FTC Announces Final Junk Fees Rule Applying to Live-Event Tickets and Short-Term Lodging
On December 17, 2024, the U.S. Federal Trade Commission (FTC) announced its final “Junk Fees Rule” (the “Final Rule” or “Rule”) to prevent certain practices related to pricing in the live-event ticketing and short-term lodging industries. The Final Rule requires businesses that offer a price for live-event tickets or short-term lodging to disclose the total price, inclusive of mandatory charges, and to do so more prominently than other pricing information. The Final Rule also prohibits businesses from misrepresenting fees or charges in any offer, display, or advertisement for live events and short-term lodging. Notably, the Final Rule does not prohibit any one type of fee, nor does it prohibit specific pricing practices, such as itemization of fees or dynamic pricing. Instead, the Rule focuses on ensuring that fees are clearly disclosed.
The FTC’s stated aim in passing the Final Rule is to curb perceived unfair and deceptive pricing practices in these two industries, specifically so-called “bait-and-switch” pricing that hides the total price of tickets and lodging by omitting mandatory fees and charges from advertised prices and misrepresenting the nature, purpose, amount, and refundability of fees or charges. The FTC pointed to evidence that these practices are prevalent in these two industries, where most transactions occur online. The FTC emphasizes that “truthful, timely, and transparent pricing” “is critical for consumers” and claims this rule will allow American consumers to make better-informed purchasing decisions in these instances.
The Rule was published in the Federal Register on January 10, 2025, and is slated to go into effect 120 days later, putting its effective date as May 10, 2025. It is possible, however, that the incoming Administration will seek to change the rule or delay its effective date.
FTC Rulemaking Leading to Final Rule
The Final Rule is the culmination of the rulemaking process that the FTC initiated in November 2022, when it announced an Advanced Notice of Proposed Rulemaking under Section 18 of the FTC Act, to address certain purportedly unfair or deceptive acts or practices involving fees. The FTC specifically sought public comment on the prevalence of certain practices related to what it labeled “junk fees” and the costs and benefits of a rule that would require upfront inclusion of mandatory fees whenever consumers are quoted a price. After posing a series of questions to solicit data and commentary, the FTC received more than 12,000 comments in 90 days.
One year later, the FTC published a Notice of Proposed Rulemaking, which proposed a rule that prohibited misrepresenting the total price of goods or services by omitting mandatory fees from advertised prices and misrepresenting the nature and purpose of fees. The proposed rule was not industry-specific; rather, it would have applied broadly to businesses across the national economy. The FTC then received 60,000 more comments on its proposed rule, most of which were supportive. The FTC interpreted this feedback as confirmation of the prevalence of the types of fee-related practices the FTC sought to address. The FTC estimated that its proposed rule would save consumers up to 53 million hours per year of wasted time spent searching for the total price of live-event tickets and short-term lodging, equating to more than $11 billion over the next decade.
In March 2024, the Biden Administration launched an interagency initiative, co-chaired by the FTC and U.S. Department of Justice, called the “Strike Force on Unfair and Illegal Pricing.” The Strike Force seeks to combat unfair and illegal pricing and lower prices for all Americans. Shortly after the announcement of the Strike Force, the FTC held a public hearing on its proposed rule while it continued to consider comments, leading to the announcement of the Final Rule last month.
Final Rule
The Final Rule prohibits hidden fees and makes it an unfair and deceptive practice for “any Business to offer, display, or advertise any price” of live-event tickets or short-term lodging without clearly and conspicuously disclosing the total price. Under Section 5 of the FTC Act, a representation, omission, or practice is “deceptive” 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 regarding a good or service. Price, for example, is a material term. A practice is considered “unfair” under Section 5 if it causes or is likely to cause substantial injury, the injury is not reasonably avoidable by consumers, and the injury is not outweighed by benefits to consumers or competition.
As an example, in the commentary to the rulemaking, the FTC says that 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.
The Final Rule specifies that the “total price” is the “maximum total of all fees or charges a consumer must pay for any good(s) or service(s) and any mandatory Ancillary Good or Service” (any additional goods or services offered as part of the same transaction). Government charges, shipping charges, and fees for ancillary goods or services may be excluded under the rule.
The total price must be displayed more prominently than any other pricing information. If a final amount is displayed before the consumer completes the transaction, it must be disclosed as prominently as the total price.
The total price also must be displayed clearly and conspicuously, which means easily noticeable (“difficult to miss”) and easily understandable by ordinary customers. The clear-and-conspicuous requirement also covers audible communications. In addition to the total price, a business must display clearly and conspicuously the nature, purpose, and amount of any optional fee or charge that has been excluded from the total price, what the fee or charge is for, and the final amount of payment for the transaction.
The Final Rule goes beyond disclosure: It affirmatively prohibits misleading fees. Under the Final Rule, it is unlawful to misrepresent any fee or charge in an offer, display, or advertisement for live-event tickets and short-term lodging, including the nature, purpose, amount, or refundability of any fee or charge and what it is for.
State Laws and Regulations on Fees
The Final Rule does not preclude state laws that are more restrictive pertaining to unfair or deceptive fees or charges, except to the extent such laws or regulations are inconsistent with the Final Rule (and then only to the extent of the inconsistency). According to the FTC, a state law or regulation is not inconsistent with the Final Rule if the protection it affords is greater than the protection under the rule.
Numerous states have passed laws aiming to increase transparency in pricing and fees, including California, Colorado, Connecticut, Maryland, Minnesota, New York, and Tennessee. Further, some states have provisions that violations of Section 5 of the FTC Act also constitute deceptive practices under their state consumer protection statutes. The Final Rule thus augments the government scrutiny of fee-related practices and conduct that businesses may receive.
Takeaways and the Future of the Final Rule
Once the Final Rule becomes effective, when businesses advertise or display a price for live-event tickets or short-term lodging, they must display the total price — including any mandatory fees — and ensure any explanations for fees or charges are truthful and not misleading. Businesses have discretion to list optional fees. For businesses that have not previously been subject to state laws or regulations, the Final Rule will now apply to those businesses.
Despite the Final Rule’s narrow applicability to live-event tickets and short-term lodging, the FTC made clear it has not given up on other industries. The FTC emphasized it may address unfair and deceptive practices in other industries, as discussed in its Notice of Proposed Rulemaking, but will do so using its existing Section 5 authority.
The Final Rule was approved with a 4–1 vote, with Republican Commissioner Holyoak voting for the rule and incoming Republican FTC Chair Andrew Ferguson dissenting. Although the agency under new leadership could look to withdraw the Final Rule, under the Administrative Procedure Act, the FTC would need to publish a notice in the Federal Register explaining the reasons for the withdrawal, allow opportunity for comment, and consider those comments before repealing the Final Rule. Although incoming administrations in the past have imposed moratoriums on regulations under development, the Final Rule has been published in the Federal Register, and a moratorium likely would not impact the rule going into effect. The incoming administration, however, might choose to delay the effective date of the Final Rule. The Final Rule also falls within the window for review under the Congressional Review Act, creating another potential avenue for its repeal.
Separately, on January 14, 2025, the Consumer Financial Protection Bureau (CFPB) released a report titled “Strengthening State-Level Consumer Protections.” In the report, the CFPB encourages states to continue to go after “junk fees,” citing the FTC’s Final Rule and the FTC’s findings on the prevalence of certain practices. The CFPB provides proposed language for states to consider adding to their “state prohibitions on unfair, deceptive, and/or abusive acts or practices.” The CFPB’s recommended statutory language is industry-agnostic, meaning more states may look to adopt broad fee-related rules.
Like the FTC’s recent rule on non-compete agreements, the Final Rule may be subject to potential legal challenge, including by industry groups and trade associations. The landscape for disclosure of fees continues to evolve, and businesses should watch for developments at both the federal and state level.
Department of Education Warns NCAA Schools That NIL Deals May Implicate Title IX Obligations
The U.S. Department of Education warned National Collegiate Athletic Association (NCAA) schools that payments to athletes for the use of their names, images, and likenesses (NIL) implicate the gender equal opportunity requirements of Title IX of the Education Amendments, even if from outside sources.
Quick Hits
The U.S. Department of Education released a fact sheet that provides guidance on educational institutions’ Title IX obligations with NIL compensation for college athletes.
The guidance confirms the Department of Education’s view that NIL compensation from schools constitutes “athletic financial assistance” covered by Title IX’s equal opportunity requirements.
The guidance comes amid a changing landscape in college sports with NIL compensation and the prospect of potential revenue-sharing between schools and college athletes.
On January 16, 2024, the Department of Education’s Office for Civil Rights (OCR) released a nine-page fact sheet, titled, “Ensuring Equal Opportunity Based on Sex in School Athletic Programs in the Context of Name, Image, and Likeness (NIL) Activities,” providing long-awaited guidance on schools’ obligations with respect to Title IX in the context of NIL.
The fact sheet confirms that the department views NIL compensation provided by a school as “athletic financial assistance,” which Title IX requires to be distributed in a nondiscriminatory manner under Title IX.
The guidance comes years after the NCAA lifted restrictions on college athletes’ ability to earn compensation for their NIL. This has led to the formation of so-called NIL collectives, organizations typically comprised of boosters, fans, alumni, and businesses, to facilitate NIL deals for athletes.
Further, the NCAA and major conferences have reached a proposed settlement in litigation that will pay nearly $2.8 billion in back pay to former athletes over the next ten years and establish a revenue-sharing framework in which schools will be allowed to share more than $20 million annually with their athletes.
Title IX regulations require schools to provide equal athletic opportunity, regardless of sex, including with “athletic financial assistance” that schools award to college athletes.
According to the OCR fact sheet, the Department of Education “does not view compensation provided by a third party (rather than a school) to a student-athlete for the use of their NIL as constituting athletic financial assistance awarded by the school.” However, the fact sheet warns that the OCR has “long recognized that a school has Title IX obligations when funding from private sources, including private donations and funds raised by booster clubs, creates disparities based on sex in a school’s athletic program or a program component.”
“The fact that funds are provided by a private source does not relieve a school of its responsibility to treat all of its student-athletes in a nondiscriminatory manner,” the Department of Education said in the fact sheet. “It is possible that NIL agreements between student-athletes and third parties will create similar disparities and therefore trigger a school’s Title IX obligations.”
The department noted the variety and evolving nature of NIL agreements in college athletics and specified that the application of Title IX “is a fact-specific inquiry.” Further, and in recognition of the continued evolution of college athletics, the department noted that “Title IX regulations assume that the receipt of financial assistance does not transform students, including student-athletes, into employees,” and the fact sheet, thus, operates under the same assumption. The Department of Education stated that it would “reevaluate” this position should the legal landscape around that issue change.
Next Steps
The fact sheet comes just days before the presidential administration changeover, which is anticipated to impact the federal government’s response to NIL pay and make systemic changes to college sports, including regarding the question of employee status. Still, the fact sheet indicates that schools may face risks under Title IX with the distribution of NIL compensation even if third parties are providing that money.
TikTok Ban Upheld By SCOTUS– Is TCR Next?
So the US Supreme Court today upheld a law requiring that abysmal TikTok app to either by sold or face a nationwide ban.
The basis for the law is TikTok’s foreign ownership and the massive amount of data available to the Chinese government as a result.
I’m a huge fan of the ban, but mostly because I’m a geezer that thinks kids these days spend too much time staring at their phones.
Still, the national security concerns are very legitimate and resonate well beyond TikTok– for instance The Campaign Registry is still tracking most every 10DLC SMS campaign in the country and is still foreign owned.
I suspect new FCC Chairman Carr–with his focus on national security– and Olivia Trusty (Trump’s new FCC pic) will take a very dim view of TCR’s foreign ownership and I suspect a similar sale or ban ruling may be in the cards.
We’ll see.
Breaking News: U.S. Supreme Court Upholds TikTok Ban Law
On January 17, 2024, the Supreme Court of the United States (“SCOTUS”) unanimously upheld the Protecting Americans from Foreign Adversary Controlled Applications Act (the “Act”), which restricts companies from making foreign adversary controlled applications available (i.e., on an app store) and from providing hosting services with respect to such apps. The Act does not apply to covered applications for which a qualified divestiture is executed.
The result of this ruling is that TikTok, an app which is owned by Chinese company ByteDance and qualifies as a foreign adversary controlled application under the Act, will face a ban when the law enters into effect on January 19, 2025. To continue operations in the United States in compliance with the Act, the law requires that ByteDance sell the U.S. arm of the company such that it is no longer controlled by a company in a foreign adversary country. In the absence of a divestiture, U.S. companies that make the app available or provide hosting services for the app will face enforcement under the Act.
It remains to be seen how the Act will be enforced in light of the upcoming changes to the U.S. administration. TikTok has 170 million users in the United States.
5 Trends to Watch: 2025 Energy Regulation and Development
As a new administration takes office in 2025, several new energy policy trends are expected to emerge, reflecting the inherent tension that often exists between political desires and economic realities. For example, while the incoming Trump administration has expressed a desire to claw back subsidies made available under the Inflation Reduction Act (IRA), Republican states have also been significant beneficiaries under the IRA. In other areas such as import tariffs, bipartisan support could emerge, with each party supporting the same result for entirely different reasons. Five trends that could result are discussed below.
Carbon-Related Tariffs Could Reshape Global Trade and Business Strategy. The convergence of increased bipartisan support for import tariffs, albeit for different reasons, could result in a significant shift in international trade dynamics and potential costs for energy companies. President-elect Donald Trump has frequently expressed support for import tariffs as a tool to boost domestic manufacturing, increase revenues, or to create leverage for international negotiations. Democrats have supported adoption of carbon tariffs and mechanisms like the Carbon Border Price Adjustment Mechanism (CBAM) that is being implemented in the European Union to level the playing field for businesses investing in emissions reduction. Adoption of the European Union’s CBAM has created new operational challenges for companies throughout the world, and similar measures in the United States would add to that already complex legal and business landscape. Companies invested in renewable energy projects or reliant on imported components like solar panels and batteries should ensure transparency and awareness of their supply chains, monitor ongoing developments, and prepare for potential cost increases and supply chain disruptions.
IRA Tax Credit Future Critical for Energy Investment Decisions. While Trump has expressed opposition to the IRA, the established tax credits present a complex economic and political challenge. Republican-controlled states have been significant beneficiaries of investments generated by IRA tax credits, and many traditional energy companies have already made substantial investments based on these incentives, particularly in energy production and carbon sequestration projects. This creates significant economic pressure to maintain existing credits. However, uncertainty looms over funds yet to be distributed by the government, as well as details of future Internal Revenue Service guidance on IRA tax credits. This creates the potential to impact short- and mid-term investment decisions and may create a temporary chilling effect on new investments as stakeholders await additional clarity on implementation guidelines. Companies should closely monitor these developments, particularly those with pending applications or planning future projects dependent on IRA incentives.
Support for Clean Hydrogen Production Tax Credit Requires a Balancing of Interests. The clean hydrogen market has experienced record investment growth, catalyzed by the IRA’s tax credits. Many of these investments are being made by traditional energy companies. However, uncertainty remains over whether and to what extent the IRS will adopt stringent requirements advocated by many environmental organizations. These would require the renewable electricity to be produced from newly constructed generation (additionality), in the same hour as hydrogen is produced (temporal matching), and in the same region as hydrogen is produced (geographic matching). How the IRS resolves these issues could have a material impact on future green hydrogen investments. Here, the Trump administration will again be confronted by tension between its more general desire to claw back IRA incentives and the economic reality of significant investment to date along with support by traditional energy companies for continued future investments and increased financial certainty. This balancing of interests may result in adoption of technology neutral policies that are intended to reduce barriers to entry and increase economic certainty for investors.
Carbon Sequestration Gains Momentum Across Political Spectrum. Carbon sequestration offers traditional energy companies and carbon emitters a rare point of bipartisan consensus in energy policy, offering traditional energy companies a pathway to sustainability while maintaining core operations. With former North Dakota Gov. Doug Burgum, a prominent carbon capture and storage (CCS) advocate, announced as Trump’s nominee to lead the Interior Department, the technology could see expanded support. Carbon sequestration appeals to many environmental advocates seeking emissions reductions and to fossil fuel companies seeking to leverage their existing expertise in pipeline construction and drilling to create new opportunities in a transitioning energy market. This dual benefit of maintaining energy security while reducing carbon footprint positions CCS as a critical component in the energy transition landscape and will continue to attract support from both environmental advocates and traditional energy producers in 2025.
Renewed Support for Conventional Energy Production. A significant transformation in federal energy policy is anticipated in 2025, with renewed support for conventional energy development, including through expanded availability of federal oil leases, reduced regulation, and reconsideration of regulations that have been adopted to increase the cost of fossil fuel energy production. The Bureau of Land Management’s current restrictions on coal mining are expected to be reversed, while federal leasing for oil, uranium, and other mineral resources is likely to accelerate. This shift extends beyond mere leasing policies, however, as the Department of Justice will likely adopt a more industry-friendly stance overall. For example, enforcement of environmental regulations, particularly regarding methane emissions and associated royalty payments, is likely to become less stringent. These changes could substantially reduce operational costs for natural gas producers and other conventional energy operators, potentially stimulating increased domestic energy production.
Privacy Tip #427 – Ahead of the TikTok Ban, Users are Turning to Another Chinese App with Similar Privacy Concerns – What you Should Know
TikTok users are seeking alternate platforms to share and view content as the U.S. is set to ban the popular social media app on January 19, 2025. Instead of turning to U.S.-based companies like Facebook or Instagram, users are flocking to another Chinese app called Xiaohongshu, also known as RedNote. The app, which previously had little presence in the U.S. market, shot up to the most downloaded app in Apple’s app store this week. RedNote shares similarities to Yelp, where users share recommendations, but it also allows users to post short clips, similar to the soon-to-be-banned TikTok.
While some of these TikTok users choose to switch to RedNote because of the similar short-form video format, other users appear to be purposefully choosing another Chinese-owned app as a form of protest. Either way, ordinary American and Chinese citizens can easily interact in new ways on the internet through RedNote.
However, RedNote includes many of the same privacy and national security issues that the U.S. government raised concerning TikTok. Although many users ordinarily ignore privacy policies, RedNote’s privacy policy is written in Mandarin, making it even more difficult (and in some cases impossible) for users to understand. A translation of the privacy policy indicates that RedNote collects sensitive data like a user’s IP address and browsing habits. As a Chinese-based app, RedNote is also similarly subject to the Chinese data laws that led U.S. lawmakers to ban TikTok. The TikTok ban could eventually be extended to include RedNote and other Chinese (and other foreign country) apps national security and privacy concerns exist. With other short-form video services (e.g., Instagram Reels and YouTube Shorts) provided by U.S. companies, users do not need to expose their personal data to Chinese-based companies. Additionally, using RedNote to circumvent the TikTok ban could be problematic, particularly for government workers with security clearances. RedNote is not worth these risks, and Americans should avoid downloading it.