The FTC Rule on Unfair or Deceptive Fees: FAQs and Guidance

On May 12, 2025, the Federal Trade Commission’s Rule on Unfair or Deceptive Fees will take effect. Under the rule, certain businesses must disclose all mandatory fees and the total price up front to limit bait-and-switch tactics. While the rule applies to live-ticketing and short-term lodging only, the FTC has warned companies in other industries of its authority under § 5 to bring actions based on deceptive pricing practices.

The rule is a similar flavor to California’s hidden fee ban eliminating “drip pricing” that went into effect on July 1, 2024. The ban applies to businesses selling or leasing goods and services for personal use in California, and other states are following suit. Minnesota and Massachusetts laws and regulations prohibiting unfair or deceptive pricing are either in effect or coming into effect soon, while Illinois and New York are considering similar proposals. Washington, D.C. has relied on its unfair practices statute to regulate what its attorney general perceives as unfair pricing practices.

Notable recent actions include a February 2025 consumer class action filed in California against Shake Shack alleging that a Shake Shack-run delivery service fails to disclose mandatory service and courier fees. That complaint pursued claims broader than an alleged violation of California’s new law—it alleged that Shake Shack’s fees were unfair and deceptive regardless of whether the law was violated. Similarly, the D.C. attorney general sued StubHub in 2024 for hiding “service” and “fulfillment” fees until the end of checkout in violation of the city’s consumer protection law. These actions underscore the risk that consumers are likely to leverage unfair competition laws to argue for greater price transparency than just what is in the express statutes mandating price disclosures.

In May 2025, the FTC staff released a set of Frequently Asked Questions providing guidance for businesses on the new rule.

Who the Law Applies to:

• Providers of short-term lodging (hotels, motels, short term home or room rentals)
• Primary, secondary, and third-party ticket sellers
• Business-to-consumer and business-to-business transactions

What Businesses Must Include in the Advertised Price:

• All amounts that the consumer will be required to pay, or cannot reasonable avoid paying (for example, processing fees for concert tickets or cleaning fees for vacation rentals)
• Costs associated with tariffs, inflation, or other market factors, if a business chooses to pass along increased prices

What Businesses May Exclude from the Advertised Price:

• Taxes or fees that the government imposes on the transaction, as well as optional goods or services
• Shipping costs, but businesses must include handling charges in the advertised price
• Fees or charges that are not mandatory—which could include optional add-ons or a credit card surcharge when an alternative method of payment is reasonably available

What Else to Know:

• Businesses must be clear and not intentionally vague, so avoid ill-defined fee types, like “convenience fees,” “service fees,” or “processing fees.”
• The rule does not prohibit offering discounts to customers. But businesses should not advertise a price that is unavailable to all consumers. Businesses may advertise a new price once a consumer meets any relevant requirements or advertise both prices conspicuously.
• Businesses may itemize the charges that make up the total advertised price so long as the itemization does not misrepresent the amount of each charge and is “clear, conspicuous, and prominent.”

Compliance with State Laws:

• If the rule conflicts with state law or regulation, businesses must follow the rule. But if the state law or regulation offers consumers greater protection, businesses must comply with both the rule and the law or regulation.

Take Action to Comply:

Businesses subject to the rule should be ready to comply by May 12, 2025. Actions to get in compliance with the rule include:

• Ensuring that all advertised prices state the full price, including required fees
• Renaming fee types to transparently identify the purpose of fees and charges
• Reviewing state laws and regulations to ensure compliance

Even businesses who are not subject to the rule should still consider whether their pricing disclosures could be argued to be unfair or deceptive.

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