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The FTC Junk Fees Rule (16 CFR Part 464): A Consumer Guide

The first federal rule specifically targeting "drip pricing." It took effect May 12, 2025, but its scope is narrower than most consumers assume. Hotels and live-event tickets only.

What it is

The FTC Junk Fees Rule, officially the Rule on Unfair or Deceptive Fees, codified at 16 CFR Part 464, took effect on May 12, 2025. It is the first federal rule specifically targeting what the agency calls "drip pricing": the practice of advertising a lower headline price and adding mandatory fees later in the transaction.

The rule's scope is narrower than many consumers assume. It covers two industries:

1. Short-term lodging: hotels, motels, vacation rentals, short-term rentals through platforms like Airbnb and Vrbo
2. Live-event ticketing: concerts, sporting events, live theater, other ticketed events

It does not (currently) cover:

• Cable and internet service
• Wireless plans
• Insurance policies
• Credit card billing
• Restaurant dining
• Retail purchases
• Many other industries where "drip pricing" is common

However, the rule has been influential beyond its formal scope. Several state consumer protection actions and private class actions have cited the rule as support for broader claims about fee transparency.

What it requires

Businesses covered by the rule must:

Disclose total price upfront. Whenever a price is offered, displayed, or advertised, the advertised price must include all mandatory fees (with narrow exceptions for government charges and shipping).

Not misrepresent fees. Businesses may not misrepresent the nature, purpose, amount, or refundability of any fee.

Disclose excluded fees before payment. Any fee that can be excluded from the advertised total (like shipping or government taxes) must still be clearly disclosed before the consumer is asked to pay, along with its amount and purpose.

The rule does not prohibit any specific fee amount or category. Resort fees can still exist. Ticket service fees can still exist. The rule requires them to be disclosed in the advertised total price.

What "mandatory" means

A fee is "mandatory" under the rule if the consumer cannot avoid it while purchasing the product or service as offered. Examples:

• A $45/night resort fee at a hotel that applies to all guests: mandatory
• A $10 service fee on concert tickets that applies to all purchasers: mandatory
• An optional early-boarding fee on an airline: not mandatory (optional add-on, separate category)
• State sales tax: excluded category (government fee, but must still be disclosed before payment)

The FTC's staff FAQs (published May 2025) clarify that bundled services where the consumer chooses among packages are not subject to the rule's upfront disclosure requirement for every conceivable option. The rule applies to the specific option the consumer is considering.

Enforcement and penalties

The FTC can seek up to approximately $53,088 per violation of the rule under its civil penalty authority (adjusted annually for inflation).

State attorneys general can also enforce the rule, and private consumer class actions can cite the rule as support for state-law deception claims even where no private right of action exists under the federal rule itself.

Since May 2025, multiple class actions have been filed citing the rule as support for state-law claims in California, Connecticut, Pennsylvania, and other states.

How it affects consumers

At hotels:

• Advertised nightly rates must now include resort fees and destination fees where mandatory
• If a mandatory fee isn't included in the advertised rate, that's a potential rule violation
• Pre-existing reservations made before May 12, 2025 aren't directly covered

At ticketing sites:

• Service fees, facility fees, and convenience fees must appear in the advertised ticket price
• Ticketmaster, StubHub, SeatGeek, and similar platforms have updated their pricing displays
• Advertised "total price" should match what you ultimately pay

What you can do if you encounter a violation:

• Screenshot the advertised price and the final total
• Document the mandatory fees that weren't in the advertised total
• File a complaint with the FTC at reportfraud.ftc.gov
• File a complaint with your state attorney general
• Consult a consumer protection attorney about class action opportunities

State laws that go further

The FTC rule is a federal floor. Several states have broader junk fee laws:

• California: law effective July 2024 requires upfront disclosure of mandatory fees for most goods and services (not just lodging and tickets)
• New York: junk fee restrictions with broader scope
• Massachusetts: regulation effective September 2025 covers most consumer transactions
• Minnesota, Colorado, Maryland, Connecticut, Tennessee, Virginia: various state-level protections

State laws sometimes provide private rights of action that the federal rule lacks. If you're affected by hidden fees, state law may provide stronger recourse than federal law.

What the rule does NOT do

Consumer clarification:

• It does not cap any fee amount
• It does not prohibit any specific fee category (resort fees, service fees, etc. remain legal if disclosed)
• It does not provide a private federal right of action
• It does not apply to cable, wireless, insurance, or most other billing (unless extended by future rulemaking)
• It does not require refunds for past overcharges (enforcement is prospective)

The rule is about disclosure and accuracy, not price control.

The FTC's intent vs. reality

The original FTC proposal was broader. It would have applied to "fees for goods and services" generally. The final rule narrowed to lodging and ticketing.

Consumer advocates pushed for broader scope. Industry pushed for narrower scope. The final rule reflects the compromise.

As of this writing, the FTC is considering additional rulemaking for rental housing (following the Greystar settlement in December 2025) and may expand the scope over time. Whether further industries will be added is uncertain.

If you think your bill involves a junk fee

For hotels and ticketing covered by the rule:

• Check whether the advertised price included all mandatory fees
• If not, the business may be in violation
• Document and report

For other bills (cable, wireless, insurance):

• The rule doesn't apply directly
• But state junk fee laws may apply in your state
• And the underlying consumer protection laws (FTC Act Section 5, state UDAP statutes) may provide recourse

Not every hidden fee is a legal violation. Some fees, even confusing ones, are adequately disclosed in the fine print of service contracts. The question is whether the advertised or headline price misrepresented what the total would be.

Common questions

A note on scope

This is consumer information based on the published text of 16 CFR Part 464, the FTC's Staff FAQs (May 2025), and subsequent enforcement actions. It is not legal advice. Specific applications of the rule involve fact-intensive analysis. Consult a consumer protection attorney for advice on specific situations.