The Federal Trade Commission (FTC) yesterday (17 December) announced a new rule related to the disclosure of resort fees, one of the types of “junk fees” that have come under scrutiny from US President Joe Biden’s administration.
The commission said the new bipartisan rule, known as the Junk Fees Rule, aims to do away with “bait-and-switch” pricing. This refers to businesses–namely those “in the live-event ticketing and short-term lodging industries”–that advertise a low price and then tack on additional fees later on. For the gaming industry, this is aimed at casino-resorts that charge resort fees.
Such fees will not be banned under the new rule. Rather, resorts will be required to “clearly and conspicuously disclose the true total price inclusive of all mandatory fees” for any short-term lodging. It will also require the total price of lodging to be displayed “more prominently than most other pricing information.”
Finally, any resorts that do exclude fees from advertised prices must “clearly and conspicuously disclose the nature, purpose, identity and amount of those fees” before payment is consented. The FTC claims the rule is primarily a timesaver, in that consumers will spend less time searching for deals. In a statement, the commission estimated Americans will save 53 million hours annually looking at pricing information.
“The FTC’s rule will put an end to junk fees around live event tickets, hotels and vacation rentals, saving Americans billions of dollars and millions of hours in wasted time,” FTC chair Lina Khan said in the statement. “I urge enforcers to continue cracking down on these unlawful fees and encourage state and federal policymakers to build on this success with legislation that bans unfair and deceptive junk fees across the economy.”
Rule change culminates Biden’s junk-fee crusade
The attack on so-called “junk fees” has been a core tenet of the Biden administration. Federal officials first began probing various industries, including hotels, ticketing platforms, credit card providers, airlines and more, in 2022.
From there, the FTC said it received more than 12,000 comments that led to a first-draft proposal of the new rule last October. After that the commission received 60,000 additional comments before releasing the final draft yesterday. The rule will officially take effect 120 days after its publication in the Federal Register. That means it could go into effect as early as April.
“We all know the experience of encountering a hidden fee at the very last stage of check out—these junk fees sneak onto your bill and companies end up making you pay more because they can,” President Biden said in a statement. “Those fees add up, taking real money out of the pockets of Americans … Today’s announcement builds on work across my Administration to ban junk fees and lower costs—saving many families hundreds of dollars each year.”
Was it really necessary?
While the outgoing administration hails the rule change as a victory, its effectiveness remains to be seen. The fees themselves are not going away, which would have been the real needle-mover. Properties charge such fees to cover amenities such as Wi-Fi, shuttle services, gyms and pools and more. Because of this, the industry has fought back on the notion they are simply “junk” fees with no value, and it also argues that all fees are already sufficiently disclosed prior to payment.
Resort fees are all but ubiquitous on the Las Vegas Strip and at most high-end properties around the US. MGM Resorts has raised its Las Vegas resort fees twice this year alone, first in January and again this month. Currently, those staying at MGM’s Strip properties pay resort fees of $45-$55 per night.
The American Gaming Association (AGA) and the Nevada Resort Association did not respond to requests for comment yesterday. The latter has argued previously that the state’s resorts already disclose such fees. AGA president and CEO Bill Miller also previously penned a letter to the FTC lobbying against the rule change.
“Resort fees are a signal to our customers that they will get more than just a well-appointed room,” Miller said in February 2023. “Because these extra amenities and services come at a cost to the resort, patrons are charged a resort fee — they are inherently valuable and therefore should not be considered “junk.””
