The U.S. Federal Trade Commission (FTC) on Tuesday approved a new rule aimed at banning bait-and-switch pricing and other tactics used to hide the total price of hotels and short-term rentals. The FTC said these unfair and deceptive pricing practices significantly harm consumers and also hurt businesses that compete honestly.

FTC Chair Lina M. Khan said, “People deserve to know up front what they will be asked to pay, without worrying that they’ll later be hit with unexpected fees they never anticipated.”

For consumers searching for hotels or vacation rentals, hidden charges such as “resort fees,” “convenience fees,” or “service fees” have often made it difficult to know the real price. Under the new rule, that should change. Businesses will be required to clearly disclose the total price, including all fees, when displaying prices. That should make comparison shopping easier, help consumers save money, and create a fairer competitive environment.

The new rule does not ban any specific type of fee or any particular fee amount, nor does it restrict specific pricing strategies. Instead, it simply requires businesses that publish prices to truthfully and transparently disclose relevant prices and fees before booking.

Here are the key parts of the rule:

  • The “Junk Fees Rule” requires businesses to clearly and conspicuously disclose the true total price, including all mandatory fees, whenever they offer, display, or advertise prices for live-event tickets or short-term lodging.
  • Businesses may not misrepresent fees for live-event tickets or short-term lodging in any offer, display, or advertisement.
  • In addition, the rule requires businesses to display the total price more prominently than most other pricing information. In other words, the most prominent price in an ad must be the full all-in total. Businesses may still provide truthful itemized breakdowns, but those breakdowns cannot obscure the total amount consumers most want to know.
  • Finally, the rule requires businesses that exclude certain fees upfront to clearly and conspicuously disclose those fees’ nature, purpose, identity, and amount before the consumer agrees to pay. For example, businesses that exclude shipping charges or taxes must clearly disclose those costs before the consumer enters payment information.

Overall, the FTC’s new rule should significantly improve transparency and fairness for consumers choosing hotels and vacation rentals, putting an end to frustrating hidden fees and making the shopping experience smoother and more straightforward.