Rule on the Use of
Prenotification Negative Option Plans (the ``Negative Option Rule''),
the Rule on Impersonation of Government and Businesses (the
``Impersonator Rule''), and the Rule on the Use of Consumer Reviews and
Testimonials.\103\ While the Commission agrees that minimal evidence of
a practice would be insufficient to meet the prevalence standard,
section 18 did not require the Commission to find for its economy-wide
rulemakings that every industry engaged in sales made at a consumer's
home or at certain other locations (Cooling-Off Rule), used credit
contracts (Holder Rule), offered products at an advertised price when
they did not have the advertised products in stock (Unavailability
Rule), or had a robust mail, internet or telephone order business (Mail
Order Rule); or that every industry used negative options (Negative
Option Rule), had an issue with impersonating government agencies or
businesses (Impersonator Rule), or used and abused reviews (Rule on the
Use of Consumer Reviews and Testimonials). Imposing such a standard
would artificially limit the Commission's rulemaking authority under
section 18 in a way that does not align with the Commission's mandate
or the text of the statute, which focuses on acts or practices
generally and never mentions the need to define markets or industries.
As explained herein and in the NPRM, the information evidencing
prevalence of bait-and-switch pricing and misleading fees more than
meets section 18's standard for prevalence for the economy generally,
and for the live-event ticketing and short-term lodging industries,
specifically, by demonstrating that the practices are widespread and,
further, that such practices are occurring across a wide range of
industries.
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\102\ Pa. Funeral Dirs. Ass'n. v. FTC, 41 F.3d 81, 87 (3d Cir.
1994).
\103\ 16 CFR part 429; 16 CFR part 433; 16 CFR part 424; 16 CFR
part 435; 16 CFR part 425; 16 CFR part 461; 16 CFR part 465.
---------------------------------------------------------------------------

Second, the Commission notes that, even when commenters challenged
the application of the rule to specific pricing scenarios or to their
own industries, they also appeared to concede that advertising a base
price to which mandatory fees are added later is a frequent practice
even in their own industries. While some commenters raised genuine
challenges or questions about the application of the rule, others
attempted to conflate such genuine challenges with their desire to
continue to use drip or partition pricing.
As discussed in section III.B.1, commenters from some ticket
sellers did not contest that their advertised prices failed to include
all mandatory fees and to provide the total price of goods or services.
Instead, they attempted to explain why they engaged in those practices.
Finally, some commenters from industries other than live-event
ticketing and short-term lodging argued that the Commission's NPRM
failed to establish prevalence because of the following reasons: the
cited cases focused on inapplicable fact patterns or resulted in
settlement; the cited conferences called for additional research rather
than regulatory strategy, or were narrow in scope as to the industries
covered; and the resort fee warning letters failed to result in
enforcement action.\104\ Commenters such as the U.S. Chamber of
Commerce argued that the enforcement record should rely only on cease-
and-desist orders or ``extensive empirical research.'' \105\ Other
commenters also raised concerns about a lack of empirical
research.\106\ These commenters overlook section 18's clear instruction
that the Commission's prevalence determination can be based on ``any
other information available to the Commission'' that indicates a
widespread pattern, which the Commission thoroughly laid out in the
NPRM and expands upon herein.
---------------------------------------------------------------------------

\104\ FTC-2023-0064-3127 (U.S. Chamber of Commerce argued the
NPRM failed to cite any cases holding that late in time fee
disclosures are unfair or deceptive and the settlements described by
the Commission only raised the failure of companies to disclose
certain applicable fees prior to purchase or at all.).
\105\ Id.
\106\ FTC-2023-0064-3152 (Building Owners & Managers Association
et al. commented that the proposed rule ``lacks any reasonable
factual underpinning as applied to the rental housing industry
because it is not based on any statistical data relevant to the
industry,'' but is ``based solely upon anecdotal, conclusory, and
non-representative justification.''); FTC-2023-0064-3172 (New Jersey
Apartment Association stated that the NPRM lacked ``statistical
basis'' for claims that unfair and deceptive fees were an issue in
the rental housing context and that the Commission relied on
anecdotal evidence.).
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In sum, the Commission's enforcement history, workshops, and
reports, together with the record of this rulemaking and the
enforcement cases brought by the Commission's local, State, and
international enforcement counterparts fully support a finding that
bait-and-switch pricing that hides the total price of goods or services
and misrepresenting the nature, purpose, amount, and refundability of
fees or charges are prevalent across the economy, including in the
live-event ticketing and short-term lodging industries.\107\ Despite
the evidence that these specific practices are prevalent economy wide,
the Commission will first focus its rulemaking authority on combatting
these practices in the live-event ticketing and short-term lodging
industries, the two industries in which the Commission first began
evaluating drip pricing more than a decade ago and for which there is a
long history of consumer harm.
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\107\ See, e.g., supra notes 66, 67, 72, 75, 80, 85, 90
(detailing the Commission's enforcement history, workshops, and
reports, class action lawsuits, state and local enforcement and
regulations, and other efforts to curb unfair or deceptive pricing
practices in the live-event ticket and short-term lodging
industries). The Commission also received thousands of comments from
individual consumers detailing bait-and-switch pricing and deceptive
fees in the live-event ticket and short-term lodging industries in
response to the ANPR and the NPRM. See, e.g., FTC-2023-0064-0820
(Individual Commenter stated ``I was just considering buying some
event tickets on Vivid Seats and was shocked to see that they add a
full 33% in bogus fees.''); FTC-2023-0064-0058 (Individual Commenter
stated: ``The worst offenders are ticket sellers/resellers, who
advertise baseline ticket prices in their search engines and then
include some unknown amount of fees when it's time to pay.''); FTC-
2023-0064-0102 (Individual Commenter stated: ``I recently went to a
MLB game and the fees were $21 for a $75 ticket or greater than 20%.
I went to a concert and the tickets were $55 but the fees brought
the price to over $100. On both cases, the fees were not disclosed
until the payment screen.''); FTC-2023-0064-0145 (Individual
Commenter described purchasing tickets to a musical: ``Nearly 20% of
the total cost was for fees that were not disclosed until I was at
the payment step ($119 ticket + $4.55 order processing fee + $4.00
facility charge + $20.50 service fee). I don't understand what any
of those fees are actually for.''); FTC-2023-0064-0040 (Individual
Commenter described hotel resort fees as ``egregious and opaque''
and stated they learned of an additional $50 per night resort fee
upon check-in: ``I asked what the purpose of the fee was and was
told by the staff person, `I'm not really sure.' ''); FTC-2023-0064-
1462 (Individual Commenter stated: ``Recently I found an
``affordable'' hotel in a city and booked a 4 night stay, but was
not informed until after I checked in that parking cost extra each
day . . . . which made the hotel no longer affordable for me'');
FTC-2023-0064-0977 (Individual Commenter described spending hours
trying to book a hotel to face ``mandatory hotel fees for a pool, a
gym and 24 hour security totalled $50/night''); FTC-2023-0064-0152
(Individual Commenter stated that fees through services including
Airbnb and VRBO are ``often vague and undefined'' and described fees
including a ``host fee,'' ``booking fee,'' ``safety fee,'' and
``resort fee'').
---------------------------------------------------------------------------

B. Manner and Context in Which the Acts or Practices Are Deceptive or
Unfair

The final rule curbs certain unfair or deceptive pricing practices
by requiring

[[Page 2078]]

truthfulness and transparency in pricing for live-event ticketing and
short-term lodging. Truthful, timely, and transparent pricing,
including the nature, purpose, and amount of any fees or charges
imposed, is critical for consumers--and also for honest businesses. The
legal underpinning of the rule, or the manner and context in which the
acts or practices defined by the rule are unfair or deceptive, is not
complex. By identifying and targeting pricing tactics that hide the
true price of live-event tickets and short-term lodging from consumers,
the rule's central provisions prohibit conduct that is inherently
deceptive or unfair, including: (1) offering prices that do not include
all mandatory fees or charges and (2) misrepresenting the nature,
purpose, amount, and refundability of fees or charges, and the identity
of the good or service for which the fees or charges are imposed. Thus,
the final rule will allow American consumers to make better-informed
purchasing decisions when purchasing live-event tickets or deciding
where to stay on a short-term basis and level the playing field for
honest businesses in these industries that truthfully, timely, and
transparently disclose their pricing information.
A representation, omission, or practice is deceptive under section
5 of the FTC Act if it is likely to mislead consumers acting reasonably
under the circumstances and is material to consumers--that is, it would
likely affect the consumer's conduct or decisions with regard to a good
or service.\108\ Price is a material term.\109\ It is a deceptive
practice to misrepresent the price of a good or service,\110\ including
through a deceptive first contact.\111\ Through its false savings
cases, the Commission repeatedly found that it was deceptive under
section 5 to present an inflated list price or comparison price, from
which consumers were misled to believe that the business offered a
lower-than-normal price.\112\ The inverse--luring consumers to a good
or service with a false low price--is also deceptive.\113\ For example,
in In re Filderman Corp., 64 F.T.C. 427 (1964), the Commission found
that the defendant violated section 5 both when it displayed misleading
list prices and when it later imposed mandatory service charges on top
of the advertised price.\114\ Once a consumer has been lured in by
deception, including about the cost of the good or service, it is well
established that a later disclosure cannot cure that deception.\115\
Thus, bait-and-switch pricing, where the initial contact with a
consumer shows a lower or partial price without including mandatory
fees, violates the FTC Act even if the total price is later disclosed.
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\108\ See Fed. Trade Comm'n, FTC Policy Statement on Deception,
103 F.T.C. 174, 175 (1984) (appended to In re Cliffdale Assocs.,
Inc., 103 F.T.C. 110, 174 (1984) (hereinafter ``Deception Policy
Statement''), <a href="https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-103/ftc_volume_decision_103_january_-_june_1984pages_103-203.pdf">https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-103/ftc_volume_decision_103_january_-_june_1984pages_103-203.pdf</a>.
\109\ Deception Policy Statement, 103 F.T.C. at 182-83 (listing
claims or omissions involving cost among those that are
presumptively material); see also, e.g., FTC v. FleetCor Techs.,
Inc., 620 F. Supp. 3d 1268, 1303-04, 1311 (N.D. Ga. 2022) (finding
that representations about discounts and transaction fees were
material).
\110\ Deception Policy Statement, 103 F.T.C. at 175 (listing
``misleading price claims'' among those claims that the FTC has
found to be deceptive); see also, e.g., In re Resort Car Rental
Sys., Inc., 83 F.T.C. 234, 281-82, 300 (1973), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/Resort%20Car%20Rental%20System%2C%20Inc.%2083%20FTC%20234%20%281973%29.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/Resort%20Car%20Rental%20System%2C%20Inc.%2083%20FTC%20234%20%281973%29.pdf</a> (finding that using the name ``Dollar-A-Day'' misrepresented
the price of car rentals in violation of section 5 of the FTC Act
where a rental could not be attained for one dollar per day due to
mileage, insurance, and other mandatory charges), aff'd sub. nom.
Resort Car Rental Sys., Inc. v. FTC, 518 F.2d 962, 964 (9th Cir.
1975).
\111\ See, e.g., Opinion of the Commission at 37-40, 47-50, In
re Intuit Inc., No. 9408 (FTC Jan. 22, 2024), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/d09408_commission_opinion_redacted_public.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/d09408_commission_opinion_redacted_public.pdf</a> (finding that under
the legal doctrine known as the first-contact or deceptive door-
opener rule, respondent's first contact with consumers was deceptive
because its advertising falsely claimed that consumers can file
their taxes for free with TurboTax and that later disclosures did
not cure the deception); Complaint ]] 12, 46-49, In re LCA-Vision,
No. C-4789 (FTC Mar. 13, 2023) (alleging respondent's advertisements
misrepresented the price of surgery and failed to disclose
eligibility limitations for a promotional price); Complaint ]] 8-10,
In re Progressive Chevrolet Company, No. C-4578 (FTC Jun. 16, 2016)
(alleging that respondents represented that consumers could lease
vehicles at advertised down payment and monthly payment amounts, and
deceptively failed to disclose a material condition that meant few
consumers would qualify for the advertised terms); Resort Car Rental
Sys., 518 F.2d at 964 (upholding the Commission's order finding that
the name ``Dollar-A-Day'' was deceptive when charges adding up to
more than one dollar per day were disclosed later).
\112\ E.g., In re Giant Food, Inc., 61 F.T.C. 326, 341-42, 361
(1962), <a href="https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-61/ftcd-vol61july-december1962pages306-404.pdf">https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-61/ftcd-vol61july-december1962pages306-404.pdf</a> (finding that comparative-price
advertising of household goods and appliances created false,
misleading, and deceptive impressions that induced consumers to make
purchases based on mistaken beliefs); In re George's Radio &
Television Co., 60 F.T.C. 179, 193-94, 196 (1962), <a href="https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-60/ftcd-vol60january-june1962pages107-211.pdf">https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-60/ftcd-vol60january-june1962pages107-211.pdf</a> (collecting cases and finding that
advertisements including manufacturer's suggested list prices that
were higher than the customary retail prices were deceptive).
\113\ See, e.g., In re Filderman Corp., 64 F.T.C. 427, 442-43,
461 (1964), <a href="https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-64/ftcd-vol64january-march1964pages409-511.pdf">https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-64/ftcd-vol64january-march1964pages409-511.pdf</a> (finding, among other things, that
respondents unlawfully advertised prices that were later inflated
with mandatory service charges); In re Resort Car Rental Sys., 83
F.T.C. at 281-82, 300; Opinion of the Commission at 37-40, 47-50, In
re Intuit Inc., No. 9408 (finding that respondent's advertising that
falsely claimed that consumers can file their taxes for free with
TurboTax was deceptive); Complaint ]] 12, 46-49, In re LCA-Vision,
No. C-4789 (alleging respondent's advertisements misrepresented the
price of surgery and failed to disclose eligibility limitations for
a promotional price). See also cases cited supra note 61 (collecting
FTC enforcement actions alleging that bait-and-switch pricing
tactics concerning hidden fees violated section 5).
\114\ In re Filderman Corp., 64 F.T.C. at 461 (ordering
respondents to stop ``[r]epresenting, directly or by implication:
That any amount is the price of merchandise when an additional
amount is required to be paid before the merchandise will be
sold.'')
\115\ Fed. Trade Comm'n, Enforcement Policy Statement on
Deceptively Formatted Advertisements 7 n.25 (2015), <a href="https://www.ftc.gov/system/files/documents/public_statements/896923/151222deceptiveenforcement.pdf">https://www.ftc.gov/system/files/documents/public_statements/896923/151222deceptiveenforcement.pdf</a>; see also Opinion of the Commission
at 28-30, In re Intuit Inc., No. 9408, <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/d09408_commission_opinion_redacted_public.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/d09408_commission_opinion_redacted_public.pdf</a>
(finding that disclosures on Intuit's websites were ``inadequate to
cure a misimpression for Intuit's ads,'' which used ``false claims
to engage consumers and induce them to further interact with the
company''); Resort Car Rental Sys, 518 F.2d at 964 (``The Federal
Trade [Commission] Act is violated if it induces first contact
through deception, even if the buyer later becomes fully informed
before entering the contract.'') (bracketed text added); Exposition
Press, Inc. v. FTC, 295 F.2d 869 (2d Cir. 1961) (``The law is
violated if the first contact is secured by deception, even though
the true facts are made known to the buyer before he enters into the
contract of purchase.'' (citations omitted)); FTC v. City W.
Advantage, Inc., No. 2:08-cv-00609-BES-GWF, 2008 WL 2844696, at *3
(D. Nev., 123 July 22, 2008) (finding defendant likely employed
``deceptive door openers . . . to induce consumers to stay on the
line'').
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A practice is considered unfair under section 5 if: (1) it causes,
or is likely to cause, substantial injury; (2) the injury is not
reasonably avoidable by consumers; and (3) the injury is not outweighed
by benefits to consumers or competition.\116\ Pricing that is not
truthful or transparent causes or is likely to cause substantial
injury; such injury is not reasonably avoidable by consumers or
outweighed by benefits to consumers or competition.
---------------------------------------------------------------------------

\116\ 15 U.S.C. 45(n).
---------------------------------------------------------------------------

Drip pricing and other bait-and-switch tactics that hide the true
price cause substantial injury, as the Commission discusses in detail
in section V.E, by leading consumers to buy more goods or services, pay
more for those goods or services, and incur higher search costs than
they otherwise would have if they had been presented with the true
price upfront. Studies have shown that consumers spend more money on
the same goods when faced with drip pricing, i.e., when they are not
shown the total price upfront, but instead are shown a base price, with
mandatory fees or charges added later

[[Page 2079]]

throughout the buying process.\117\ Where mandatory fees or charges are
disclosed at the same time as, but separately from, the base price,
consumers are still harmed. The practice of dividing the price into
multiple components without disclosing the total, generally referred to
as partitioned pricing, distorts consumer choice.\118\ Consumers
confronted with partitioned pricing, on average, underestimate the
total price of the good or service, likely because they use mental
shortcuts to estimate price that do not fully account for each
component.\119\
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\117\ Alexander Rasch et al., Drip Pricing and its Regulation:
Experimental Evidence, 176 J. Econ. Behav. & Org. 353 (2020)
(``[E]xperimental evidence suggests that consumers indeed strongly
and systematically underestimate the total price under drip pricing,
and that they make mistakes when searching''); Shelle Santana et
al., Consumer Reactions to Drip Pricing, 39 Mktg. Sci. 188 (2020)
(``Across six studies, we find that drip pricing (versus nondrip
pricing) increases the likelihood that consumers will both initially
and ultimately select a lower base price option, even though the
surcharges for optional add-ons cause this base price to balloon--
making the lower base fare option more expensive than the
alternative''); Tom Blake et al., Price Salience and Product Choice,
40 Mktg. Sci. 619 (2021); Steffen Huck et al., The Impact of Price
Frames on Consumer Decision Making: Experimental Evidence (2015);
Meghan R. Busse & Jorge M. Silva-Risso, ``One Discriminatory Rent''
or ``Double Jeopardy'': Multi-component Negotiation for New Car
Purchases, 100 a.m. Econ. Rev. 470 (2010); Raj Chetty et al.,
Salience and Taxation: Theory and Evidence, 99 a.m. Econ. Rev. 1145
(2009) (``[C]ommodity taxes that are included in posted prices
reduce demand significantly more than taxes that are not included in
posted prices.''); see also FTC-2023-0064-3247 (Private Law Clinic
at Yale Law School).
\118\ Sullivan, supra note 67, at 4; FTC-2023-0064-3271 (U.S.
Senate, Sen. Amy Klobuchar).
\119\ Sullivan, supra note 67, at 22-24; Vicki G. Morowitz et
al., Divide and Prosper: Consumers' Reactions to Partitioned Prices,
35 J. Mktg. Rsch. 453 (1998) (subjects exposed to partitioned prices
recalled significantly lower total product costs than subjects
exposed to combined prices).
---------------------------------------------------------------------------

In addition, consumers who wish to compare prices incur additional
search costs to make direct comparisons of goods or services when the
full price is not disclosed upfront.\120\ For example, in an online
transaction to book a hotel room, consumers cannot simply view the
first price displayed on each website, but instead need to navigate to
subsequent pages or even enter all their payment information and reach
the checkout page for each website to determine the true total price of
their hotel stay.\121\ The same is true on live-event ticketing
websites. As TickPick, LLC noted, ``[m]ajor ticketing marketplaces
often require consumers to enter their credit card or other payment
information prior to disclosing mandatory fees. On these marketplaces,
the full purchase price is only disclosed after payment information is
collected.'' \122\ Under such circumstances, consumers waste time and
effort pursuing an offer that is not actually available at the promised
price. Such search costs that result from unfair or deceptive practices
are legally cognizable injuries under the FTC Act.\123\
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\120\ Sullivan, supra note 67, at 4; Fed. Trade Comm'n, ``That's
the Ticket'' Workshop: Staff Perspective 4 (May 2020), <a href="https://www.ftc.gov/system/files/documents/reports/thats-ticket-workshop-staff-perspective/staffperspective_tickets_final-508.pdf">https://www.ftc.gov/system/files/documents/reports/thats-ticket-workshop-staff-perspective/staffperspective_tickets_final-508.pdf</a>; see also
Han Hong et al., Using Price Distributions to Estimate Search Costs,
37 RAND J. Econ. 257 (2006) (describing methods of estimating search
costs).
\121\ NPRM, 88 FR 77433 n.170.
\122\ FTC-2023-0064-3212 (TickPick, LLC) (``[On] StubHub's
website, for example, a consumer can be required to click 12 times
after being shown the first price before being shown the total price
they will pay.'')
\123\ See, e.g., Decision & Order at 3-4, In re LCA-Vision, No.
C-4789 (FTC Mar. 13, 2023) (settling allegations that deceptive
advertising caused consumers to ``waste[ ] 90 minutes to two hours
of their time'' responding to a deceptive promotion, Complaint ] 35,
and prohibiting misrepresentations of price and requiring disclosure
of price or discount qualification requirements), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/1923157-lca-vision-consent-package.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/1923157-lca-vision-consent-package.pdf</a>; Decision & Order at 2-3, In re Credit Karma, LLC, No.
C-4781 (FTC, Jan. 19, 2023) (settling allegations that deceptive
advertising caused consumers to waste significant time in applying
for ``pre-approved'' offers that were denied, Complaint ] 13, and
requiring Credit Karma to pay $3 million in monetary relief),
<a href="https://www.ftc.gov/system/files/ftc_gov/pdf/2023138-credit-karma-combined-final-consent-without-signatures.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/2023138-credit-karma-combined-final-consent-without-signatures.pdf</a>; FTC v. <a href="http://Amazon.com">Amazon.com</a>,
Inc., No. C14-1038-JCC, 2016 U.S. Dist. LEXIS 55569, at *17 (W.D.
Wash., Apr. 26, 2016) (finding consumer injury included ``time spent
pursuing those refunds''); FTC v. Neovi, Inc., 598 F. Supp. 2d 1104,
1115 (S.D. Cal. 2008) (finding ``no genuine issue of material fact
that consumers suffered substantial injury'' based on ``considerable
amount of time'' spent by consumers); FTC v. Accusearch, Inc., No.
06-cv-105-D, 2007 U.S. Dist. LEXIS 74905, at *22-23 (D. Wyo., Sept.
28, 2007) (granting summary judgment in favor of FTC based in part
on finding of consumer injury for ``lost time and productivity'').
---------------------------------------------------------------------------

Misrepresented fees also cause or are likely to cause substantial
injury--they harm consumers as well as businesses that do not engage in
these practices. For example, as discussed in section III.C, a hotel
might charge a resort fee when only typical and ordinary accommodations
and amenities are offered, an environmental fee that serves no
environmental purpose, or a fee misrepresented as a government charge.
As TickPick, LLC put it, misrepresented fees trick consumers into
paying more and ultimately inhibit competition by providing an unfair
advantage to businesses that misrepresent their fees.\124\ Likewise,
when businesses misrepresent fees, consumers are unable to make
informed choices about the value of the fee or charge, or the good or
service it represents, because their understanding of the fee or charge
is predicated on false, vague, or otherwise misleading information. As
such, consumers are unable to understand what they have purchased, or
to which charges they have consented.\125\
---------------------------------------------------------------------------

\124\ FTC-2023-0064-3212 (TickPick, LLC).
\125\ Id.
---------------------------------------------------------------------------

Consumers cannot reasonably avoid these harms. As explained in the
NPRM, studies suggest that cognitive bias may prevent consumers from
reasonably avoiding injury caused by unfair and deceptive pricing
practices.\126\ Several behavioral studies explain why consumers cannot
reasonably avoid making errors when the true price is not displayed
upfront. Behavioral research shows that consumers who first learn of a
lower price do not properly adjust their calculations when additional
fees are added, thereby underestimating the total price.\127\ It also
shows that consumers attach value to things they perceive to be theirs
and, once consumers begin the purchase process, their perception shifts
so that stopping the transaction feels like a loss.\128\ The research
shows that consumers who already have invested in an endeavor, such as
by taking time to make selections on a travel or live-event ticket
website, continue that endeavor even if they would pay less if they
began again elsewhere.\129\ Lastly, consumers necessarily incur search
costs when mandatory fees are obscured because it takes them longer to
discover the full price within a single transaction and to comparison
shop across transactions.\130\ Notably, it is unlikely that the market
can correct for these injuries because once the practice of displaying
incomplete initial prices takes hold, honest businesses will struggle
to compete. For example, as noted in the NPRM, one market participant
in the live-event ticketing industry, StubHub, unilaterally adopted
all-in pricing in 2014 but soon reverted back to its original model
after it lost significant market share when customers

[[Page 2080]]

incorrectly perceived StubHub's prices to be higher.\131\
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\126\ NPRM, 88 FR 77434 (discussing various cognitive biases
that contribute to the unavoidability of consumer injury, including
the anchoring theory, the endowment theory, and the sunken cost
fallacy).
\127\ Inst. for Policy Integrity, Pet. for Rulemaking Concerning
Drip Pricing 18 (2021), <a href="https://policyintegrity.org/documents/Petition_for_Rulemaking_Concerning_Drip_Pricing.pdf">https://policyintegrity.org/documents/Petition_for_Rulemaking_Concerning_Drip_Pricing.pdf</a>.
\128\ Steffen Huck et al., The Impact of Price Frames on
Consumer Decision Making: Experimental Evidence (2015).
\129\ David A. Friedman, Regulating Drip Pricing, 31 Stan. L. &
Pol'y Rev. 51, 55 n.13 (2020).
\130\ See NPRM, 88 FR 77447 (discussing reductions in search
costs from the proposed rule).
\131\ See NPRM, 88 FR 77434 (quoting Fed. Trade Comm'n, ``That's
the Ticket'' Workshop: Staff Perspective 4 (May 2020), <a href="https://www.ftc.gov/system/files/documents/reports/thats-ticket-workshop-staff-perspective/staffperspective_tickets_final-508.pdf">https://www.ftc.gov/system/files/documents/reports/thats-ticket-workshop-staff-perspective/staffperspective_tickets_final-508.pdf</a>.). See
also, e.g., <a href="https://www.contactlensking.com/faq.aspx">https://www.contactlensking.com/faq.aspx</a> (describing a
contact lens company's decrease in traffic and total orders when it
displayed a total price while competitors implemented ``processing''
fees).
---------------------------------------------------------------------------

The consumer injury caused by these bait-and-switch pricing
practices is not outweighed by any benefits to consumers or
competition. Consumers receive no benefit from businesses that use drip
pricing, partitioned pricing, or misleading price presentation while
they obscure the total price. To the extent that consumers could
benefit from itemized information about price components, such
itemization can be done in conjunction with clear total price
information. Consumers receive no benefit from businesses partitioning
or breaking up mandatory price components while they obscuring the
total price.
Likewise, as discussed in section V.E, there is no benefit to
competition, as honest businesses that disclose all-inclusive total
prices lose market share to businesses that do not. Bait-and-switch
pricing and misleading fees undermine the ability of honest businesses
to compete on price and therefore diminish the competitive pressure in
a market that pushes prices downward. As a result, these practices lead
to higher prices than would be supported in a competitive marketplace.
The Antitrust Division of the U.S. Department of Justice noted that
``companies that impose mandatory hidden fees'' have ``an unfair
advantage over honest brokers'' and interfere with consumers' ability
to ``choose between competitors based on the important considerations
of price and what, exactly, the consumer is purchasing.'' \132\ Some
commenters, including those from the live-event ticketing and short-
term lodging industries, noted that bait-and-switch pricing not only
confuses consumers, but harms honest businesses that offer truthful,
timely, and transparent pricing because their prices initially may seem
higher than competitors that use bait-and-switch pricing and misleading
fees. For example, TickPick, LLC commended the Commission for proposing
to curb the widespread practice of bait-and-switch pricing and observed
that ``the proposed rule would significantly benefit consumers and
competition in the live-event ticketing industry.'' \133\ The American
Society of Travel Advisors argued that, in addition to consumer harm,
``the imposition of undisclosed fees also unfairly places honest
retailers--those that do disclose the full, all-in price upfront--at a
competitive disadvantage relative to those that do not.'' \134\
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\132\ FTC-2023-0064-3187 (U.S. Department of Justice, Antitrust
Division, observed that ``[w]hen consumers lack choice and
information, and are saddled with mandatory hidden fees, the
benefits of the competitive process break down.''); see also FTC-
2023-0064-3106 (American Society of Travel Advisors); FTC-2023-0064-
3184 (New York State Sen. Michael Gianaris); FTC-2023-0064-1294
(James J. Angel, Ph.D., CFP, CFA, Professor, Georgetown University,
McDonough School of Business).
\133\ FTC-2023-0064-3212 (TickPick, LLC).
\134\ FTC-2023-0064-3106 (American Society of Travel Advisors).
---------------------------------------------------------------------------

A minority of commenters stated that hidden and misleading fees do
not harm consumers. For instance, the Competitive Enterprise Institute
argued that consumers' search costs do not increase when advertisements
lack a single total price, as the consumer is better informed after
watching the advertisement despite the omission.\135\
---------------------------------------------------------------------------

\135\ FTC-2023-0064-3028 (Competitive Enterprise Institute
argued that consumers already bear a search cost merely by looking
for a product, and that any advertisement that includes some, but
not all, pricing information, benefits the searching consumer if the
information is accurate and non-deceptive.).
---------------------------------------------------------------------------

While the commenter conceded that consumers may benefit more if a
total price is disclosed, the commenter argued that any harm could be
easily avoidable by consumers calculating the total themselves.\136\
Some commenters also argued that these types of fees often benefit
consumers and are openly disclosed.\137\ Indeed, the American Gaming
Association stated that resort fees enhance a consumer's stay,
distinguish resorts from more standard lodging offerings, are openly
disclosed to consumers, and often appear several times throughout the
search and purchasing process. As the Commission already noted, drip
and partitioned pricing and other bait-and-switch pricing harm
consumers for numerous reasons, including because consumers
underestimate the total price of a good or service, overconsume,
overpay, and waste time. The U.S. Chamber of Commerce argued that there
are pro-consumer and pro-competitive justifications for this type of
pricing, including allowing for dynamic pricing strategies and
preventing consumers from paying for services that they do not
use.\138\ The rule, however, does not prohibit the use of dynamic
pricing strategies, itemization, or offering optional goods or services
for consumers to select; it simply prohibits offering a price that is
not inclusive of all mandatory fees and charges, as well as prohibiting
misrepresented fees and charges.
---------------------------------------------------------------------------

\136\ Id.
\137\ FTC-2023-0064-2886.
\138\ FTC-2023-0064-3127 (U.S. Chamber of Commerce noted that,
among these pricing practices, dynamic pricing strategies provide
these benefits to consumers and this was ignored in the conclusions
of the NPRM.).
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As stated herein, the Commission and courts have previously
recognized that price is a material term \139\ and that it is a
violation of section 5 of the FTC Act to misrepresent the price of a
good or service.\140\ Commenters emphasized the materiality of price to
consumers.\141\ The commenters who argue that bait-and-switch pricing
does not harm consumers ignore the large body of literature
demonstrating that drip pricing and partitioned pricing have a negative
impact on consumers and competition. The economic analysis in Section V
provides additional discussion regarding the economic harms from bait-
and-switch pricing tactics, including drip pricing and partitioned
pricing in the live-event and short-term lodging industries.
---------------------------------------------------------------------------

\139\ Deception Policy Statement, 103 F.T.C. at 182-183, 183
n.55 (listing claims or omissions involving cost among those that
are presumptively material); see also, e.g., FleetCor Techs., Inc.,
620 F. Supp. 3d at 1303-04, 1311 (finding that representations about
discounts and transaction fees were material); FTC v. Windward
Marketing, Inc., No. 1:96-CV-615F, 1997 WL-33642380, at *10 (N.D.
Ga., Sept. 30, 1997) (``[A]ny representations concerning the price
of a product or service are presumptively material'').
\140\ Deception Policy Statement, 103 F.T.C. at 175 (listing
``misleading price claims'' among those claims that the FTC has
found to be deceptive); see also, e.g., Resort Car Rental Sys., 518
F.2d at 964 (upholding the Commission's order finding that using the
name ``Dollar-A-Day'' misrepresented the price of car rentals in
violation of section 5 of the FTC Act).
\141\ See, e.g., FTC-2023-0064-3162 (BBB National Programs Inc.
stated that BBB National Advertising Division ``precedent is clear
that the advertised price for a product or service is among one of
the most material terms to a consumer's purchasing decision.'').
---------------------------------------------------------------------------

C. The Economic Effect of the Rule

As part of the rulemaking proceeding, the Commission solicited
public comment and data (both qualitative and quantitative) on the
economic impact of the proposed rule and its costs and benefits. In
issuing this final rule, the Commission has carefully considered the
comments received and the costs and benefits of each provision, taking
into account the effects on small businesses and consumers, as
discussed in more detail in sections V and VII.
The record demonstrates that the most significant anticipated
benefits of the final rule are promoting transparent pricing,
facilitating comparison shopping for consumers, and leveling

[[Page 2081]]

the playing field for businesses in the live-event ticketing and short-
term lodging industries. By prohibiting drip pricing, the final rule
also will promote social trust, which is a necessary component of
successful market interactions.\142\ Most participants in a market
transaction do not have prior experience with one another and consumers
must rely on some degree of trust that the business will provide the
good or service in question, at the stated price and quality level.
Without social trust, it would be costlier for both consumers and
businesses to acquire all the necessary information to participate in
the market. While there has been less research on the relationship
between social trust and previous market interactions, there is some
evidence that bad market experiences can reduce social trust.\143\
Thus, prohibiting these types of deceptive and unfair practices will
promote social trust, which can be a measure of a well-functioning
market.\144\
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\142\ The relationship between social trust and market outcomes
is well established. See, e.g., Paul J. Zak & Stephen Knack, Trust
and growth. 111 Econ. J., 470 (Mar. 2001), <a href="https://doi.org/10.1111/1468-0297.00609">https://doi.org/10.1111/1468-0297.00609</a>; Philip Keefer & Stephen Knack, Does Social Capital
Have an Economic Payoff? A Cross-Country Investigation, 112 Q.J.
Econ. 4 (Nov. 1997), <a href="https://doi.org/10.1162/003355300555475">https://doi.org/10.1162/003355300555475</a>. Social
trust is particularly necessary for participation in financial
markets. See Jesse Bricker & Geng Li, Fed. Reserve Bd., Credit
Scores, Social Trust, and Stock Market Participation, Finance and
Economics Discussion Series 2017-008r1, <a href="https://doi.org/10.17016/FEDS.2017.008r1">https://doi.org/10.17016/FEDS.2017.008r1</a>; Luigi Guiso, Paola Sapienza, & Luigi Zingales,
Trust the Stock Market, 63 J. Fin. (Dec. 2008), <a href="https://www.jstor.org/stable/20487944?seq=1">https://www.jstor.org/stable/20487944?seq=1</a>.
\143\ Ginny Seung Choi & Virgil Henry Storr, Market
interactions, trust and reciprocity, 15 PLOS One 5 (May 7, 2020),
<a href="https://doi.org/10.1371/journal.pone.0232704">https://doi.org/10.1371/journal.pone.0232704</a>.
\144\ Joshua Kleinfeld & Hadar Dancig-Rosenberg, Social Trust in
Criminal Justice: A Metric, 98 Notre Dame L. Rev. 815 (2022),
<a href="https://scholarship.law.nd.edu/ndlr/vol98/iss2/6">https://scholarship.law.nd.edu/ndlr/vol98/iss2/6</a>.
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Another beneficial consequence would be the expansion of the
remedies available for violations of the final rule, including the
ability to more effectively obtain monetary relief for consumers who
have been deceived about the true total price of live-event tickets or
short-term lodging. This is particularly critical given the U.S.
Supreme Court's decision in AMG Capital Mgmt., LLC v. FTC, 593 U.S. 67
(2021), which held that equitable monetary relief, including consumer
redress, is not available under section 13(b) of the FTC Act.\145\
Under the final rule, the Commission will now be able to seek court-
ordered consumer redress in one Federal district court action brought
under section 19(a)(1), rather than the longer, less efficient, two-
step process for obtaining redress under section 19(a)(2).\146\ By
allowing the Commission to secure redress more efficiently, this rule
will also allow the Commission to conserve its limited enforcement
resources for other mission priorities.
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\145\ AMG Cap. Mgmt., 593 U.S. at 82.
\146\ See 15 U.S.C. 57b(a)(1) and (2); see also NPRM, 88 FR
77438 (discussing impact of AMG Cap. Mgmt.). When the Commission has
reason to believe that the rule has been violated, the Commission
can commence a Federal court action to ask a Federal judge to
determine liability and, if proven, require violators to provide
redress. See 15 U.S.C. 57b(a)(1), (b). Without the rule, the path to
court-ordered redress is longer. The Commission must first conduct
an administrative proceeding to determine whether the respondent
engaged in unfair or deceptive acts or practices in violation of
section 5(a) of the FTC Act. If the Commission finds that the
respondent did so, the Commission issues a cease-and-desist order,
which might not become final until after the resolution of any
resulting appeal to a Federal court of appeals. Then, to obtain
redress, the Commission must initiate a second action in Federal
district court, in which it must prove that the violator engaged in
objectively fraudulent or dishonest conduct in order to obtain
court-ordered redress. See 15 U.S.C. 57b(a)(2), (b).
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As an additional benefit, the rule will enable the Commission to
seek civil penalties against violators. The FTC Act generally does not
allow the Commission to obtain civil penalties against those who engage
in unfair or deceptive acts or practice in violation of section 5(a) of
the FTC Act. Section 5(m)(1)(A) of the FTC Act does, however, authorize
the Commission to seek civil penalties in court for violations of trade
regulation rules, such as the final rule here.\147\ The ability to
obtain civil penalties provides two benefits. First, court-ordered
civil penalties give the Commission the ability to ensure that
violators do not retain the profits they earn by engaging in the unfair
or deceptive pricing practices prohibited by the rule. Second, the
potential for civil penalties will deter violations and provide a
strong incentive for businesses providing live-event tickets and short-
term lodging to provide truthful and transparent pricing information in
compliance with the rule, which will have consumer welfare benefits and
will benefit honest competition.\148\
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\147\ See section 5(m)(1)(A) of the FTC Act, 15 U.S.C.
45(m)(1)(A) (providing that those who violate a trade regulation
rule ``with actual knowledge or knowledge fairly implied on the
basis of objective circumstances that such act is unfair or
deceptive and is prohibited by such rule'' are liable for civil
penalties for each violation). In addition, any entity or person who
violates such a rule (irrespective of the state of knowledge) is
liable for any injury caused to consumers by the rule violation. The
Commission may pursue such recovery in a suit under section 19(a)(1)
of the FTC Act, 15 U.S.C. 57b(a)(1).
\148\ NPRM, 88 FR 77447-48.
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When promulgating a final rule, the Commission must prepare a final
regulatory analysis, which is contained in section V. The final
regulatory analysis contains an estimated cost-benefit analysis of the
final rule, as well as a more in-depth discussion of the comments the
Commission received in response to the NPRM. In addition, the
Commission's final regulatory flexibility analysis, which is contained
in section VII, discusses the final rule's economic impact on small
entities.

III. Section-by-Section Analysis

The Commission has carefully considered the rulemaking's extensive
comment record. It has weighed considerations raised by individual
consumers, businesses (including small businesses), industry advocates,
consumer advocates, labor representatives, academics, and other law
enforcement bodies. After considering these comments, the Commission
finalizes this rule to address a subset of the specific unfair and
deceptive practices identified in the NPRM. The rule will help ensure
that consumers shopping for live-event tickets and short-term lodging
see advertised prices that include all mandatory fees, can obtain such
goods or services at those prices, and know what they are paying for.
The rule promotes honest and transparent pricing for consumers and a
level playing field for businesses.
Numerous public comments in support of and in opposition to the
rule included discussions of the definitions and substantive provisions
of the proposed rule, and made various recommendations. The Commission
considered comments pointing out confusion about specific phrases in
the proposed rule, particularly phrases that commenters found vague or
overbroad. The Commission also took notice of comments that suggested
some entities or transactions would be subject to overlapping Federal
regulations regarding pricing disclosures that could result in
confusion to consumers or businesses. In addition, the Commission
appreciated comments from industry that identified potential gaps in
how the proposed rule would interact with certain types of pricing
practices.
The Commission makes a number of changes to the final rule.
Notably, the Commission narrows the application of the final rule to
offers, displays, or advertisements of a covered good or service--i.e.,
live-event tickets or short-term lodging. The Commission recognizes
that many comments to the proposed rule focused on the application of
the rule to specific industries or pricing scenarios. As a result of
the Commission's decision to limit this final rule to live-event
ticketing and short-term lodging, the

[[Page 2082]]

Commission need not respond to each of these comments at this time.
In addition, wherever possible, the Commission works to reduce
burden on, and maintain pricing flexibility for, businesses. Finally,
the Commission provides guidance and explanation to respond to specific
questions and hypotheticals posed by commenters to help give additional
clarity to businesses. The following discussion provides a section-by-
section analysis of the NPRM's proposed provisions and the provisions
adopted in the final rule, as well as a discussion of the comments
received and the Commission's responses.

A. Sec. 464.1 Definitions

Proposed Sec. 464.1 contained definitions for the following terms:
``ancillary good or service''; ``business''; ``clear(ly) and
conspicuous(ly)''; ``government charges''; ``pricing information'';
``shipping charges''; and ``total price.'' The Commission received
various comments with respect to these definitions, including
particular industries' requests for exemption from the definition of
``business'' and other suggestions. Section 464.1 of the final rule
adopts these definitions, in some instances with minor modifications
for clarification, and adds a definition for ``covered good or
service.'' In the definition-by-definition analysis, the Commission
discusses each definition proposed in the NPRM, any changes to the
definition's text, the added definition, and other comments relevant to
the definitions section that are not otherwise addressed in the
discussion of the final rule's substantive provisions.
1. Ancillary Good or Service
Proposed Sec. 464.1(a) in the NPRM defined ``ancillary good or
service'' as ``any additional good(s) or service(s) offered to a
consumer as part of the same transaction.'' This definition was
relevant to the definition of ``total price,'' in proposed Sec.
464.1(g), which specified that any mandatory fees or charges for such
goods or services would be included in total price. Commenters proposed
modifications to the definition of ``ancillary good or service'' but,
following review of those comments and as discussed in this section,
the Commission declines to adopt the suggested modifications. Final
Sec. 464.1 adopts the definition of ``ancillary good or service''
without modification.
Several commenters recommended that the Commission modify the
definition of ``ancillary good or service'' to state that fees charged
by a third party must be included in total price if those fees are part
of the same transaction.\149\ As stated in the NPRM, if a business
advertises a price for a good or service that requires an ancillary
good or service provided by another entity, the charge for the
mandatory ancillary good or service must be included in total price.
Additionally, the NPRM made clear that the definition includes goods
and services (whether from the seller or third parties) offered as part
of the same transaction, because it included examples of mandatory
ancillary goods or services that may be offered by third-party
providers but are part of the same transaction, such as a payment
processing fee for an online transaction. Accordingly, the Commission
does not believe that it is necessary to modify the definition of
``ancillary good or service'' to clarify that fees charged by a third
party must be included in total price if those fees are part of the
same transaction.
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\149\ FTC-2023-0064-3191 (Community Catalyst et al.); FTC-2023-
0064-3283 (National Consumer Law Center, Prison Policy Initiative,
and advocate Stephen Raher).
---------------------------------------------------------------------------

Several commenters also suggested that the Commission add language
referring to a reasonable consumer in the definition of ``ancillary
good or service,'' to clarify that only goods or services that a
``reasonable consumer'' would expect to be included must be included in
total price.\150\ The Commission does not believe that adding
``reasonable consumer'' to the definition of ``ancillary good or
service'' is necessary, as the reasonable consumer standard is implicit
in the rule text. Under longstanding precedent, the Commission examines
conduct from the perspective of a consumer acting reasonably under the
circumstances.\151\ If a representation or practice affects or is
directed primarily to a particular group, the Commission examines
reasonableness from the perspective of an ordinary member of that
group.\152\ Accordingly, the Commission does not believe it is
necessary to modify the definition of ``ancillary good or service'' to
refer to a reasonable consumer.
---------------------------------------------------------------------------

\150\ FTC-2023-0064-3268 (Housing & Eviction Defense Clinic,
University of Connecticut School of Law, commented ``the definition
of an `Ancillary Good or Service' should be amended to include all
fees that are not reasonably avoidable and all fees or charges for
goods or services that a reasonable consumer would expect to be
included with the purchase.''); FTC-2023-0064-3275 (Berkeley Center
for Consumer Law & Economic Justice et al. recommended the
definition of ``Ancillary Good or Service'' be revised ``to mean
`any optional, additional good(s) or service(s), offered to a
consumer as part of the same transaction, that a reasonable consumer
would not expect to be included with the purchase of the advertised
good or service.''); FTC-2023-0064-3160 (Consumer Federation of
America et al. proposed the definition of ``Ancillary Good or
Service'' be modified to ``any optional, additional good(s) or
service(s), offered to a consumer as part of the same transaction,
that a reasonable consumer would not expect to be included with the
purchase of the advertised good or service.'').
\151\ Deception Policy Statement, 103 F.T.C. at 175, 177-82; see
also FTC v. Cantkier, 767 F. Supp. 2d 147, 151-52 (D.D.C. 2011)
(applying deception standard set forth in the Deception Policy
Statement); POM Wonderful, LLC v. FTC, 777 F.3d 478, 490, 500 (D.C.
Cir. 2015) (applying deception standard set forth in the Deception
Policy Statement and upholding administrative law judge
determination that `` `a significant minority' of `reasonable'
consumers `would interpret [the ad] to be claiming that drinking
eight ounces of POM Juice daily prevents or reduces the risk of
heart disease.' ''); FTC v. World Travel Vacation Brokers, Inc., 861
F.2d 1020, 1029 (7th Cir. 1988) (upholding lower court's
determination that `` `the $29 airfare promotion constituted the
type of misrepresentation upon which a reasonably prudent person
would rely' ''); Fed. Trade Comm'n, FTC Policy Statement on
Unfairness (appended to In re Int'l Harvester Co., 104 F.T.C. 949,
1070, 1073 (1984), (hereinafter ``Unfairness Policy Statement''),
<a href="https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-104/ftc_volume_decision_104__july_-_december_1984pages949_-_1088.pdf">https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-104/ftc_volume_decision_104__july_-_december_1984pages949_-_1088.pdf</a>
(``To justify a finding of unfairness the [consumer] injury must . .
. be an injury that consumers themselves could not reasonably have
avoided.'').
\152\ Deception Policy Statement, 103 F.T.C. at 175, 179 (``For
instance, if a company markets a cure to the terminally ill, the
practice will be evaluated from the perspective of how it affects
the ordinary member of that group.'').
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One commenter argued, in the context of online movie ticket
purchases, that online convenience fees are reasonably avoidable
because consumers can purchase tickets in-person at a theater without
incurring the fees.\153\ Although a movie ticket is not a covered good
or service, similar convenience fees are common in the live-event
ticketing industry. The Commission disagrees with the commenter that
online convenience fees are reasonably avoidable: If a consumer must
pay a service or other fee in order to purchase tickets online (i.e.,
as part of the same transaction), then such a fee must be included in
total price when it appears online. In addition, using vague fee
descriptions, such as an unspecified ``convenience'' fee, may violate
Sec. Sec. 464.2(c) and 464.3 by failing to disclose clearly and
conspicuously, and by misrepresenting, the nature or purpose of fees or
the identity of the good or service for which fees or charges are
imposed.
---------------------------------------------------------------------------

\153\ FTC-2023-0064-3292 (National Association of Theatre
Owners).
---------------------------------------------------------------------------

Another commenter argued that the definition of ``ancillary good or
service'' should ``not turn on whether the good or service is `offered'
to a consumer but whether it is `required to be purchased' by the
consumer.'' \154\ The commenter proposed that the Commission

[[Page 2083]]

incorporate the word ``mandatory'' into the definition of ``ancillary
good or service.'' The Commission disagrees with this proposed
modification. As discussed in the NPRM, an ancillary good or service
may be mandatory or optional. Whether the cost of the ancillary good or
service must be incorporated into total price turns on whether the good
or service is mandatory, which depends on the facts of a
transaction.\155\ For example, if a hotel offers a consumer the option
to purchase or decline a trip protection plan with a room reservation,
the plan would be an optional ancillary good or service because the
consumer has the option to decline the trip insurance. Conversely, a
hotel may require all guests to purchase a daily breakfast voucher. In
this case, the hotel guest cannot avoid being charged for the voucher,
and it is a mandatory ancillary good or service. If a business charges
payment processing fees that the consumer cannot reasonably avoid, such
fees would be for a mandatory ancillary good or service.
---------------------------------------------------------------------------

\154\ FTC-2023-0064-3206 (Motor Vehicle Protection Products
Association et al.).
\155\ See infra section III.A.8.a.
---------------------------------------------------------------------------

It is also possible that a good or service may be mandatory in one
transaction but optional in another.\156\ For example, if a hotel
allows a guest to purchase amenities such as bottled water or pool
towels for an additional fee but permits each guest to supply their own
water or pool towels, such amenities would be optional ancillary goods
or services. If, however, the hotel requires all patrons to use the
hotel-provided amenities for a fee, then the amenities would be
mandatory ancillary goods or services. Because ancillary goods or
services may be either mandatory or optional, the Commission declines
to add the word ``mandatory'' into the definition of ``ancillary good
or service.''
---------------------------------------------------------------------------

\156\ The Commission notes that several commenters
misinterpreted the definition of ``Ancillary Good or Service'' as
necessarily being optional. See, e.g., FTC-2023-0064-3145
(Association of National Advertisers, Inc. stated that ``Ancillary
fees, by definition, are not `mandatory' and should not be
characterized as `mandatory' fees subject to the proposed disclosure
requirements.''); FTC-2023-0064-1425 (Iowa Bankers Association
stated, ``While the definition of Total Price includes `mandatory'
Ancillary Goods or Services, the actual definition [of Ancillary
Good or Service] seems to speak to the discretionary aspect of this
term.''). The Commission reiterates that the rule text is clear:
Ancillary Goods or Services may be mandatory or optional, depending
on the facts of a particular transaction.
---------------------------------------------------------------------------

Some commenters also asked the Commission for additional guidance
as to when a good or service might be considered ancillary,
particularly if a good or service includes variable costs.\157\ The
Commission addresses pricing scenarios, including those pertaining to
contingent or variable fees, in section III.B.1.a. Another commenter
stated that the use of the word ancillary was unclear, because it
``implies a relationship between a primary object and the ancillary
object'' and does not include guidance concerning the primary
object.\158\ The Commission cannot identify in every possible situation
which good or service would be the ``primary object'' versus an
ancillary good or service because such a determination is fact-specific
and will depend on the goods or services offered by individual
businesses.
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\157\ FTC-2023-0064-3172 (New Jersey Apartment Association);
FTC-2023-0064-3296 (Bay Area Apartment Association).
\158\ FTC-2023-0064-3206 (Motor Vehicle Protection Products
Association et al.).
---------------------------------------------------------------------------

For the foregoing reasons, and based on its review of the comments
received, the Commission adopts the definition of ``ancillary good or
service'' set forth in the NPRM. As discussed in section III.A.8, to
address comments and clarify the rule, the Commission modifies the
definition of total price to further clarify that under final Sec.
464.2(a), Businesses may exclude from total price fees or charges for
any optional ancillary good or service.
2. Business
Proposed Sec. 464.1(b) defined ``business'' as ``an individual,
corporation, partnership, association, or any other entity that offers
goods or services, including, but not limited to, online, in mobile
applications, and in physical locations.'' As part of the NPRM, the
Commission also proposed a carve-out for certain motor vehicle dealers
required to comply with the Combating Auto Retail Scams Trade
Regulation Rule (``CARS Rule''),\159\ and for the carve-out to become
effective upon the CARS Rule's effective date. The CARS Rule provides
for certain pricing disclosure requirements and prohibits
misrepresentations. Final Sec. 464.1 adopts the first sentence of the
proposed definition of ``business,'' but removes the carve-out for
motor vehicles required to comply with the CARS Rule because of the
final rule's narrowed scope.
---------------------------------------------------------------------------

\159\ 16 CFR part 463.
---------------------------------------------------------------------------

In the NPRM, the Commission sought input as to whether it should
modify the proposed definition of ``business'' to exclude certain
businesses, or whether it should add a definition of ``covered
business'' to narrow the businesses subject to the rule. The NPRM also
included several questions concerning how to define ``covered
business'' in the event the Commission opted to adopt such a
definition. The Commission received broad support for an industry-
neutral rule from individual commenters, consumer groups, and industry
organizations. Commenters cited the prevalence of hidden and deceptive
fees across a variety of industries and argued that broad exemptions
would create an uneven economic playing field and confuse consumers by
creating unpredictability across industries.\160\ Conversely, the
Commission received numerous comments asking that it narrow the rule to
specific industries, including, for example, live-event ticketing and
short-term lodging. Several commenters also urged the Commission to
exempt certain industries, arguing that the rule would pose challenges
for those industries or that those industries are already subject to
existing regulations.
---------------------------------------------------------------------------

\160\ See, e.g., FTC-2023-0064-2887 (Progressive Policy
Institute); FTC-2023-0064-3160 (Consumer Federation of America et
al.); FTC-2023-0064-3275 (Berkeley Center for Consumer Law &
Economic Justice et al.).
---------------------------------------------------------------------------

Following its review of the comments, the Commission narrows
application of the final rule to covered goods or services, those
involving live-event tickets or short-term lodging. While the comments
demonstrated that bait-and-switch pricing and misleading fees and
charges inflict harms on consumers across the economy, the rulemaking
record reveals longstanding concerns with these unfair and deceptive
practices within the live-event ticketing and short-term lodging
industries in particular. The final rule addresses these industries
first. The Commission addresses the definition of ``covered good or
service'' in section III.A.4.
The Commission received comments requesting modifications to
various definitions, including the definition of ``business,'' or
wholesale exemptions from the proposed rule's coverage related to
issues in particular industries, including auto dealers and service
providers,\161\ app-based delivery platforms,\162\ financial services

[[Page 2084]]

providers,\163\ franchised businesses,\164\ funeral service
providers,\165\ rental housing,\166\ restaurants and other food and
beverage service providers,\167\ telecommunications providers,\168\
vending machine retailers,\169\ movie theaters,\170\ health and fitness
centers,\171\ higher education institutions,\172\ recreational vehicles
and marine crafts,\173\ and towing companies.\174\ The Commission's
decision to narrow the final rule to covered goods or services renders
these requests inapplicable, and as such, the Commission does not
address them at this time.
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\161\ E.g., FTC-2023-0064-3276 (Automotive Service Association);
FTC-2023-0064-3206 (Motor Vehicle Protection Products Association et
al.); FTC-2023-0064-3189 (National Automobile Dealers Association);
FTC-2023-0064-3121 (National Independent Automobile Dealers
Association).
\162\ E.g., FTC-2023-0064-3263 (Flex Association); FTC-2023-
0064-3202 (TechNet); FTC-2023-0064-3238 (Gibson, Dunn & Crutcher
LLP).
\163\ E.g., FTC-2023-0064-3139 (American Bankers Association and
Consumer Bankers Association); FTC-2023-0064-2893 (America's Credit
Unions); FTC-2023-0064-3168 (American Financial Services
Association); FTC-2023-0064-3147 (American Land Title Association);
FTC-2023-0064-1425 (Iowa Bankers Association); FTC-2023-0064-1941
(Independent Bankers Association of Texas); FTC-2023-0064-3182
(Massachusetts Bankers Association); FTC-2023-0064-3119 (Money
Services Business Association, Inc.); FTC-2023-0064-3144 (Mortgage
Bankers Association); FTC-2023-0064-3127 (U.S. Chamber of Commerce).
\164\ E.g., FTC-2023-0064-3294 (International Franchise
Association); FTC-2023-0064-3141 (Coalition of Franchisee
Associations); FTC-2023-0064-3211 (American Association of
Franchisees & Dealers).
\165\ E.g., FTC-2023-0064-3210 (Service Corporation
International); FTC-2023-0064-3065 (Carriage Services, Inc.); FTC-
2023-0064-3130 (International Cemetery, Cremation & Funeral
Association).
\166\ E.g., FTC-2023-0064-3152 (Building Owners & Managers
Association et al.); FTC-2023-0064-3116 (Manufactured Housing
Institute); FTC-2023-0064-3133 (National Multifamily Housing Council
and National Apartment Association); FTC-2023-0064-3172 (New Jersey
Apartment Association); FTC-2023-0064-3289 (Zillow Group). As
explained in section III.A.4, the Commission does not intend to
cover rental housing providers in its definition of ``Covered Good
or Service'' at this time.
\167\ E.g., FTC-2023-0064-0264 (Individual Commenter); FTC-2023-
0064-2953 (Individual Commenter); FTC-2023-0064-2124 (Individual
Commenter); FTC-2023-0064-3022 (Individual Commenter); FTC-2023-
0064-3021 (Individual Commenter); FTC-2023-0064-3300 (National
Restaurant Association); FTC-2023-0064-3219 (Georgia Restaurant
Association); FTC-2023-0064-3180 (Independent Restaurant Coalition);
FTC-2023-0064-3078 (Washington Hospitality Association); FTC-2023-
0064-3080 (UNITE HERE); FTC-2023-0064-2918 (Elite Catering + Event
Professionals).
\168\ E.g., FTC-2023-0064-3234 (CTIA--The Wireless Association);
FTC-2023-0064-3295 (USTelecom--The Broadband Association); FTC-2023-
0064-2884 (NTCA--The Rural Broadband Association); FTC-2023-0064-
3143 (ACA Connects).
\169\ E.g., FTC-2023-0064-2919 (National Automatic Merchandising
Association).
\170\ E.g., FTC-2023-0064-3292 (National Association of Theatre
Owners).
\171\ E.g., FTC-2023-0064-3269 (IHRSA--The Health & Fitness
Association).
\172\ E.g., FTC-2023-0064-2906 (National Association of College
& University Business Officers et al.).
\173\ E.g., FTC-2023-0064-3249 (Marine Retailers Association of
the Americas); FTC-2023-0064-3251 (National RV Dealers Association).
\174\ Towing & Recovery Association of America, Inc. submitted a
late comment, which the Commission considered in its discretion and
makes available at <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/R207011TRAAComment.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/R207011TRAAComment.pdf</a>.
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The Commission received comments from various third-party travel
service providers, including online travel agencies and travel
advisors, arguing that third-party travel intermediaries and advisors
are situated differently from underlying travel service providers and
may be subject to existing Department of Transportation (``DOT'')
regulations. Online travel agencies and travel advisors routinely
offer, display, or advertise prices of covered goods or services to
consumers, including businesses, which is conduct covered by the final
rule. One industry group representing travel advisors argued that
travel advisors do not set the price of underlying travel products and
rely on the sellers of such products to provide accurate pricing
information.\175\ The commenter requested that the Commission include a
``safe harbor mechanism'' to protect travel advisors who may rely on
inaccurate pricing information provided by sellers. The Commission
declines to exclude travel advisors from the rule or to provide them
with a safe harbor. The Commission addresses in section III.B.1.f
requests for immunity for third-party intermediaries.
---------------------------------------------------------------------------

\175\ FTC-2023-0064-3106 (American Society of Travel Advisors).
---------------------------------------------------------------------------

The Commission also received comments from online travel agencies
seeking an exemption from the rule for airfare or bundled products that
include airfare, arguing that the FTC Act does not confer jurisdiction
over airlines and, further, that DOT's Full Fare Advertising Rule
requires certain pricing disclosures for airfare.\176\ As noted in the
NPRM, the Commission's enforcement of its rule is subject to all
existing limitations of the law and the Commission cannot bring a
complaint to enforce its rule if doing so would exceed the Commission's
jurisdiction or constitutional limitations. The Commission declines to
exempt online travel agencies from the rule. However, the Commission
notes that, where there is overlap between this rule and the DOT's Full
Fare Advertising Rule on the treatment of government charges (i.e., in
the context of bundled travel packages, such as for airfare and hotels,
the Full Fare Advertising Rule requires the inclusion of government
taxes and fees in the total price), complying with both rules is
feasible. While this rule permits businesses to exclude government
charges from total price, it does not require them to do so.
---------------------------------------------------------------------------

\176\ See, e.g., FTC-2023-0064-3293 (Travel Technology
Association); FTC-2023-0064-3262 (Skyscanner).
---------------------------------------------------------------------------

The Commission received a comment from a gaming association seeking
an exemption for Federally recognized Indian Tribes and Tribal entities
as governments that act for the benefit of their tribal citizens.\177\
The commenter asserted that the Commission does not generally exercise
regulatory authority over such entities. The comment focused on Tribal
government casinos and explained that Tribal casino revenues are used
for essential Tribal government services and community development,
including education, healthcare services, housing, and infrastructure
development.\178\
---------------------------------------------------------------------------

\177\ FTC-2023-0064-3120 (Arizona Indian Gaming Association).
\178\ Id.
---------------------------------------------------------------------------

The Commission recognizes that some Tribal Government casinos and
other businesses may operate as hotels or live-event venues, or may
otherwise offer goods or services that fit within the definition of
covered good or service. Nevertheless, the Commission declines to
exempt Federally recognized Indian Tribes and Tribal entities from
coverage under the final rule. The FTC Act is a law of general
applicability that applies to such entities, as well as individual
members thereof.\179\ The Commission recognizes that, in some
instances, these entities may be organized in such a way that they are
outside FTC jurisdiction, but whether a given Tribe or Tribal business
is a corporation within the scope of the FTC Act is a fact-dependent
inquiry.\180\ The Commission is not aware of any evidence to suggest
that the final rule would disproportionately impact such entities or
that it would have any impact on their ability to continue to use
revenues for government services or community development.
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\179\ See Fed. Power Comm'n v. Tuscarora Indian Nation, 362 U.S.
99, 116-17 (1960) (examining case law supporting the conclusion that
``a general statute in terms applying to all persons includes
Indians and their property interests''); FTC v. AMG Servs., Inc.,
No. 2:12-CV-00536-GMN, 2013 WL 7870795, at * 16-21 (D. Nev. July 16,
2013), R. & R. adopted, 2014 WL 910302 (D. Nev. Mar. 7, 2014)
(discussing the FTC Act's applicability to Federally recognized
Tribes and Tribal businesses).
\180\ See, e.g., AMG Servs., 2013 WL 7870795, at * 22-23
(holding there was a genuine dispute of material fact barring
summary judgment on question of whether Tribal chartered
corporations were for-profit corporations under the FTC Act).
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The Commission received a comment seeking an exemption for all
franchised businesses. The commenter raised concerns that franchised
businesses may lose out on the benefit of national

[[Page 2085]]

advertising campaigns, asserting that ``[u]nder the Proposed Rule,
national marketing campaigns are only workable if all franchised
businesses in a franchise system adhere to the same pricing regime
(including pass-through fees), regardless of the economic demands of
the market in which they operate.'' \181\ The commenter also raised
concerns particular to restaurant franchises.\182\
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\181\ FTC-2023-0064-3294 (International Franchise Association).
\182\ Id.
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The Commission declines to exclude franchised businesses from the
final rule. As the commenter notes, franchised businesses include
hotels, restaurants, and fitness centers, among other businesses. The
Commission's addition of the ``covered good or service'' definition
narrows the rule's application to businesses that make available live-
event tickets or short-term lodging and moots the commenter's concerns
regarding restaurants or other franchises. Further, the final rule
applies equally to franchised and non-franchised businesses, including
hotels. The commenter has not provided any evidence to suggest that the
rule will disproportionately impact franchised businesses. As to the
commenter's contention that application of the rule will negatively
impact franchised businesses' ability to benefit from national
advertising campaigns, the Commission addresses commenters' questions
and concerns about national advertising campaigns in section III.B.1.d.
The commenter also urged the Commission to exclude from the rule
sellers of franchises (``franchisors'') subject to the FTC's Disclosure
Requirements and Prohibitions Concerning Franchising Rule (``Franchise
Rule''), arguing that the rule's total price requirement would
undermine the Franchise Rule's requirement to itemize specific
fees.\183\ Two commenters representing franchised businesses
(``franchisees''), however, urged the Commission to address ``the types
of fees that are charged to franchisees by franchisors,'' which are not
subject to the Franchise Rule.\184\
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\183\ Id.
\184\ FTC-2023-0064-3141 (Coalition of Franchisee Associations);
FTC-2023-0064-3211 (American Association of Franchisees & Dealers).
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The Franchise Rule, 16 CFR part 436, requires franchisors, in
connection with the offer or sale of a franchise, to provide
prospective franchisees with specific information about the fees and
charges necessary to begin operation of the franchised business,
including the estimated initial investment, expected fees, and other
expenses.\185\ Because the final rule is limited to prices for covered
goods or services and ancillary goods or services offered as part of
the same transaction, it would not apply to an offer or sale of a
franchise, including a hotel franchise. However, the Commission
reiterates that franchised businesses must comply with the final rule
in its entirety when selling covered goods or services.
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\185\ 16 CFR 436.5; see also Fed. Trade Comm'n, Staff Guidance
on the Unlawfulness of Undisclosed Fees Imposed on Franchisees (July
2024), <a href="https://www.ftc.gov/system/files?file=ftc_gov/pdf/Franchise-Staff-Guidance.pdf">https://www.ftc.gov/system/files?file=ftc_gov/pdf/Franchise-Staff-Guidance.pdf</a>.
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One industry group recommended that the definition of ``business''
be limited to ``an individual, corporation, partnership, association,
or any other entity that offers goods or services to consumers,'' with
the purpose of exempting business-to-business transactions from the
scope of the final rule.\186\ Another industry group similarly
requested that the Commission exempt business-to-business transactions
from the scope of the final rule.\187\ As set forth in section
III.B.1.f, the Commission believes that application of the rule to
business-to-business transactions is appropriate and necessary to
provide the Commission with the tools necessary to seek redress from
businesses that violate the law. The final rule covers both business-
to-consumer transactions and business-to-business transactions, so no
modification to the definition of ``business'' is required.
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\186\ FTC-2023-0064-3189 (National Automobile Dealers
Association).
\187\ FTC-2023-0064-3294 (International Franchise Association).
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3. Clear(ly) and Conspicuous(ly)
Proposed Sec. 464.1(c) in the NPRM defined ``clear(ly) and
conspicuous(ly),'' consistent with longstanding FTC practice, as ``a
required disclosure that is difficult to miss (i.e., easily noticeable)
and easily understandable,'' and listed proposed specifications for
``visual disclosure[s],'' ``audible disclosure[s],'' and ``any
communication using an interactive electronic medium.'' Among other
specifications, the definition explained that the disclosure ``must be
made through the same means through which the communication is
presented.'' The proposed definition also provided that disclosures
``must use diction and syntax understandable to ordinary consumers and
must appear in each language in which the representation that requires
disclosure appears'' and ``must not be contradicted or mitigated by, or
inconsistent with, anything else in the communication.'' The proposed
definition further made clear that for ``representations or sales
practice[s]'' targeting specific audiences, ``such as children, older
adults, or the terminally ill, `ordinary consumers' includes reasonable
members of that group.'' The Commission finalizes the definition of
``clear(ly) and conspicuous(ly)'' proposed in Sec. 464.1(c) with minor
clarifications to harmonize the language and terminology used in this
provision with the terminology used in recent rulemakings and agency
guidance.
Specifically, proposed Sec. 464.1(c) provided that a required
disclosure must be ``difficult to miss (i.e., easily noticeable).''
Final Sec. 464.1 reverses the order of the phrases ``easily
noticeable'' and ``difficult to miss,'' and, thus, provides that a
required disclosure must be ``easily noticeable (i.e., difficult to
miss).'' Additionally, in final Sec. 464.1, the Commission adds
language to clarify that required disclosures must be ``easily
understandable by ordinary consumers.'' In final Sec. 464.1, the
Commission deletes reference to ``reasonable'' members of a
specifically targeted group. Each of these modifications is to comport
with the Commission's recently finalized Trade Regulation Rule on the
Use of Consumer Reviews and Testimonials and the Negative Option Rule,
as well as the Commission's Endorsement Guides.\188\ Moreover, as noted
in section II.B., the Commission examines conduct from the perspective
of a consumer acting reasonably under the circumstances, and if a
representation or practice affects or is directed primarily to a
particular group, the Commission examines reasonableness from the
perspective of an ordinary member of that group.\189\ In final Sec.
464.1, the Commission also includes ``mobile

[[Page 2086]]

applications'' within the definition of ``clear(ly) and
conspicuous(ly).'' This addition clarifies that ``mobile applications''
constitute interactive media devices under item (4) of the definition.
The Commission does not believe that these modifications substantively
alter the definition of ``clear(ly) and conspicuous(ly).''
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\188\ See Promulgation of Trade Regulation Rule and Statement of
Basis and Purpose: Rule Concerning Recurring Subscriptions and Other
Negative Option Programs, 89 FR 90476 (Nov. 15, 2024), <a href="https://www.federalregister.gov/documents/2024/11/15/2024-25534/negative-option-rule">https://www.federalregister.gov/documents/2024/11/15/2024-25534/negative-option-rule</a> (amending 16 CFR 425.4); 16 CFR part 465; Promulgation
of Trade Regulation Rule and Statement of Basis and Purpose: Rule on
the Use of Consumer Reviews and Testimonials, 89 FR 68034 (Oct. 22,
2024), <a href="https://www.federalregister.gov/documents/2024/08/22/2024-18519/trade-regulation-rule-on-the-use-of-consumer-reviews-and-testimonials">https://www.federalregister.gov/documents/2024/08/22/2024-18519/trade-regulation-rule-on-the-use-of-consumer-reviews-and-testimonials</a>; Guides Concerning Use of Endorsements and Testimonials
in Advertising, 16 CFR 255.0(f). The Commission notes that it
declines to adopt every modification adopted in the finalized Rule
on the Use of Consumer Reviews and Testimonials, based on the goals
of each rule and the comment record.
\189\ See Deception Policy Statement, 103 F.T.C. at 175, 177-82;
Unfairness Policy Statement, 104 F.T.C. at 1073; and other sources
cited supra notes 151-52.
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The Commission declines to adopt several modifications to the
definition of ``clear(ly) and conspicuous(ly)'' proposed by a consumer
group. First, the commenter suggested that the Commission add ``limited
English proficient consumers'' to the list of specific audience-types
that a representation or sales practices may target in proposed Sec.
464.1(c)(8) to make clear that disclosures are understandable for both
English and limited-English speakers.\190\ The Commission does not
believe such a modification is necessary. While the definition includes
examples of specific audiences who may be targeted by particular sales
practices or representations, the use of ``such as'' is intended to
make clear these are examples, rather than an exhaustive list of
categories of consumers who may be targeted. The Commission further
notes that final Sec. 464.1 requires that the disclosures ``must
appear in each language in which the representation that requires the
disclosure appears.''
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\190\ FTC-2023-0064-3160 (Consumer Federation of America et
al.).
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The commenter also suggested that the Commission add language to
require that disclosures on interactive electronic media ``be capable
of being printed and saved in an easily readable format.'' \191\ The
Commission does not believe such a modification is necessary. The
definition considers the various types of media through which consumers
and businesses transact and, for all types of media, the definition
requires the disclosures to be ``easily noticeable (i.e., difficult to
miss).'' Thus, the Commission believes that the definition provides
businesses with flexibility to continue transacting effectively and
efficiently through different media, while ensuring sufficient consumer
understanding of required disclosures. The commenter further proposed
that the rule clarify that disclosures must be concise to discourage
businesses from ``listing hundreds of optional fees, identifying fees
that would not be applicable to the consumer, providing a description
that uses complex jargon, [or is] unnecessarily lengthy.'' \192\ The
definition already addresses these concerns by setting forth what
``clear(ly) and conspicuous(ly)'' means: using simple terms that
provide sufficient information about how businesses can formulate
disclosures that are easily understandable and noticeable to consumers.
The definition provides that disclosures ``must stand out from any
accompanying text or other visual elements'' to be ``easily noticed,
read, and understood.''
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\191\ Id.
\192\ Id.
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An automobile industry group urged the Commission to remove
``required disclosure'' from the definition of ``clear(ly) and
conspicuous(ly),'' arguing that ``the NPRM is

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