77420 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

1The Commission elects not to provide a 

separate, second comment period for rebuttal 

comments. See 16 CFR 1.11(e) (‘‘The Commission 

may in its discretion provide for a separate rebuttal 

period following the comment period.’’). 

2Fed. Trade Comm’n, ANPR: Unfair or Deceptive 

Fees Trade Regulation Rule Commission Matter No. 

R207011, 87 FR 67413 (Nov. 8, 2022), https:// 

www.federalregister.gov/documents/2022/11/08/ 

2022-24326/unfair-or-deceptive-fees-traderegulation-rule-commission-matter-no-r207011 or 

https://www.regulations.gov/document/FTC-2022- 

0069-0001. 

3 Id. 

4 88 FR 4796 (Jan. 25, 2023). 

5See 15 U.S.C. 57a(b)(3) (‘‘The Commission shall 

issue a notice of proposed rulemaking pursuant to 

paragraph (1)(A) only where it has reason to believe 

that the unfair or deceptive acts or practices which 

are the subject of the proposed rulemaking are 

prevalent.’’). 

6For Docket ID FTC–2022–0069, Regulations.gov 

lists the ‘‘Number of Comments Posted to this 

Docket’’ as 6,166 out of a total ‘‘Number of 

Comments Received’’ of 12,046. As noted in the 

responses to Frequently Asked Questions at 

Regulations.gov, ‘‘Not every comment is made 

publicly available to read. Comment counts that 

refer to ‘comments posted’ reflect the number of 

comments that an agency has posted to 

Regulations.gov to be publicly viewable. Agencies 

may choose to redact or withhold certain 

submissions (or portions thereof) such as those 

containing private or proprietary information, 

inappropriate language, or duplicate/near duplicate 

examples of a mass-mail campaign. Therefore, the 

number of comments posted may be lower than the 

comments received.’’ In connection with this 

docket, over 5,700 comments were a part of a single 

mass-mail campaign, which is represented in the 

posted comments by comment FTC–2022–0069– 

5989. 

FEDERAL TRADE COMMISSION 

16 CFR Part 464 

Trade Regulation Rule on Unfair or 

Deceptive Fees 

AGENCY: Federal Trade Commission. 

ACTION: Notice of proposed rulemaking; 

request for public comment. 

SUMMARY: The Federal Trade 

Commission commences a rulemaking 

to promulgate a trade regulation rule 

entitled ‘‘Rule on Unfair or Deceptive 

Fees,’’ which would prohibit unfair or 

deceptive practices relating to fees for 

goods or services, specifically, 

misrepresenting the total costs of goods 

and services by omitting mandatory fees 

from advertised prices and 

misrepresenting the nature and purpose 

of fees. The Commission finds these 

unfair or deceptive practices relating to 

fees to be prevalent based on prior 

enforcement, the comments it received 

in response to an advance notice of 

proposed rulemaking, and other 

information discussed in this proposal. 

The Commission now solicits written 

comment, data, and arguments 

concerning the utility and scope of the 

trade regulation rule proposed in this 

notice of proposed rulemaking to 

prevent the identified unfair or 

deceptive practices. 

DATES: Comments must be received on 

or before January 8, 2024. 

ADDRESSES: Interested parties may file a 

comment online or on paper by 

following the instructions in the 

Comment Submissions part of the 

SUPPLEMENTARY INFORMATION section in 

this preamble. Write ‘‘Unfair or 

Deceptive Fees NPRM, R207011’’ on 

your comment and file your comment 

online at https://www.regulations.gov. If 

you prefer to file your comment on 

paper, mail your comment to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

600 Pennsylvania Avenue NW, Mail 

Stop H–144 (Annex J), Washington, DC 

20580. 

FOR FURTHER INFORMATION CONTACT: 

Janice Kopec or Stacy Cammarano, 

Division of Advertising Practices, 

Bureau of Consumer Protection, Federal 

Trade Commission, 202–326–2550 

(Kopec), 202–326–3308 (Cammarano), 

jkopec@ftc.gov, scammarano@ftc.gov. 

SUPPLEMENTARY INFORMATION: The 

Federal Trade Commission (‘‘FTC’’ or 

‘‘Commission’’) invites interested 

parties to submit data, views, and 

arguments on the proposed Rule on 

Unfair or Deceptive Fees and, 

specifically, on the questions set forth in 

Section X of this notice of proposed 

rulemaking (‘‘NPRM’’). The comment 

period will remain open until January 8, 

2024.1 To the extent practicable, all 

comments will be available on the 

public record and posted at the docket 

for this rulemaking on https://

www.regulations.gov. The Commission 

will provide an opportunity for an 

informal hearing if an interested person 

requests to present their position orally. 

See 15 U.S.C. 57a(c). Any person 

interested in making a presentation at 

an informal hearing must submit a 

comment requesting to make an oral 

submission, and the request must 

identify the person’s interests in the 

proceeding and indicate whether there 

are any disputed issues of material fact 

that need to be resolved during the 

hearing. See 16 CFR 1.11(e). The 

comment should also include a 

statement explaining why an informal 

hearing is warranted and a summary of 

any anticipated testimony. If the 

Commission schedules an informal 

hearing, either on its own initiative or 

in response to request by an interested 

party, a separate notice will issue. See 

id. at 1.12(a). 

I. Background 

The Commission published, on 

November 8, 2022, an Advance notice of 

proposed rulemaking (‘‘ANPR’’) under 

the authority of Section 18 of the 

Federal Trade Commission Act (‘‘FTC 

Act’’), 15 U.S.C. 57a(b)(2); the 

provisions of Part 1, Subpart B, of the 

Commission’s Rules of Practice, 16 CFR 

1.7 through 1.20; and 5 U.S.C. 553.2

This authority permits the Commission 

to promulgate, modify, or repeal trade 

regulation rules that define with 

specificity acts or practices that are 

unfair or deceptive in or affecting 

commerce within the meaning of 

Section 5(a)(1) of the FTC Act, 15 U.S.C. 

45(a)(1). 

The ANPR described the 

Commission’s history of taking law 

enforcement action against, and 

educating consumers about, unfair or 

deceptive practices relating to fees, and 

it asked a series of questions to inform 

the Commission about whether such 

practices are prevalent and, if so, 

whether and how to proceed with a 

NPRM.3 The Commission took 

comments for 60 days, extended the 

comment period,4 and received over 

12,000 comments, which it has 

thoroughly considered. 

Based on the substance of these 

comments, as well as the Commission’s 

history of enforcement and other 

information discussed in this preamble, 

the Commission has reason to believe 

that unfair or deceptive practices 

relating to fees are prevalent 5 and that 

proceeding with this rulemaking is in 

the public interest. After discussing the 

comments and explaining its 

considerations in developing the 

proposed rule, the Commission poses 

specific questions for comment and 

provides the text of its proposed rule. 

II. Summary of Comments to the ANPR 

The Commission received over 12,000 

comments in response to the ANPR. 

Publicly posted comments are available 

on this rulemaking’s docket at https://

www.regulations.gov/docket/FTC-2022- 

0069/comments.6 The majority of 

comments expressly supported 

government action or described negative 

experiences relating to fees that 

suggested support for such action. The 

comments generally supported a 

rulemaking to improve pricing 

transparency—including requiring 

advertised prices to include mandatory 

fees—and to prohibit misrepresentations 

about the nature, purpose, or amount of 

fees. The Commission has carefully 

considered the views expressed in the 

comments, and proposes the rule 

described in Section XIV. 

As discussed in this preamble, the 

comments raised concerns about 

widespread deceptive practices in 


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7The comments also stated in large numbers that 

the amounts of fees charged are often excessive, 

increasing prices by large percentages and making 

purchases unaffordable, particularly, in the liveevent ticketing industry. The rule proposed by the 

FTC does not limit the amount that businesses may 

charge for goods or services. 

8FTC–2022–0069–1046 (‘‘Consumers should not 

have to guess what their total outlay for a purchase 

will be . . . . Not revealing the true cost of 

something is deceptive and anti-competitive (How 

can you comparison-shop if you don’t know the 

price?)’’); FTC–2022–0069–1481 (‘‘the price 

advertised is significantly less then [sic] the final 

price once convenience fees and other hidden fees 

with vague justifications are added to the cost’’); 

FTC–2022–0069–2582 (‘‘These fees serve to mask 

the true price of any service.’’); FTC–2022–0069– 

3420 (delayed disclosures ‘‘artificially lower 

prices’’); FTC–2022–0069–3498 (‘‘[O]nline 

businesses . . . advertise a low cost to attract 

attention, then add on a fee at checkout that 

eliminates any benefit from the initial advertised 

price.’’); FTC–2022–0069–4064 (‘‘In a time when 

information is readily available to hide it when it 

comes to costs is nefarious.’’); FTC–2022–0069– 

4120 (‘‘If the fees are not optional, they need to be 

included in the initial price; otherwise, it’s false 

advertising[.]’’); FTC–2022–0069–4724 (‘‘It has 

gotten to the point that fees mis-represent [sic] the 

true cost of the product or service until after the 

purchase.’’); FTC–2022–0069–6104 (‘‘Advertising 

low prices and tacking on various fees is nothing 

more than bait and switch.’’). 

9FTC–2022–0069–0040 (describing additional 

mandatory fees disclosed at the checkout page in 

a live-event ticket purchase); FTC–2022–0069–0103 

(describing additional mandatory fees disclosed at 

the hotel checkout); FTC–2022–0069–0120 (same); 

FTC–2022–0069–0116 (describing additional 

mandatory fees disclosed at the rental car 

checkout); FTC–2022–0069–0842 (describing latedisclosed fees in a variety of industries); FTC– 

2022–0069–1437 (describing late-disclosed fees in 

delivery applications and vacation rentals). 

10FTC–2022–0069–1622 (describing subscription 

models to use features that are already part of a 

product); FTC–2022–0069–1915 (same); FTC–2022– 

0069–5913 (‘‘We need to ban having subscription 

services attached to vehicle features, requiring you 

to pay monthly fees for items already installed in 

the vehicle.’’); FTC–2022–0069–1638 (complaining 

of a video subscription service with undisclosed 

limitations on the shows included and requiring 

additional payments); FTC–2022–0069–5434 

(describing recurring fees for rental apartments 

disclosed after the lease application was submitted); 

FTC–2022–0069–5419 (describing a gym 

membership with a late-disclosed policy of add-on 

fees, including extra charges to access classes); 

FTC–2022–0069–5353 (describing a security camera 

that requires additional purchases to use). 

11FTC–2022–0069–0048 (‘‘I’ve seen situations 

where the resort fee can be 2–3 times the ‘room 

rate.’ ’’); FTC–2022–0069–1862 (‘‘Norwegian Cruise 

Line recently increased their service charge to $20 

per person per day. That’s $560 for a week-long 

cruise for a family of four and accounts for 17% of 

the total cost of a cruise. It’s clear that cruise lines 

have been increasing these fees to pay their workers 

more without increasing the base fare they 

advertise.’’); FTC–2022–0069–2154 (‘‘Often times 

these fees are a considerable percentage of the 

advertised price, and there is no obvious rationale 

for how they quantify these massive and varying 

amounts.’’); FTC–2022–0069–3434 (‘‘[C]ompanies 

should not be allowed to advertise one price and 

then tack on enough fees to almost double the cost 

to consumers.’’); FTC–2022–0069–5892 (‘‘a 

‘Processing fee’ of $299.11, which is more than the 

total quoted price for a year’s supply of contact 

lenses, is added to the order, increasing the total 

purchase price from $271.92 to $579.98. This 

clearly shows how these deceptive junk fees more 

than double the advertised price of a year’s supply 

of contact lenses.’’). 

12FTC–2022–0069–3415 (‘‘false advertising at 

best’’); FTC–2022–0069–0111 (‘‘a way to falsely 

advertise a lower price’’); FTC–2022–0069–3435 

(‘‘Advertising one price when you know there is 

more to it, or more that you as a business will have 

to pay, is deceptive and unfair to the consumer[.]’’); 

FTC–2022–0069–6167 (‘‘Please put a STOP to this 

deceptive, dishonest practice’’). 

connection with fees. In particular, they 

raised concerns that sellers do not 

advertise the total amount consumers 

will have to pay and disclose fees only 

after consumers are well into 

purchasing transactions, harming both 

consumers and businesses. They also 

stated sellers misrepresent or do not 

adequately disclose the nature or 

purpose of fees, leaving consumers 

wondering what they are paying for or 

believing fees are arbitrary, and they are 

getting nothing for the fees charged.7

Commenters provided examples of 

these practices related to a wide array of 

goods and services, such as hotels, 

short-term lodging, ticket sales, rental 

housing, financial services, auto sales, 

internet service providers, and other 

market sectors. Many commenters 

addressed multiple sectors in a single 

comment. In this section, we discuss 

comments from individual commenters 

and other stakeholders, including 

consumer, policy, and industry groups, 

about these widespread practices. The 

breadth and number of comments 

strongly support a rule to tackle the 

harm caused to consumers and 

businesses from these practices across 

various industries, by requiring all-in 

pricing and other measures to prevent 

false and misleading representations 

about fees. 

A. Overview of Prevalent Unfair or 

Deceptive Fee Practices Identified in 

Comments 

1. Comments on Bait-and-Switch 

Tactics: Misrepresenting Total Costs by 

Omitting Mandatory Fees From 

Advertised Prices 

Commenters stated businesses 

routinely engage in deceptive bait-andswitch pricing tactics by advertising 

prices that fail to include mandatory 

fees and that end up misrepresenting 

total prices because fees imposed later 

increase total prices significantly.8 In 

many comments, mandatory add-on fees 

omitted from an initial offer were not 

disclosed until checkout,9 and some 

comments raised concerns about 

advertisements that omitted key terms 

that required consumers to pay more to 

fully use the good or service.10 They 

stated fees can inflate advertised prices 

by amounts that are large percentages of 

the base prices of goods or services.11

Commenters described this bait-andswitch practice as misrepresenting the 

total costs consumers must pay and as 

false advertising that is deceptive and 

unfair to consumers, and asked the FTC 

to take action.12


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13FTC–2022–0069–0489 (‘‘it is unclear what 

purpose they serve’’); FTC–2022–0069–0493 (‘‘fee 

system’’ is ‘‘clouded in secrecy’’); FTC–2022–0069– 

0603 (‘‘what are they for?’’); FTC–2022–0069–1301 

(‘‘These fees are terrible, they’re an added cost with 

no apparent purpose or meaning.’’); FTC–2022– 

0069–1748 (‘‘Besides ticketing sites, utilities have 

service fees, banks have statement fees, retail stores 

may have convenience fees, ride sharing apps have 

service fees, food delivery apps have service fees, 

and many other business types have fees that the 

consumer is expected to pay for without clarity to 

their purpose.’’); FTC–2022–0069–1794 (‘‘[h]aving a 

name for a fee [that] doesn’t really describe what 

it does or why I have to pay it’’); FTC–2022–0069– 

2187 (‘‘[I]t seems too easy for companies across the 

spectrum to both ‘hide’ fees from the consumer in 

the initial pricing, but then also avoid explain [sic] 

to the purchaser what those fees are actually for.’’); 

FTC–2022–0069–2189 (‘‘it’s often unclear what 

these fees are for’’); FTC–2022–0069–2346 (‘‘A 

reasonable person can’t fathom what these ‘fees’ are 

for and most times these fees are not explicit in 

their purpose.’’); FTC–2022–0069–3784 (‘‘Not only 

are the fees added later, their [sic] is no insight as 

to what these fees are.’’); FTC–2022–0069–2566 (‘‘it 

has never been clear what they are actually for’’); 

FTC–2022–0069–3148 (‘‘Fees are going up and up 

and it’s never clear what, exactly, they’re being 

charged for.’’); FTC–2022–0069–3686 

(‘‘organizations do not make the knowledge of what 

the fees are used for public, or at least accessible/ 

obvious’’); FTC–2022–0069–4067 (‘‘It would be 

better also if an explanation of the fees and what 

their purpose is was present.’’). 

14FTC–2022–0069–1477 (‘‘some secret 

convenience fee pushing the actual cost up’’); FTC– 

2022–0069–1612 (‘‘The fees are vague and there’s 

not [sic] reason for them to not be included in the 

advertised price, unless the company is utilizing a 

marketing strategy with the intention of deceiving 

the customer.’’); FTC–2022–0069–1947 (‘‘Why are 

companies allowed to charge an abstract 

‘convenience fee’ with no further explanation of 

what the fee is for?’’); FTC–2022–0069–3766 

(‘‘restaurant . . . deceptively adds a 20% ‘equity 

fee’ to every bill instead of fairly displaying a 

price’’); FTC–2022–0069–3880 (commenter wrote 

about a fluctuating ‘‘Economic Impact Fee’’); FTC– 

2022–0069–4405 (‘‘From hotels to online delivery 

companies to service providers, it seems that nearly 

all companies are tackling [sic] on additional costs 

without explaining why they are necessary to 

provide the service.’’). 

15FTC–2022–0069–1676 (‘‘Turbo tax. Waiting 

until I’ve done all of my paperwork to tell me that 

I need to upgrade my package to file.’’); FTC–2022– 

0069–2986 (‘‘the cruise line included room service 

at no charge,’’ but ‘‘they added a $9,95 [sic] plus 

18% gratuity charge to all room service services’’); 

FTC–2022–0069–0688 (‘‘During on-line Christmas 

shopping, one company offered ‘Free Shipping’ as 

a promotion. At checkout, even though there was 

a $0 charge for ‘Shipping’, I was charged $2.99 for 

‘Shipping Service Fees’. How is this considered 

FREE shipping?’’). 

16FTC–2022–0069–2433 (‘‘These fees are not 

representative of any actual cost of processing an 

electronic payment or other transaction and without 

regulation any price can be set arbitrarily resulting 

in extra cost to the consumer for no reason at all.’’); 

FTC–2022–0069–2558 (‘‘whatever fees they decide 

to make up’’); FTC–2022–0069–3492 (Consumers 

are under the impression that ‘‘fees do not cover 

any actual costs’’). 

17FTC–2022–0069–0605 (‘‘just an unfair profit 

markup, there is not benefit or service for the ticket 

transaction’’); FTC–2022–0069–0443 (‘‘Pure income 

generation scams’’); FTC–2022–0069–3664 (‘‘fee is 

used merely to generate profit rather than cover a 

cost’’). 

18FTC–2022–0069–0450 (‘‘As a consumer, I 

despise being duped with advertised pricing only 

to be alarmingly surprised at checkout that there are 

ancillary fees, convenience charges, special 

handling charges, resort fees, extended warranty 

charges, restocking fees, waste disposal fees, entry 

fees, exit fees, toll charges, health mandate fees, 

CRV fees, upgrade fees, downgrade fees, overweight 

baggage fees, extra baggage fees, additional BBQ 

sauce fees, monthly service fees if your balance falls 

below $xxx, overdraft fees, mystery gasoline tax for 

winter blends and/or summer blends, to-go bag and 

container fees, delivery fees, etc.’’); FTC–2022– 

0069–0688 (‘‘These fees in various forms, are 

appearing everywhere: through entertainment ticket 

sales, hotels and resorts, banks, credit card 

companies, car dealerships, on-line retail 

companies, etc.’’); FTC–2022–0069–1634 (‘‘Unduly 

forcing frivolous and intentionally vague monetary 

fees on anything, whether necessary (utility 

payments, rent, phone bills, etc.) or recreational 

(concerts, hotels, short-term rental properties, etc.) 

is unethical); FTC–2022–0069–1940 (‘‘This is 

everything from Ticketmaster, ticket processing 

fees, doordash/food delivery, convenience fees, 

bank fees, landlords charging admin fees, 

restaurants charging a service surcharge, and many 

more. These hidden fees that are not upfront greatly 

affect consumers and do not give them the proper 

knowledge of the true cost upfront.’’); FTC–2022– 

0069–3323 (‘‘Hidden fees just feel way too common 

nowadays. Credit cards, software, subscriptions, 

travel, and the vast majority of other industries are 

making it too difficult for consumers to find the 

right business to work with.’’); FTC–2022–0069– 

3374 (‘‘Lately most companies are using hidden fees 

to falsely advertise low prices. Delivery companies, 

Ticketmaster, telecommunications companies, car 

dealerships, airbnb, rentals, hotels, credit card 

companies, banks, convenience fees for payment 

types, airlines, and others.’’); FTC–2022–0069–3932 

(‘‘Consumers across so many industries are 

increasingly subject to fees that are not conveyed 

at the time of the purchase . . . surprise service fees 

in hospitality, surprise interest fees in financial 

services, surprise charges in healthcare that even 

insurance providers cannot explain’’); FTC–2022– 

0069–5743 (‘‘The FTC needs to regulate the 

transparency of prices for EVERYTHING, online 

and in person.’’). 

19FTC–2022–0069–0427 (Pottery shop ‘‘receipt 

said C19 surcharge. What? I had to look it up. Never 

heard of it before now. . . . There was no signage 

about this extra surcharge. The sales clerk didn’t 

say there would be extra fees.’’); FTC–2022–0069– 

2242 (Grocery ‘‘store charges a .5% ‘improvement 

fee’ that no employee can give me a straight answer 

as to why it exists.’’); FTC–2022–0069–5616 (‘‘there 

are some areas that have a ‘Public improvement 

fee.’ These are nice areas that I have no issue 

shopping at, but why do I not know what the fee 

is or where it is applied? These fees and taxes 

should be included in the listing price. Stores have 

price guns, so I know they can set the price on each 

item in the store.’’). 

20For example, individual commenters noted that 

merchant account payment processors charged 

previously undisclosed fees for no clear purpose. 

See, e.g., FTC–2022–0069–1922 (‘‘without warning 

or justification, we have been charged $149 for an 

‘annual compliance fee’ and $169 for an ‘annual 

member fee.’ I assure you that these fees were not 

part of our original contract.’’); FTC–2022–0069– 

6159 (‘‘These, often bogus, fees go by many names 

and in some cases there are ‘duplicate’ fees for the 

same purpose only under different names on the 

same monthly statements.’’). 

21FTC–2022–0069–6077 (The Institute for Policy 

Integrity at New York University School of Law 

(‘‘Policy Integrity’’) submitted a comment in 

support of rulemaking); FTC–2022–0069–6095 (The 

Consumer Federation of America (‘‘CFA’’) 

submitted comments from 42 national and State 

consumer advocates, supporting FTC rulemaking); 

FTC–2022–0069–6042 (Truth in Advertising, Inc. 

(‘‘TINA.org’’) supports FTC rulemaking); FTC– 

2022–0069–6099 (Consumer Reports (‘‘CR’’) 

supports FTC rulemaking relating to junk fees, and 

joins the comment of CFA); FTC–2022–0069–6113 

(UnidosUS, the nation’s largest Hispanic civil rights 

and advocacy organization, submitted a comment in 

support of rulemaking, and endorsing the comment 

of the CFA.). 

2. Comments on Misrepresenting the 

Nature and Purpose of Fees 

Commenters stated consumers often 

do not know what fees are for because 

businesses routinely do not clearly or 

conspicuously disclose the nature or 

purpose of fees, including the identity 

of the goods or services for which the 

fees are charged.13 Commenters 

explained that businesses employ vague 

names like convenience fees, economic 

impact fees, or improvement fees that 

do not adequately disclose to consumers 

what they are paying for.14 Commenters 

also noted prices are sometimes 

advertised as ‘‘free,’’ but are not in fact 

free when fees are added.15

Commenters stated that, even when 

businesses purport to disclose the 

nature or purpose of fees, the 

disclosures may not be truthful. 

Commenters described fees as arbitrary 

and not bearing any reasonable 

relationship to the costs of goods or 

services provided.16 Commenters stated 

fees provided them with little or no 

value, were not for goods or services 

they received, and were merely revenue 

sources for businesses.17

B. The Comments Show the Identified 

Deceptive Practices Are Widespread 

The FTC received comments 

regarding a wide range of industries 

from individual commenters and 

consumer, policy, and industry groups. 

Individual commenters frequently 

raised concerns about these practices in 

connection with more than one industry 

in a single comment, with some 

describing the existence of mandatory, 

hidden, or misrepresented fees across 

the economy.18 Although many 

individual commenters wrote about 

online purchases, they also noted that 

stores with physical locations also 

engage in advertising prices that do not 

include mandatory fees, and only later 

disclose fees using names that do not 

clearly inform consumers of the nature 

or purpose of fees.19 Individual 

commenters noted that businesses also 

face undisclosed fees for which the 

nature or purpose is not clear.20

Consumer groups—the Consumer 

Federation of America, Consumer 

Reports, Truth in Advertising, 

UnidosUS, and the Institute for Policy 

Integrity—expressed support for 

rulemaking.21 Although the U.S. 

Chamber of Commerce and the 

Association of National Advertisers 


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22FTC–2022–0069–6047 (The U.S. Chamber of 

Commerce (‘‘the Chamber’’) did not support 

rulemaking, argued that fees rulemaking should be 

based on whether practices are unfair or deceptive 

under Section 5 of the FTC, not on a lack of 

remedies, such as monetary relief after AMG, and 

recommended that the FTC withdraw from 

rulemaking); FTC–2022–0069–6093 (ANA also did 

not support rulemaking.). 

23Consumer groups noted that the Consumer 

Financial Protection Bureau, the Department of 

Transportation, and the Federal Communications 

Commission are tackling junk fees through 

regulation, and that the States are also tackling 

deceptive junk fees through legislation. See, e.g., 

FTC–2022–0069–6095 (CFA discussed efforts by 

other Federal agencies (e.g., CFPB, DOT, FCC) and 

New York legislation related to junk fees.). 

24FTC–2022–0069–6095 (CFA cited enforcement 

actions that addressed deceptive practices relating 

to junk fees); FTC–2022–0069–6042 (TINA.org has 

tracked and published information about classaction lawsuits related to fees in various industries 

in its Class Action Tracker); FTC–2022–0069–6113 

(UnidosUS cited enforcement actions regarding 

auto-dealer fees and subprime installment lending 

fees as evidence of problematic fees and unfair or 

deceptive practices.). 

25FTC–2022–0069–6099 (CR discussed its 

WTFee?! Survey, 2018 Nationally-Representative 

Multi-Mode Survey of hidden fees in multiple 

sectors of the economy and the prevalence of unfair 

or deceptive fees practices in specific ‘‘priority 

economic sectors,’’ including telecommunications, 

travel, banking and financial services, automotive 

sales and services, utilities, retail sales and ecommerce, and live entertainment and sporting 

events.); FTC–2022–0069–6095 (CFA noted that the 

Washington Attorney General’s Hidden Fee Survey 

showed that consumers experienced unexpected 

fees in a wide range of industries.); FTC–2022– 

0069–6113 (UnidosUS cited surveys or studies by 

UnidosUS, the Financial Health Network, and the 

Center for Responsible Lending that documented 

the impact of fees related to financial services 

products.). 

26FTC–2022–0069–6095 (CFA provided 

information relating to the prevalence of unfair or 

deceptive practices relating to junk fees); FTC– 

2022–0069–6042 (TINA.org stated its ‘‘work 

tracking and exposing junk and hidden fees makes 

clear that it is a pervasive problem that causes real 

financial harm to consumers’’); FTC–2022–0069– 

6113 (UnidosUS endorsed the comment by the 

Consumer Federation of America in connection 

with that comment’s discussion of evidence of how 

junk fees in connection with financial products and 

transactions, such as overdraft, auto-buying fees, 

mortgage delinquency-related fees, education 

tuition and loan fees, and installment loan fees, 

disproportionally harm low-income consumers, 

consumers of color, and those who are limited 

English proficient.). 

27FTC–2022–0069–6099 (CR submitted its 

WTFee?! Survey, a related 2019 article, Protect 

Yourself from Hidden Fees, and ‘‘consumer stories 

collected by CR in January 2023’’ detailing many 

personal experiences with hidden fees). Another 

survey was published after the close of the 

comment period showed that a significant 

percentage of consumers encountered unexpected 

or hidden fees across a variety of industries, 

including telecommunications, utilities, auto loans 

and purchases, financial services, college tuition, 

hotels, rental cars, and live entertainment. 

Consumer Reports, American Experiences Survey: 

A Nationally Representative Multi-Mode Survey 

(April 2023), available at https://article.images.

consumerreports.org/image/upload/v1682544745/ 

prod/content/dam/surveys/ 

Aprill2023lAESlToplines.pdf. 

28FTC–2022–0069–6042 (TINA.org). 

29 In addition to these market sectors, the FTC 

also received comments about many other market 

sectors, such as healthcare, subscriptions, electronic 

payment services, and utilities, and from other 

industry groups. For example, one industry 

commenter reported that remittance fees are often 

hidden in artificially inflated exchange rates and 

that the nature of these fees is not disclosed to 

consumers who do not have an adequate 

opportunity to comparison shop among different 

methods to transfer money. FTC–2022–0069–2523 

(Wise supported rulemaking and recommended that 

any rule address pricing practices in cross-border 

payments (remittances)). Another industry 

commenter stated chain Fixed-Base Operators 

(‘‘FBOs’’), which are businesses or organizations 

which provide commercial aeronautical services, 

‘‘might disclose pricing for their services only after 

an aircraft has arrived at the Chain FBO or, even 

more troubling, after rendering the services[,]’’ and 

therefore supported enhancing pricing transparency 

by requiring chain FBOs, to disclose pricing for 

their services before aircrafts arrive at airports. 

FTC–2022–0069–2615 (The Aircraft Owners and 

Pilots Association (‘‘AOPA’’) also stated some chain 

FBOs may also charge fees that ‘‘often offer little or 

no added value or discernable benefit[.]’’). 

30FTC–2022–0069–0084 (‘‘[Y]ou have hotels 

around the country that are now adding in 

destination fees, resort fees, etc. Not only are these 

fees hidden, they also add these fees to ‘free’ night 

stays.’’); FTC–2022–0069–2350 (‘‘Vacation 

accommodation platforms are becoming 

increasingly misleading with the listed price on the 

initial search nearly doubling by the time you reach 

checkout for fees that, by explanation, dont [sic] 

seem to differ from what you are already paying for; 

‘destination fee’ and ‘property service fee’. This 

practice seems to be common with most booking 

sites but I specifically use Booking.com so I will 

keep my complaint specific to their hidden fees. 

. . . [O]nce I reach checkout, the price has been 

increased by 78% to $853.10. This makes it 

impossible to search by cost on this site because 

these final hidden fees differ between 

accommodations and are not clearly explained why 

they exist in the first place. . . . I have called and 

discussed this with Booking.com and lodged a 

formal complaint but their response was that they 

have no control over this. I believe all of these fees 

should be listed up front as the final price when 

conducting a search comparing cost.’’); FTC–2022– 

0069–3459 (‘‘Lodging: Both hotels (including travel 

agencies) and short term private lodging (like 

AirBnB) falsely advertise low ‘nightly rates’ to 

appear better on upfront/initial comparison screens 

than alternatives. However, once you select them 

the fees can be 2x what the base rate is. This is 

blatant misrepresentation; they know the total cost 

and are hiding it.’’); FTC–2022–0069–3469 (‘‘Hotel 

‘Resort Fees’ = When comparing prices online, 

calling, etc—If a hotel subtracts a fraction of the 

true cost and hides it in the back end (fees), it 

suddenly looks a lot more affordable in reservations 

searches.’’); FTC–2022–0069–3484 (‘‘Hotel hidden 

fees are insidious. They allow hotels to ‘compete’ 

with seemingly low rates, then use fees to increase 

the actual amount paid after you’ve already booked. 

. . . This results in significant increase in consumer 

burden to avoid fees or eat the additional cost, and 

stifles competition and innovation.’’). 

31FTC–2022–0069–1759 (commenter complained 

about ‘‘mandatory charges that are not initially 

disclosed in listed pricing, cleaning fees for 

vacation home rentals after mandatory cleaning by 

the renter’’); FTC–2022–0069–2131 (‘‘Cleaning Fees 

for Airbnb; these fees significantly increase the 

price of the room, and it often involves hosts 

essentially charging guests to clean the room they 

stayed in.’’); FTC–2022–0069–3470 (‘‘Homes often 

ask you to clean before you go but then add several 

hundred dollars in cleaning fees.’’). 

32FTC–2022–0069–6099 (CR). 

33FTC–2022–0069–6037 (American Hotel and 

Lodging Association (‘‘AHLA’’) stated resort fees at 

hotel properties provide guests with value that 

includes various goods and services); FTC–2022– 

0069–6057 (American Gaming Association (‘‘AGA’’) 

contended that resort fees provide value to 

consumers). The AHLA stated some of the data 

Continued 

(‘‘ANA’’) argued the FTC has not 

presented evidence that unfair or 

deceptive practices related to fees are 

prevalent, and opposed rulemaking,22

consumer groups raised concerns shared 

by individual commenters and provided 

information about existing regulations 

and legislation,23 enforcement actions,24

and studies and surveys,25

demonstrating (along with other 

evidence described in this NPRM) that 

it is a prevalent practice for businesses 

to advertise prices that fail to disclose 

mandatory fees.26

The information presented by 

consumer groups shows that false 

advertising of total prices occurs across 

industries. Consumer Reports’ 2018 

WTFee?! Survey ‘‘found that at least 

85% of Americans have experienced a 

hidden or unexpected fee for a service 

in the previous two years, and 96% 

found them highly annoying’’ and that 

‘‘[n]early two-thirds of those surveyed 

by [Consumer Reports] said they were 

paying more now in surprise charges 

than they did five years ago.’’ 27 Truth 

in Advertising noted that hidden fees 

are a prevalent problem related to 

internet apps, automobile rentals, 

communications companies, event 

ticket sellers, carpet cleaners, auto 

dealers, dietary supplement sellers, 

restaurants, airlines, moving companies, 

credit unions and banks, payday 

lenders, gyms, hotel and travel 

companies, outlet stores, sports betting, 

and online auctions.28 Some of the 

market sectors about which the FTC 

received comments are discussed in this 

section of the preamble.29

1. Hotel and Short-Term Lodging Fees 

Individual commenters stated hotels, 

online travel agencies (‘‘OTAs’’), and 

vacation rental providers often do not 

include fees, such as hotel resort fees 

and vacation rental fees such as 

cleaning fees, in advertised nightly 

rates, artificially lowering the true cost 

of hotel rooms and rentals vis-a-vis 

competitors.30 Other comments stated 

fees may be misrepresented, for 

example, fees charged as vacation rental 

cleaning fees when hosts require renters 

to clean accommodations.31 Consumer 

Reports commented that hotels and 

OTAs have continued to charge hidden 

resort fees after the FTC issued warning 

letters in 2012.32

Comments from the lodging industry 

generally argued further regulation is 

not necessary because resort fees 

provide value to consumers 33 and the 


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about resort fees that the FTC provided in the ANPR 

were incorrect. AHLA stated ‘‘only 6% of hotels 

nationwide charge a mandatory resort/destination/ 

amenity fee, at an average of $26 per night[,]’’ and 

that ‘‘80% of hotel-goers are willing to pay 

additional fees if doing so will provide access to 

certain amenities or better service.’’ FTC–2022– 

0069–6037. 

34FTC–2022–0069–6037 (AHLA stated ‘‘[t]he 

hotel industry embraces a competitive business 

model that is driven by transparency and customer 

satisfaction’’ and that hotels ‘‘disclose resort and 

amenity fees at or before the time of booking.’’); 

FTC–2022–0069–6111 (Travel Technology 

Association (Travel Tech) stated its members 

‘‘publish, disclose and share . . . rates, terms, and 

fees’’ provided to them by accommodation 

suppliers and other travel service providers ‘‘in a 

clear and conspicuous manner . . . prior to 

consumers completing their bookings.’’); FTC– 

2022–0069–6057 (AGA stated businesses properly 

disclose ‘‘how much and what the resort fee pays 

for’’). 

35FTC–2022–0069–6057 (AGA stated the 

disclosures occur after the base room rate is 

advertised (i.e., ‘‘typically no more than one screen 

following the base room rate, and at least one web 

page before consumers commit to the room and 

before any payment is required or made.’’). 

36FTC–2022–0069–6057 (AGA stated companies 

may roll resort fees into base room rates and not 

itemize fees to the detriment of consumers’ ability 

to review amenities and services on offer and 

compare them with competitors and to the 

detriment of businesses’ ability to distinguish 

themselves from competitors, for example, through 

loyalty programs that waive resort fees, a practice 

that the comment claimed would be difficult if 

itemized pricing were eliminated or limited). 

37FTC–2022–0069–6037 (AHLA urged that any 

rule requirements proposed by the FTC apply to all 

industry participants, including ‘‘the short-term 

rental market, metasearch sites, and online travel 

agencies (‘OTAs’)’’); FTC–2022–0069–6111 (Travel 

Tech recommends that any regulation adopted by 

the FTC ‘‘apply to any entity that supplies or 

advertises travel pricing information to consumers, 

including, for example, travel provider direct sites, 

metasearch, and both online and offline 

advertisements.’’). 

38FTC–2022–0069–0448 (‘‘My wife and I 

regularly attend metal and punk concerts, and 

sometimes we cannot justify attending a show we 

thought we were going to attend because, rather 

than pay the amount we expected to pay, we are 

sometimes looking at $50 or more of additional 

costs and fees.’’); FTC–2022–0069–0530 (‘‘They 

wait until a buyer has waited in queues for long, 

stressful delays and spring substantial (nonsense) 

fees on them last minute knowing they are more 

likely to pay them than if they had been upfront 

with the cost of the purchase to begin with.’’); FTC– 

2022–0069–1323 (‘‘I personally am always very 

frustrated when I go to buy so something, like a 

concert ticket, and try to get the advertised price. 

It has never, in my entire life, been as simple as 

handing over $100 for a $100 ticket. It always ends 

up costing much more, whether through a fee to 

hand them the money, soem [sic] contrived 

surcharge, or simply outright undisclosed and 

wholly newly made up miscellaneous charges.’’); 

FTC–2022–0069–2086 (‘‘Time and time again, as a 

consumer I and many I know have been 

discouraged from purchasing things we like or 

going to events we wanted to, simply because the 

amount we had allocated based on the cost was not 

enough in the end due to hidden fees.’’); FTC– 

2022–0069–2144 (‘‘I also feel that it is deception to 

say a ticket is price X. Then when all the fees 

collapse on top of you that the total price is now 

$80–$100 more than price X PER ticket.’’); FTC– 

2022–0069–2154 (‘‘It is incredibly deceptive that a 

company can advertise a particular price for a ticket 

but then stack substantial fees at the end of the 

check-out process onto the consumer. Often times 

these fees are a considerable percentage of the 

advertised price, and there is no obvious rationale 

for how they quantify these massive and varying 

amounts.’’); FTC–2022–0069–3128 (‘‘A face value 

ticket can have fees that nearly equal the original 

price, making the end consumer cost nearly double 

the advertised price. This is unfair and deceptive 

practice.’’); FTC–2022–0069–3595 (‘‘It is 

uncommon to find tickets at advertised prices as 

[sic] Ticketmaster’’); FTC–2022–0069–5435 

(‘‘Ticketmaster, StubHub, & other ticket retailers: 

These companies abuse the fact that there’s limited 

competition in their industry, and tack on predatory 

fees during check out that can double or triple the 

originally advertised price of the ticket.’’); FTC– 

2022–0069–5886 (‘‘It is very disheartening to be 

told that the price of a ticket is one thing and then 

be met by service fees, convenience fees, and 

additional unknown fees that bring the price up to 

almost 2 times what the original price was listed 

at.’’); FTC–2022–0069–5971 (‘‘Ticketmaster 

routinely and repeatedly pulls a bait-and-switch 

with ticket pricing—and the size of their final price 

inflations are egregious, reaching 50%.’’). 

39FTC–2022–0069–6099 (CR). 

40FTC–2022–0069–0226 (‘‘The ‘convenience’ fees 

and processing fees charged by Ticketmaster and 

others, are not only inconvenient but excessive and 

provide no benefit.’’); FTC–2022–0069–2281 

(‘‘These fees are often labeled as ‘convenience fees’, 

however they serve no real purpose and the 

consumer is often left with no other option.’’). 

41FTC–2022–0069–0603 (‘‘How much money 

does it take for a computer to process a ticket 

order?’’); FTC–2022–0069–2123 (‘‘Ticketmaster is 

not printing physical tickets, yet charges a 

significant delivery fee’’); FTC–2022–0069–2665 

(‘‘ ‘order processing fee’ . . . . fine. Whatever. Even 

though this is an automated software system that 

requires no additional time or effort for a human to 

process’’); FTC–2022–0069–3500 (‘‘ensure the scam 

of ‘processing fees’ is ended, because its [sic] all 

digital, there are no fees on their end’’); FTC–2022– 

0069–3592 (‘‘there is no reason for it to cost more 

to process a more expensive ticket’’). 

42FTC–2022–0069–1972 (‘‘Something has to be 

done to protect consumers from runaway ticket 

prices and these unbelievable fees with no 

discernable or knowable purpose.’’); FTC–2022– 

0069–2970 (‘‘fees were added with no detail of why 

or for what purpose’’); FTC–2022–0069–3571 (‘‘fees 

often feel completely arbitrary . . . . the fees vary 

wildly depending on what show I’m purchasing 

tickets for’’); FTC–2022–0069–0489 (‘‘Although the 

fees are disclosed, it is unclear what purpose they 

serve.’’). 

43FTC–2022–0069–3347 (AXS opposed all-in 

pricing, arguing that it would be less transparent to 

consumers, and recommended that any rule require 

sellers to disclose to consumers whether the ticket 

is being sold ‘‘from the artist/venue’s official ticket 

seller, at the face price set by the artist or venue, 

or, alternatively, from a ticket broker or resale 

marketplace where ticket prices are set by the 

reseller.’’). 

44The following ticket sellers support 

rulemaking: FTC–2022–0069–6089 (National 

Association of Ticket Brokers (‘‘NATB’’); FTC– 

2022–0069–6078 (TickPick, LLC); FTC–2022–0069– 

6079 (StubHub). AXS Group LLC does not support 

a rulemaking. FTC–2022–0069–3347. 

45FTC–2022–0069–6162 (Recording Academy 

recommends that any rule include strong 

protections for artists); FTC–2022–0069–6048 

(Future of Music Coalition (‘‘FMC’’)); FTC–2022– 

0069–6041 (National Independent Talent 

Organization (‘‘NITO’’)). 

46FTC–2022–0069–6046 (National Independent 

Venue Association); FTC–2022–0069–0501 (Annual 

International Ballet Festival of Miami and Cuban 

Classical Ballet of Miami). 

47FTC–2022–0069–6110 (Sports Fans Coalition 

described harm to consumers from drip pricing); 

FTC–2022–0069–2581 (Dunsmoor Law, P.C.). 

48FTC–2022–0069–6162 (The Recording 

Academy believes that the majority of concerts 

listed for sale in the United States do not disclose 

the total cost or mandatory fees in advertising, but 

that some sellers advertise a base cost ‘‘plus fees’’); 

FTC–2022–0069–6048 (FMC noted that ‘‘pervasive 

problems currently exist where ticketing fees are 

not disclosed’’); FTC–2022–0069–6078 (TickPick 

stated other jurisdictions have taken action against 

drip-pricing, including Canada which enacted a law 

providing that ‘‘the making of a representation of 

a price that is not attainable due to fixed obligatory 

charges or fees constitutes a false or misleading 

representation, unless the obligatory charges or 

fees’’ are imposed by the Canadian federal 

government or a provincial government (e.g., 

taxes).’’). 

industry already engages in pricing 

transparency.34 However, these 

comments do not dispute that resort fee 

disclosures routinely occur after base 

room rates are advertised.35 Some 

industry members cautioned that 

requiring all-in pricing may have 

unintended consequences,36 and 

recommended that, if the FTC decides 

to proceed with a rulemaking, any rule 

apply across the board, online and 

offline, to all short-term lodging 

providers to provide a level playing 

field.37

2. Live-Event Ticket Fees 

In connection with tickets for live 

entertainment, individual commenters 

noted that it is nearly impossible to 

obtain tickets at advertised prices 

because ticket sellers inflate these prices 

with fees.38 Consumer Reports noted 

that hidden fees can increase the price 

of tickets by as much as 30% to 40%.39

Individual commenters questioned the 

meaning of fees that are vaguely 

identified, such as ‘‘convenience’’ 

fees,40 and the stated purposes of ticket 

fees. For example, individual 

commenters questioned whether 

processing fees really pay for ticket 

processing and whether delivery fees 

really pay for delivery expenses.41 The 

comments opined that fees appear to be 

arbitrary.42

One ticket seller argued that State and 

Federal laws prohibiting unfair or 

deceptive trade practices already 

adequately address any problems with 

unfair or deceptive fees,43 but most 

comments received from ticket sellers or 

entities representing them,44 and from 

entities representing the interests of 

musicians, artists, managers, agents; 45

independent venues, promoters, 

festivals; 46 and audience groups; 47

expressed concerns about deceptive 

practices and supported a rulemaking 

with some conditions. Some of these 

comments noted that ticket sellers 

routinely do not disclose the total cost 

of tickets in advertising,48 and that the 


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49FTC–2022–0069–6048 (FMC stated it ‘‘can be 

challenging to distinguish between a fee that can 

reasonably be connected to an actual expense, and 

what is just tacked on to the ticket base price to 

provide a venue or ticketing company with an 

additional revenue stream.’’) 

50FTC–2022–0069–6065 (The Break Up 

Ticketmaster Coalition argued that Ticketmaster’s 

market dominance, including in secondary markets, 

has resulted in excessive fees that consumers 

cannot reasonably avoid.); FTC–2022–0069–6162 

(The Recording Academy recommended strong 

enforcement and improved regulation of the 

secondary ticket market, including requiring 

disclosure by resellers that tickets are resale tickets 

and that fees do not go to artists); FTC–2022–0069– 

6041 (NITO raised concerns that ticket fees are 

excessive, often as a result of the secondary market, 

and asked the FTC to take all measures within its 

authority to stop the growth of ticket fees for live 

events); FTC–2022–0069–6048 (FMC noted that it is 

a part of the Break Up Ticketmaster coalition and 

that it also broadly shares the concerns expressed 

in the comments by NITO and the Recording 

Academy, relating to problems stemming from 

secondary ticketing companies, and the importance 

of considering cultural diversity and community 

health, including the music community); FTC– 

2022–0069–0501 (Annual International Ballet 

Festival of Miami and Cuban Classical Ballet of 

Miami commented that Ticketmaster adds 

‘‘exorbitant fees . . . in some cases more than 20%’’ 

to its ticket prices, resulting in many people not 

being able to afford tickets, ‘‘particularly those with 

children or elderly’’ and reducing ticket sales and 

profits); FTC–2022–0069–6110 (SFC noted a lack of 

competition among ticket sellers and problematic 

behavior in the secondary ticket marketplace, 

including transferability restrictions, disclosures of 

holdbacks, speculative ticket disclosures, and the 

use of bots, and recommended that the FTC conduct 

a 6(b) study of Ticketmaster/Live Nation’s business 

conduct, and that the FTC support Federal and 

State legislation to address harm to consumers in 

ticket sales); FTC–2022–0069–2581 (Dunsmoor Law 

stated Ticketmaster’s practices are harmful to artists 

and consumers, including dynamic pricing which 

‘‘makes it nearly impossible to comparison shop,’’ 

and recommended that the FTC consider limiting 

fees and addressing Ticketmaster’s monopolistic 

behavior.); FTC–2022–0069–6046 (NIVA stated 

apart from practices related to fees, secondary 

markets use predatory and deceptive practices in 

connection with ticket resales); FTC–2022–0069– 

6089 (NATB described the practice of holding back 

tickets or ‘‘slow ticketing’’ to be a deceptive 

marketing tactic that distorts the market and urged 

the FTC to require disclosures of how many tickets 

are available for sale, but argued that the 

transferability of tickets should be protected in any 

rulemaking.); FTC–2022–0069–6079 (StubHub 

expressed concerns regarding the lack of 

competition in the live events industry, and 

requested that the FTC investigate anticompetitive 

and anti-consumer behaviors in the industry 

brought about by the merger of Live Nation and 

Ticketmaster.). 

51FTC–2022–0069–6046 (NIVA stated many fees 

add value, such as facilities fees charged by 

independent venues and promoters to pay for 

overhead costs such as staffing, rent, insurance, 

heating and cooling, repairs and maintenance, and 

property taxes, but notes that there are differences 

between facilities fees charged by independent 

venues and promoters and fees charged on 

secondary resale exchanges that do not support 

venues); FTC–2022–0069–6089 (NATB 

recommended that any rule differentiate between 

types of ticket fees, arguing that fees imposed by 

secondary ticket brokers account for a valuable 

service, while fees imposed by the original ticket 

sellers may not); FTC–2022–0069–6079 (StubHub 

objected to the characterization of fees it charges as 

‘‘junk’’ or ‘‘hidden’’ fees because its service fees 

enable it to provide valuable services to StubHub 

users and partners); FTC–2022–0069–3347 (AXS 

argues that its fees provide value to consumers). 

52FTC–2022–0069–6079 (StubHub stated its fees 

are transparent and fully disclosed before it collects 

payment information and before consumers 

complete transactions); FTC–2022–0069–3347 (AXS 

argued that its fees are adequately disclosed). 

53FTC–2022–0069–6078 (TickPick). 

54 Id. 

55FTC–2022–0069–6110 (Sports Fans Coalition); 

FTC–2022–0069–6041 (NITO): FTC–2022–0069– 

6046 (NIVA); FTC–2022–0069–6089 (NATB); FTC– 

2022–0069–6078 (TickPick); FTC–2022–0069– 

2581–A2 (Dunsmoor Law recommended that the 

FTC ‘‘evaluate all possible legal outcomes from the 

disclosing of fees.’’); FTC–2022–0069–6078 

(TickPick supported model rule language proposed 

by the Institute for Policy Integrity with minor 

modifications, and proposed definitions for ‘‘all–in 

price,’’ ‘‘unavoidable fee or charge,’’ and ‘‘avoidable 

fee or charge.’’); FTC–2022–0069–6048 (FMC 

described music royalty fees that are a part of a 

subscription music service as an example of 

unavoidable or mandatory fees); FTC–2022–0069– 

6079 (StubHub supported Policy Integrity’s 

recommendation to exclude fees for optional addon purchases that are fully disclosed to consumers 

prior to payment). 

56FTC–2022–0069–6089 (NATB commented that 

it will only be effective if applicable to all ticket 

sellers); FTC–2022–0069–6078 (TickPick); FTC– 

2022–0069–6079 (StubHub). 

57FTC–2022–0069–6078 (TickPick stated its allin pricing has not caused competitors to engage in 

the practice, that a competitor temporarily adopted 

all-in pricing but abandoned the practice after 

losing market share, and that regulatory 

intervention is necessary to establish an even 

playing field); FTC–2022–0069–6079 (StubHub 

stated that in 2014 it voluntarily began displaying 

all-in pricing to buyers, but this practice put 

StubHub at a disadvantage in comparison to 

competitors who did not display all-in pricing, 

causing StubHub to discontinue the practice). 

58FTC–2022–0069–6162 (The Recording 

Academy recommended that any rule require the 

disclosure of the face value of tickets to avoid 

consumer misperception that artists are responsible 

for any increase in total cost that results from the 

rule); FTC–2022–0069–6048 (FMC recommended 

requiring full fee itemization so consumers can still 

see the base price so artists are not blamed for fees 

and can identify increases in fees); FTC–2022– 

0069–6041 (NITO’s support for rulemaking is 

conditioned on requiring that ticket fees are clearly 

separated and itemized from the face value of the 

ticket); FTC–2022–0069–6046 (NIVA recommends 

requiring itemization of the face value of tickets and 

all fees so that consumers know what they are 

paying for); FTC–2022–0069–3347 (AXS 

recommended, if the FTC determines that a new 

rule is necessary, that instead of all-in pricing, the 

FTC require sellers to disclose all components of 

the ticket price). 

59FTC–2022–0069–6078 (TickPick opposed 

itemization of fees and recommends that the all-in 

price be the only price a consumer sees in all 

advertising and marketing materials; itemization of 

fees is not helpful to consumers because the fees are 

contrived and only serve to mislead consumers and 

inhibit competition). 

60FTC–2022–0069–6079 (StubHub supported an 

industry-neutral rule establishing price 

transparency across market sectors. StubHub 

supported a Federal solution, consistent 

enforcement of a rule with sufficient specificity to 

avoid varying interpretations.); FTC–2022–0069– 

6078 (TickPick reserved judgment on whether the 

rule should be industry-neutral or specific to the 

ticketing industry). 

61FTC–2022–0069–6078 (TickPick recommended 

that the FTC create a procedure to provide staff 

interpretations and guidance regarding what 

constitutes an unavoidable fee); FTC–2022–0069– 

6048 (FMC recommended that the FTC take 

enforcement action in connection with live-event 

ticketing, and other instances of problematic fee 

practices); FTC–2022–0069–6089 (NATB 

commented that a rule will only be effective if the 

FTC undertakes rigorous enforcement). 

nature and purpose of fees is not always 

clear.49 The comments emphasized that 

ticket fees raise competition issues 

separate from the deceptive advertising 

practices and recommended that the 

FTC address alleged anticompetitive 

practices that result in fees consumers 

consider excessive.50

Although entities in the ticketing 

sector argued that ticket fees are not 

‘‘junk’’ fees, but provide value to 

consumers 51 and are already adequately 

disclosed,52 a ticket seller in the 

secondary market, TickPick, disagreed. 

TickPick stated other members of the 

secondary market, including all of 

TickPick’s larger peers, have gained a 

competitive advantage by omitting 

mandatory fees from the total cost of 

tickets in advertising and luring 

consumers with deceptively low prices 

only to impose substantial back-end 

fees, sometimes after customers provide 

payment information.53 TickPick also 

noted that ticket sellers misrepresent the 

nature or purpose of their mandatory 

fees when fees do not provide anything 

of value to consumers and are used only 

to generate additional profit.54

Comments related to ticket sales 

supported greater pricing transparency 

with most supporting all-in pricing that 

specifies the full final cost to consumers 

including mandatory, but not optional, 

fees.55 Most comments from ticket 

sellers supported all-in pricing if the 

requirement would apply to all ticket 

sellers to establish a level playing 

field.56 They argued that, without a 

level playing field, businesses that 

display all-in pricing would be at a 

competitive disadvantage.57 Many of 

these comments recommended that 

itemization of fees should also be 

required so consumers see a breakdown 

of the fees charged,58 but one comment 

argued that itemization of fees harms 

consumers.59 Some of these comments 

recommended an industry-neutral rule 

while others did not express an 

opinion.60 The comments also noted the 

importance of FTC guidance and 

enforcement action relating to fees.61

3. Fees Related to Restaurants and 

Prepared Food and Grocery Delivery 

Apps 

Individual commenters submitted 

many observations about restaurants 

and prepared food and grocery delivery 

services. They noted that restaurants 

routinely add fees to bills that were not 


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62FTC–2022–0069–3423 (‘‘I don’t know what the 

‘‘HOSPITALITY FE’’ [sic] is for, but it doesn’t 

appear anywhere on the menu of this restaurant we 

attended.’’); FTC–2022–0069–3459 (restaurants 

‘‘started adding a ‘kitchen fee’ in the small foot 

notes of the menu. Why not just include this in the 

cost of the food. Otherwise all menu items can be 

misrepresented as very low and high fees added in 

the foot notes.’’); FTC–2022–0069–3766 (restaurant 

‘‘deceptively adds a 20% ‘equity fee’ to every bill 

instead of fairly displaying a price.’’); FTC–2022– 

0069–3880 (restaurant ‘‘started putting an 

undisclosed ‘Economic Impact Fee’ on their bills’’); 

FTC–2022–0069–3885 (‘‘local businesses have been 

tacking on ‘service fees’ when ringing up at the 

register. This is most noticeable at restaurants, for 

dine-in, takeout, and delivery. The fees are not 

disclosed on the menu or anywhere at the physical 

establishments or on their websites before placing 

an order.’’); FTC–2022–0069–4428 (‘‘I would like to 

add that lately, I’ve seen the restaurant industry 

adding-on junk fees to post-meal restaurant bills 

named ‘temporary inflation fee’ or similar which 

are not disclaimed prior to eating. It’s difficult to 

un-eat a meal if you disagree with these fees.’’); 

FTC–2022–0069–5999 (‘‘And restaurants that 

charge a surcharge fee for various things at the final 

bill which ate [sic] not disclosed on the menu or 

stated by the wait staff or posted at the door!’’). 

63FTC–2022–0069–0244 (‘‘Another, more recent, 

development has been the addition of a ‘service 

charge’ on a restaurant check, calculated as a 

percent of the check total. Is this in place of a tip? 

Who receives it?’’); FTC–2022–0069–1988 (‘‘I 

visited a bar that had a sign which stated ‘we add 

on a 20% service fee to all transactions which goes 

directly to the staff as a tip.’ Then, on the payment 

screen, I was prompted AGAIN to tip for 15%, 20%, 

or 25% by the software.’’); FTC–2022–0069–2131 

(‘‘Service Charges at restaurants. I am fine with 

these when 100% of the charge goes to the waiter, 

but it’s not always clear and I’ve heard that many 

restaurants hold it for themselves.’’). 

64 29 CFR 531.52(b). 

65See 29 CFR 531.52(a) (distinguishing tips— 

which are entirely at the discretion of the 

customer—from the payment of a charge made for 

service). 

66FTC–2022–0069–2089 (‘‘Many food delivery 

services, are deceptive in their pricing. . . . They 

are advertising a price much lower than it truly is’’); 

FTC–2022–0069–2997 (‘‘these companies add 

multiple different fees and charges to the final bill 

that are not seen until check-out’’); FTC–2022– 

0069–4617 (‘‘Doordash, Ubereats, Postmates, and 

every other food delivery app uses hidden fees to 

somehow make a $10 order double in price through 

several different fees that have no explanation as to 

what they are and there is no transparency on how 

much they will be when the customer is building 

their order.’’). 

67FTC–2022–0069–0581 (‘‘Delivery app services 

similarly charge fees which are not clearly related 

to a service or function of the business’’); FTC– 

2022–0069–1545 (‘‘it isn’t plainly clear that the fees 

are non refundable even when the company fails to 

properly provide the service they are charging you 

a fee to perform’’); FTC–2022–0069–1672 (‘‘why am 

I being charged a delivery fee for my food, when 

the fee doesn’t go to the driver?’’); FTC–2022–0069– 

2190 (‘‘Charges extra fees without explanation. How 

are there 2 delivery fees?’’); FTC–2022–0069–2316 

(‘‘The delivery fee I pay to the national pizza chain 

that doesn’t go to the delivery person, instead I still 

have to tip the delivery driver because the fee 

doesn’t go to him/her’’); FTC–2022–0069–4400 (‘‘I 

have to pay unexplained additional fees for delivery 

services that don’t seem to have a good explanation 

when there is already a base fee and travel fee.’’). 

68FTC–2022–0069–6095 (CFA). 

69FTC–2022–0069–0084 (‘‘Airlines, if they are 

offering a ‘free’ flight, should ONLY charge you the 

fees charged by governments or airports. They 

shouldn’t be taking on junk fees, fuel surcharges, 

etc.’’); FTC–2022–0069–1676 (‘‘Airline fees for bags, 

seats etc. Its [sic] not transparent until you get to 

the last page. Last minute fees for changes.’’); FTC– 

2022–0069–3724 (‘‘Airlines obscure the true price 

of tickets until the very end of the purchase process 

wasting customer’s time in a cynical effort to 

leverage sunk cost biases so we just buy the 

misleading ticket price because we’ve spent the last 

30 minutes filling in every detail.’’); FTC–2022– 

0069–2055 (‘‘I recently paid a ‘plane usage’ fee on 

plane ticket, purchased directly from the airline’s 

website. This fee implies there’s a possible travel 

option I could have booked that didn’t involve 

flying, which is deceptive.’’). 

70FTC–2022–0069–0013 (‘‘I recently reserved a 

rental car with a ‘total’ of $856. When I got to the 

final booking page, the total was $600 more. ‘Total’ 

should mean exactly that, all-in, no further 

charges.’’); FTC–2022–0069–3459 (‘‘Renting either a 

car or a moving van; they advertise $10/day. After 

all the fees which are standard and they are already 

aware of (nothing dependent on your choices) the 

actual cost is $40/day.’’); FTC–2022–0069–3785 

‘‘(For my rental car, I got charged a tourism 

commission fee, county bus license fee, customer 

facility charge, airport tram fee, vehicle license 

recovery fee, and concession recovery fee in 

addition to the base rate. Prices jump up to 30% 

higher when fee after fee is added’’.). 

71FTC–2022–0069–0688 (‘‘It wasn’t until we sat 

down to fill out the contract, that we were informed 

of an additional mandatory fee of $3,000 for a clearcoat finish.’’); FTC–2022–0069–5435 (auto dealers 

‘‘tack on a number of fees during the contract 

process such as ‘dealer fees’ and ‘transportation 

fees’ that were not included in price discussions’’). 72FTC–2022–0069–6095 (CFA). 

73 Id. 

74FTC–2022–0069 6043 (The National 

Automobile Dealers Association (NADA) stated 

rulemaking is not necessary, and recommended 

advertising guidance and business education); FTC– 

2022–0069–6106 (American Property Casualty 

Insurance Association (APCIA) stated fees 

rulemaking would impact several industries and 

business activities, and suggested that the FTC 

engage in more stakeholder engagement and 

analysis of the marketplace before moving forward); 

FTC–2022–0069–6058 (The Service Contract 

Industry Council (SCIC), the Motor Vehicle 

Protection Products Association (MVPPA), and the 

Guaranteed Asset Protection Alliance (GAPA)); 

FTC–2022–0069–5983 (The Motorcycle Industry 

Council (MIC), the Specialty Vehicle Institute of 

America (SVIA), and the Recreational Off-Highway 

Vehicle Association (ROHVA)); FTC–2022–0069– 

0124 (The National Association of Mutual 

Insurance Companies (NAMIC) objected that the 

ANPR created a false impression that junk fees are 

a problem in the property casualty insurance 

market, including automobile insurance, and 

argued that the FTC may not have the jurisdiction 

to regulate fees in insurance). All of these 

commenters, except NAMIC, referenced comments 

they previously submitted in connection with the 

Motor Vehicle Dealers Trade Regulation Rule 

matter. 

75FTC–2022–0069–6043 (NADA stated the scope 

of the ANPR requires clarification regarding the 

definition of ‘‘junk’’ fees, and proposed defining a 

‘‘junk’’ fee as one that ‘‘is mandatory and yet 

provides no additional benefit of any kind beyond 

that included in the advertised price of the specific 

good or service and does not have any other 

business justifications.’’); FTC–2022–0069–6058 

(SCIC, MVPPA, and GAPA argued that the 

definition of junk fees is too vague to provide any 

notice as to what the FTC may seek to regulate.). 

76FTC–2022–0069–6106 (APCIA expressed 

concern that the definition of ‘‘junk fees’’ in the 

ANPR could unintentionally include products such 

as voluntary protection products (i.e., VPPs) that 

have proven to be beneficial to consumers and are 

sold in a transparent manner); FTC–2022–0069– 

6058 (SCIC, MVPPA, and GAPA argued that fees for 

VPPs in auto sales do not meet the definition of 

junk fees.) 

previously disclosed, using various 

names (e.g., ‘‘service fee,’’ ‘‘hospitality 

fee,’’ ‘‘kitchen fee,’’ ‘‘equity fee,’’ 

‘‘economic impact fee,’’ ‘‘temporary 

inflation fee’’) that do not clearly or 

conspicuously identify their nature or 

purpose.62 Commenters expressed 

particular concern about the true 

purpose of restaurant ‘‘service’’ charges, 

which they expected would go entirely 

to wait staff.63 As these comments 

imply, while a restaurant’s management 

may not keep tips received by its 

employees for any purposes,64 no such 

prohibition exists for service fees 

imposed by a restaurant.65 In 

connection with food delivery, 

individual commenters similarly stated 

delivery apps charge fees that are not 

reflected in advertised food prices,66

and that the nature or purpose of these 

fees is not always clear or is 

misrepresented, for example, when fees 

identified as delivery fees do not go to 

delivery personnel.67 The Consumer 

Federation of America noted that 

prepared food and grocery delivery apps 

have been the subject of law 

enforcement actions challenging 

misrepresentations relating to fees.68

4. Transportation Fees 

Individual commenters made similar 

observations about transportationrelated goods and services. They noted 

that airlines fail to include mandatory 

fees in advertised prices and 

misrepresent fees.69 They also described 

advertising for car rentals 70 and car 

sales 71 that misrepresented total costs to 

consumers by delaying the disclosure of 

mandatory fees that inflated amounts 

consumers had to pay. The Consumer 

Federation of America noted that rental 

car companies impose fees that are not 

always clearly disclosed up front,72 and 

that ‘‘[d]ishonest auto dealers have an 

established history of failing to clearly 

disclose mandatory fees in their 

advertised prices.’’ It noted that 

numerous State attorneys general have 

taken related enforcement action.73

Industry comments related to auto 

sales, including ancillary goods and 

services, did not support a 

rulemaking.74 These comments stated 

that the definition of junk fees is too 

vague,75 and questioned whether fees 

that are not mandatory because they 

relate to voluntary ancillary products 

offered as part of auto sales transactions 

(e.g., voluntary protection products) 

would be covered by the ANPR 

definition of ‘‘junk’’ fees.76 The 

comments stated that fees for ancillary 


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77FTC–2022–0069–6106 (APCIA stated VPPs that 

motor vehicle dealers make available at the time of 

auto sales provide valuable services and benefits to 

consumers); FTC–2022–0069–6058 (SCIC, MVPPA, 

and GAPA argued that VPPs provide value to 

consumers by facilitating the filing of product 

claims and providing financial security). See also 

supra nn. 33, 51. 

78FTC–2022–0069–6043 (NADA stated failing to 

disclose mandatory fees is already prohibited and 

opined that the FTC’s desire to obtain authority for 

monetary relief is not a legally adequate basis for 

rulemaking. 

79FTC–2022–0069–6043 (NADA); FTC–2022– 

0069–5983 (MIC, SVIA, and ROHVA argued that it 

would be burdensome for smaller powersports 

dealers to implement disclosure requirements); 

FTC–2022–0069–6058 (SCIC, MVPPA, and GAPA 

argued that the disclosure of all-in prices at the 

beginning of auto sale transactions is impracticable 

and likely impossible). 

80FTC–2022–0069–6106 (APCIA noted that VPPs 

are subject to Truth in Lending Act Regulation Z as 

well as state lending laws similar to other voluntary 

products sold in connection with vehicle loans, and 

that an Unfair or Deceptive Fees rule would be 

duplicative and conflict with existing Federal and 

State laws and regulations); FTC–2022–0069–0124 

(NAMIC noted that casualty insurance payments are 

strictly regulated by state insurance codes). 

81FTC–2022–0069–6043 (NADA recommended 

that auto dealers be exempt from any fees rule 

‘‘given that the Proposed Vehicle Shopping Rule 

addresses this type of disclosure in a more 

comprehensive, and vastly different, manner.’’); 

FTC–2022–0069–5983 (MIC, SVIA, and ROHVA 

recommended exempting powersports vehicle 

dealerships, including motorcycles, ATVs, and 

ROVs, from the rule and adopting an incremental 

response to regulation). 

82FTC–2022–0069–6043 (NADA). 

83FTC–2022–0069–0138 (cable ‘‘fees do not 

appear on their advertised rates . . . to appear 

cheaper than they really are. In actuality it is 

impossible to subscribe at advertised rates.’’); FTC– 

2022–0069–2124 (‘‘Cell phone companies, advertise 

$69 dollars unlimited, my bill has never been under 

$100, carrier fees, service fees, premium data 

charges. If its [sic] impossible to access the $69 

dollar charge then thats [sic] false advertising.’’); 

FTC–2022–0069–2892 (‘‘The advertised price from 

my cable package is $99.99 a month, so why am I 

paying $160 a month? I can understand the 

equipment rental fees, but the broadcasting and 

regional fees make no sense and seem to go up 

every time I turn around.’’); FTC–2022–0069–2382 

(‘‘Often, consumers are not aware that their cable 

or internet bill includes a monthly ‘rental’ fee for 

the hardware modem that is provided by the cable 

or telephone company.’’); FTC–2022–0069–5435 

(‘‘Spectrum, Comcast, Verizon, & other internet/ 

cable/phone providers: The advertised price 

becomes bloated with unnecessary surcharges such 

as ‘economic adjustment’ fees and recurring charges 

to use their mandated hardware.’’); FTC–2022– 

0069–5631 (telecommunication company ‘‘charged 

a mandatory $9.95 ‘Technology Service Fee’ and a 

$4.95 ‘Billing Fee’ on top of their normal rates. It 

is absolutely a ploy to artificially advertise a lower 

monthly payment for service even though it’s 

guaranteed to be no less than $14.90 higher every 

month than they say it’s going to be.’’). 

84FTC–2022–0069–6087 (New America’s Open 

Technology Institute (‘‘OTI’’)). 

85 Id. 

86FTC–2022–0069–6095 (CFA). 

87FTC–2022–0069–3393 (NTCA—The Rural 

Broadband Association (‘‘NTCA’’)). 

88 Id. 

89 Id. 

90FTC–2022–0069–1391 (landlord ‘‘charges for 

extra programs that I was not informed about nor 

able to opt out easily’’); FTC–2022–0069–1677 (‘‘In 

the realm of rental housing, any and all fees should 

be included into advertised rental prices.’’); FTC– 

2022–0069–1717 (‘‘when looking for apartment 

rentals, they are never honest about upfront costs 

until you sign a lease and get your first bill.’’); FTC– 

2022–0069–1782 (‘‘When we started getting the 

bills, we were being charged electric, common area, 

utility admin, and pest fees that were not disclosed 

upfront.’’); FTC–2022–0069–2242 (‘‘When renting 

my unit we were told the cost was $1500 utilities 

included and were completely strong armed at lease 

signing with the new cost of $1650 ‘to cover the 

utilities’, and given 0 wiggle room or time to work 

out an alternate place to live.’’); FTC–2022–0069– 

2858 (‘‘Property management companies include 

excessive hidden fees that are not included in base 

rent and can make the cost of rent several hundred 

dollars more than what is advertised.’’); FTC–2022– 

0069–4455 (‘‘I am writing about the practice of 

apartment companies advertising misleading prices 

and including hidden fees for renters. . . . It is 

extremely widespread. I looked for a new apartment 

around north Dallas twice in the past year, and 

every single one I visited had mandatory monthly 

fees not included in the monthly rate and not listed 

at all on their website (at least not anywhere I 

saw).’’). 

91FTC–2022–0069–3129 (‘‘Junk fees have become 

fundamentally ridiculous, especially as these 

companies cannot even describe what the fee is for. 

In my monthly rent, I have a $34 service fee (that 

Continued 

goods and services provide value to 

consumers.77

The comments from auto industry 

representatives stated the law already 

prohibits failing to disclose mandatory 

fees, and that fees are adequately 

disclosed.78 Commenters stated ‘‘total 

cost’’ often varies in negotiated sales 

transactions and there is no clear reason 

why the disclosure of fees later in 

purchasing transactions should be 

deemed categorically deceptive or 

unfair because there are often good 

reasons why certain fees cannot be 

disclosed earlier in sales transactions.79

Comments noted that a fees rule could 

overlap or conflict with State and 

Federal laws and regulations.80

Commenters recommended excluding 

auto dealers from a rule on unfair or 

deceptive fees because fees related to 

auto sales transactions are already the 

subject of the FTC’s rulemaking in the 

Motor Vehicle Dealers Trade Regulation 

Rule (‘‘proposed Motor Vehicle Dealers 

Rule’’) matter.81

One commenter, the National 

Automobile Dealers Association 

(‘‘NADA’’), urged that, if the FTC 

proceeds with rulemaking, such a 

rulemaking should have ‘‘a strict focus 

with clear rules on how to adequately 

disclose so as to avoid consumer harm.’’ 

Any rule should not go beyond 

addressing the failure to disclose 

mandatory costs.82

5. Telecommunications Fees 

Individual comments about 

telecommunications, including internet, 

television, and telephone services, 

noted that consumers are confronted 

with advertised rates that do not include 

mandatory fees, which are only 

disclosed after consumers contract for 

services and in ways that consumers 

find difficult to understand.83

Citing a Consumer Reports study and 

its own research, New America’s Open 

Technology Institute (‘‘OTI’’) stated 

internet service providers routinely do 

not include internet service fees, such as 

installation and activation fees, 

equipment fees, penalties for exceeding 

data caps, and early termination fees, in 

advertised prices, and that these fees 

should be considered as part of the true 

monthly cost of internet service that 

should be incorporated into advertised 

prices or prohibited when they are 

arbitrary or do not reflect added value.84

OTI supported a rulemaking to increase 

price transparency and eliminate junk 

fees that provide no value to consumers, 

particularly in connection with wireless 

and wired internet connections, and 

urged the FTC to consider standardized 

price disclosures across industries.85

The Consumer Federation of America 

cited a review of internet bills by 

Consumer Reports that showed 

providers using terminology such as 

‘‘network enhancement fee,’’ ‘‘internet 

infrastructure fee,’’ ‘‘deregulated 

administration fee,’’ and ‘‘technology 

service fee,’’ that made fees look like 

government-imposed, mandatory fees.86

The Rural Broadband Association 

(‘‘NTCA’’) noted that many internet 

service provider fees are related to 

mandatory government programs that 

provide value to consumers.87 It argued 

that the FTC does not have jurisdiction 

over common carriers, and that 

broadband internet providers, while not 

common carriers, are already regulated 

by the FCC, and should be exempt from 

a fees rule.88 NTCA acknowledged, 

however, that certain types of 

retransmission fees that are opaque to 

consumers because broadcasters’ 

confidentiality terms preclude 

transparent explanation of the fees 

could be examined to determine 

whether greater transparency can be 

achieved without imposing burdens in 

the generation of invoices.89

6. Rental Housing Fees 

Comments from individual consumers 

about rental housing fees stated leasing 

companies advertise monthly rents that 

do not include fees for mandatory 

ancillary services that unexpectedly and 

significantly increase renters’ monthly 

expenditures.90 The comments stated 

leasing companies do not always 

identify the purpose of these fees.91


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the . . . rental management company . . . has not 

been able to identify the reason for)’’). 

92FTC–2022–0069–6091 (NCLC argues that 

landlords fail to explain the purpose of fees.). 

93FTC–2022–0069–6085 (Michigan Law School 

endorses NCLC’s recommendations in connection 

with the rental housing market generally and 

recommends that the FTC investigate and regulate 

junk fees in the manufactured housing industry.) 

94FTC–2022–0069–6091 (NCLC noted that the 

survey was conducted between November and 

December of 2022, and showed that tenants face an 

array of unavoidable fees, including rental 

application fees, sometimes charged even if 

landlords know applications will never be 

approved, excessive late fees, utilities-related fees, 

processing or administrative fees, convenience fees, 

insurance fees, notice fees, trash fees, pest control 

fees, technology fees, common area and amenityrelated fees, inspection fees, and mail sorting fees.). 

95FTC–2022–0069–6091 (NCLC). 

96FTC–2022–0069–6094 (Private Equity 

Stakeholder Project (‘‘PESP’’)). 

97FTC–2022–0069–6091 (NCLC recommends that 

the FTC investigate deceptive or unconscionable 

practices by corporate and large landlords that 

impose unavoidable and exploitative fees). 

98FTC–2022–0069–6091 (NCLC recommends that 

the FTC develop guidance). 

99FTC–2022–0069–6091 (NCLC stated corporate 

and large landlords often impose fees that are 

excessive in amount or greater than the cost to the 

landlord of providing a service, that are for services 

not provided, that are for services that landlords are 

legally obligated to provide as part of renting 

habitable premises, or that prevent competition); 

FTC–2022–0069–6094 (PESP recommended that the 

FTC identify specific fees charged by landlords that 

would be invalid per se and take strong 

enforcement action, and referred to the comment of 

the NCLC (FTC–2022–0069–6091) in identifying 

fees that should be invalid, including fees that are 

excessive in amount or greater than the cost to the 

landlord of a service, fees for services not provided, 

and fees for services that landlords are legally 

obligated to provide as part of renting habitable 

premises); FTC–2022–0069–6085 (Michigan Law 

School stated additional fees faced by tenants of 

MHCs include application fees that may violate or 

attempt to circumvent state laws that prohibit 

MHCs from imposing entrance fees, community 

rule violation fees, and unilateral increases in lot 

rent.). 

100FTC–2022–0069–6085 (Michigan Law School 

notes that tenants in manufactured housing 

communities (MHC) are disproportionately lowincome, disabled, and elderly, and are a captive 

audience of the owners of the land on which mobile 

homes sit.). 

101FTC–2022–0069–6091 (NCLC). 

102FTC–2022–0069–2288 (‘‘This rule should 

apply to ‘non-profit’ institutions such as colleges 

and universities as they use them [fees] in the same 

predatory ways as for profit companies but have the 

advantage of exploiting a captive consumer 

population that is younger and naive.’’); FTC–2022– 

0069–2616 (‘‘Tuition bills for higher education have 

also added increasing amounts of charges with no 

opt-out’s.’’); FTC–2022–0069–4375 (University 

charged ‘‘miscellaneous’ fees that aren’t included in 

the tuition cost. When looking at the price of tuition 

it is not included and is only seen on the final bill. 

When confronted they couldn’t give an itemized list 

for the charge.’’). 

103FTC–2022–0069–6095 (CFA). See also FTC– 

2022–0069–6113 (UnidosUS endorsing the 

comment of the CFA). 

Consumer and policy groups noted 

that landlords do not adequately 

disclose many unavoidable fees or fail 

to explain the purpose of fees,92 and 

supported a rulemaking pertaining to 

fees in connection with rental housing, 

including apartments, house rentals, 

and manufactured housing communities 

(‘‘MHCs’’).93 The National Consumer 

Law Center (‘‘NCLC’’) conducted a 

survey of legal services and nonprofit 

attorneys that identified many 

unavoidable fees faced by tenants,94 and 

recommended that the FTC require that 

online platforms for rental 

advertisements disclose all fees, 

including fees charged before and after 

signing rental leases.95 Private Equity 

Stakeholder Project supported enhanced 

fee disclosure requirements and upfront 

disclosure of the costs of goods and 

services to protect consumers and the 

economy at large.96 The comments also 

recommended that the FTC investigate 

unfair or deceptive practices related to 

housing fees 97 and provide guidance on 

fees.98

The comments also recommended 

that a rule prohibit certain rental-related 

fees as invalid per se because they are 

exploitative 99 and target captive renters 

who often come from vulnerable 

groups.100 The comments stated fees 

make rental housing even more 

unaffordable and jeopardize access to 

future housing and financial stability.101

7. Education Fees 

The comments further noted that 

institutions of higher learning often 

charge mandatory fees that are not 

included in advertised tuition fees.102

The Consumer Federation of America 

noted that the rate of fees is increasing 

faster than the cost of tuition and nontransparent tuition and fee pricing 

models particularly affect Black and 

Indigenous communities and other 

communities of color.103


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104FTC–2022–0069–0450 (‘‘monthly service fees 

if your balance falls below $xxx, overdraft fees’’); 

FTC–2022–0069–0488 (‘‘Then there are the account 

fees, service fees, and atm fees at banks, which are 

ridiculous considering they loan out your money 

and pay a half a percent interest to you.’’); FTC– 

2022–0069–0550 (‘‘Junk fees manifest in markets 

ranging from auto financing to international calling 

cards and payday loans.’’); FTC–2022–0069–1676 

(‘‘Banks charging overdraft fees and then when you 

link a credit card to cover the overdraft, the credit 

card charges you a fee. This can be for every single 

overdraft! Ridiculous!’’); FTC–2022–0069–1974 (‘‘I 

also am charged $12 anytime my savings account 

goes below 1500 dollars by chase bank.’’); FTC– 

2022–0069–2131 (‘‘ ‘Convenience’ fees for paying 

bills online. A literal scam. It’s more convenient for 

businesses to take electronic payments.’’); FTC– 

2022–0069–5995 (‘‘Fees to pay with a credit card 

when the fee wasn’t posted or disclosed anywhere. 

Usually at least 3 to 5% of the total transaction and 

that would include taxes. It’s insane. Prices not 

posted. Fees added. Consumers are being robbed at 

will.’’); FTC–2022–0069–2262 (‘‘Convenience fees 

in general are outrageous. It’s 2023, credit cards and 

online payments aren’t novel, they’re the norm. 

Cable/internet companies do it (xfinity/Comcast 

and Cox). Cell phone companies do it, Verizon. It’s 

outrageous.’’); FTC–2022–0069–2312 (‘‘Fees should 

also be collected in one place and easy to read. 

Some places like banks list fees but they’re usually 

not collected in one place. You have to go looking 

for them. This feels a little hidden and anticonsumer.’’); FTC–2022–0069–2729 (‘‘When I 

opened a bank account at a small local bank they 

charged a monthly fee for even opening a savings 

account. They claimed this fee for ‘maintenance’ of 

the account.’’); FTC–2022–0069–3052 (‘‘My 

employer opened an HSA account for me at First 

Financial Bank. I started receiving statements in the 

mail that they took a monthly $3 paper statement 

fee out of my account, which I had not consented 

to. When I went online to change it to email 

statements, the first thing they made me do is 

accept an agreement saying that I acknowledge the 

validity of paper statement fees.’’); FTC–2022– 

0069–3675 (‘‘You know how sometimes you get 

those visa style gift cards that work as debit cards 

with the pre-loaded amounts? Some of those 

companies will charge you a monthly fee on those 

types of cards that isn’t mentioned literally 

anywhere and that you won’t know about until you 

go to check the balance and find out that they’ve 

literally been robbing you of your own money.’’); 

FTC–2022–0069–3681 (‘‘Some examples of 

companies that include hidden fees at significant 

cost to the consumer include: . . . USBank/Wells 

Fargo/BoA/WaFD Bank—Monthly maintenance 

fees/overdraft fees (These also disproportionately 

impact the poor).’’); FTC–2022–0069–3932 

(‘‘Consumers across so many industries are 

increasingly subject to fees that are not conveyed 

at the time of the purchase . . . surprise service fees 

in hospitality, surprise interest fees in financial 

services, surprise charges in healthcare that even 

insurance providers cannot explain and are 

unwilling to pay themselves. Consumers should 

simply not be required to pay fees that were not 

agreed to and understood in advance.’’); FTC–2022– 

0069–5652 (‘‘Banks disclose their fees for ‘overdraft 

protection’ or ‘insufficient funds fees’ buried in a 

massive packet of information and on their 

websites. Meanwhile advertisements excitedly talk 

about interest rates or joining bonuses. Most 

banking customers find out about these fees when 

they are the most vulnerable: low on funds. They 

then have to pay nearly $30 for being poor.’’); FTC– 

2022–0069–5896 (‘‘Fees should be disclosed. 

Misleading ads that lure consumers in. Hidden 

disclosures that change to benefit financial is [sic] 

institutes and further burden consumers should be 

disclosed in larger print, and announced more than 

advertisements.’’); 105FTC–2022–0069–6099 (CR also noted that, in 

March 2022, it asked its member to share 

experiences regarding junk financial fees, and 

collected over 1,800 comments identifying hidden 

financial fees, including overdraft and insufficient 

fund fees, account maintenance fees, late fees, 

dormancy and inactivity fees, check cashing fees, 

fees for minimum purchase transactions, fees for 

paper statements, and fees to pay bills). 

106FTC–2022–0069–6095 (CFA noted that fees 

represent a disproportionately high cost to lowincome consumers and may destabilize household 

budgets and ‘‘ultimately push consumers out of 

mainstream financial products and into fringe 

financial services and predatory financial 

products.’’); FTC–2022–0069–6113 (UnidosUS 

referenced a comment it submitted to the Consumer 

Financial Products Bureau, highlighting ways that 

junk fees in the financial system disproportionately 

impact Latinos and lower-income people.) 

107FTC–2022–0069–6044 (The American Fintech 

Council (‘‘AFC’’) acknowledged and supported the 

FTC’s jurisdiction over the issues raised in the 

ANPR and supported regulation that will create a 

fairer and more transparent financial services 

ecosystem to provide for sustainable access to credit 

and to foster responsible practices and fair lending 

in consumer financial markets); FTC–2022–0069– 

2623 (The American Land Title Association 

(‘‘ALTA’’) supported the FTC rulemaking to address 

bad actors who mislead consumers about fees). 

Some commenters framed their comments within 

the context of previous comments they submitted 

in connection with Motor Vehicle Trade Regulation 

Rule—Rulemaking, No. P204800. See FTC–2022– 

0069–6045 (The Credit Union National Association 

(‘‘CUNA’’) submitted a comment that referred to 

and incorporated its comment to Motor Vehicle 

Trade Regulation Rule—Rulemaking, No. P204800, 

in which it stated it supports ‘‘the FTC’s effort to 

develop a rule that addresses bad actors in the auto 

dealer market’’); FTC–2022–0069–6114 (The 

Consumer Credit Industry Association (‘‘CCIA’’) 

similarly referred the FTC to its comments 

submitted in response to the Motor Vehicle Dealers 

Trade Regulation Proposed Rule). 

108FTC–2022–0069–6090 (The American 

Financial Services Association (‘‘AFSA’’) opposed 

rulemaking and argued that the unfair or deceptive 

practices on which the FTC sought comment in the 

ANPR are not widespread in the consumer financial 

services market.). 

109FTC–2022–0069–2623 (ALTA recommended 

that the FTC clearly define what ‘‘junk’’ fees are 

because the definition in the ANPRM is too broad); 

FTC–2022–0069–6114 (CCIA suggested that there is 

no objective standard for identifying junk fees for 

goods or services that have little or no added value 

to consumers); FTC–2022–0069–6045 (CUNA 

strongly urged the Commission to further clarify the 

definition of the term ‘‘junk fee.’’). 

110FTC–2022–0069–2623 (ALTA noted that title 

insurance and settlement services fees commonly 

charged in real estate transactions are for legitimate 

services); FTC–2022–0069–6090 (AFSA argued that 

junk fees are misnamed because they provide value 

to consumers who are in the best position to 

determine whether fees add value to them through 

their purchasing decisions, and that such fees 

compensate financial services providers, including 

when they are placed in a worse position as a result 

of subsequent consumer action); FTC–2022–0069– 

6114 (CCIA commented that ancillary products 

offered in conjunction with auto financing loans 

provide value to consumers by protecting auto 

financing loans and consumer credit); FTC–2022– 

0069–6040 (Online Lenders Alliance (‘‘OLA’’) 

argued that three types of fees, mandatory fees, 

misconduct fees, and enhancement fees, have been 

mislabeled as junk fees by the Consumer Financial 

Protection Bureau); FTC–2022–0069–6045 (CUNA 

argued that describing fees as ‘‘junk fees’’ does a 

disservice to responsible actors like credit unions 

and their partners that charge well-disclosed fees to 

recoup costs and encourage positive behavior.). 

111FTC–2022–0069–2623 (ALTA noted that title 

insurance and settlement services fees are highly 

regulated to provide protection for consumers and 

ensure that fees are adequately disclosed); FTC– 

2022–0069–6045 (CUNA); FTC–2022–0069–6114 

(CCIA commented that Federal and State 

regulations adequately protect consumers by 

ensuring that their purchase of ancillary products 

is voluntary and express); FTC–2022–0069–6040 

(OLA noted that the financial services sector is 

already heavily regulated and numerous types of fee 

disclosures are already required.). 

112FTC–2022–0069–6090 (AFSA). 

113FTC–2022–0069–6044 (AFC). 

114FTC–2022–0069–6045 (CUNA stated fees in 

the heavily regulated consumer financial services 

market cannot be equated with opaque fees for liveevent tickets or hotel resorts); FTC–2022–0069– 

6040 (OLA criticized oft-cited studies on fees, 

particularly, ‘‘The Impact of Price Frames on 

Consumer Decision Making Experimental 

Evidence’’ and ‘‘The Competition Initiative And 

Continued 

8. Financial Services Fees 

Individual commenters argued that 

fees charged in connection with bank 

accounts, credit cards, and other 

financial products are excessive and not 

adequately disclosed.104 Consumer 

Reports noted that ‘‘[a]ccording to the 

2018 Consumer Reports national survey, 

37% of consumers said they had 

received a hidden fee for personal 

banking in the previous two years, 

while 36% had received a hidden fee for 

credit cards and 24% for investment 

services.’’ 105 Consumer groups noted 

that financial services fees are 

particularly burdensome to vulnerable, 

low-income, Black, and Latino 

consumers.106

Some comments from the consumer 

financial services industry supported a 

rulemaking to create a more transparent 

financial services sector and to address 

bad actors who mislead consumers 

about fees.107 Other comments opposed 

a rulemaking.108

Industry comments recommended 

that the FTC clearly define or clarify the 

meaning of ‘‘junk fees,’’ 109 and objected 

that fees in the consumer financial 

sector are for legitimate services that 

add value to consumers 110 and are 

already adequately regulated by State 

and Federal laws.111 For example, 

AFSA argued that there is already 

sufficient regulation of fees in the 

financial services sector, including 

through the Truth in Lending Act 

(‘‘TILA’’), the Real Estate Settlement 

Procedures Act (‘‘RESPA’’), the Truth in 

Savings Act (‘‘TISA’’), and the 

Consumer Financial Protection Act of 

2010 (‘‘CFPA’’)).112 Comments also 

stated competitive pressures within the 

industry tend to reduce fees.113

The comments stated fees in the 

consumer financial services market 

cannot be equated with fees charged in 

other markets, such as live event or 

resort fees.114 They stated there may be 


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Hidden Fees,’’ arguing that they are not applicable 

to fees in the financial services industry.). 

115FTC–2022–0069–6114 (CCIA objected that fees 

are not hidden or deceptive if they are offered to 

consumers at different steps of the sales process 

because disclosing fees later in the process may be 

necessitated by the fact that consumers must first 

be approved for loans); FTC–2022–0069–6045 

(CUNA noted that late fees are disclosed on fee 

schedules and only levied if payments are not 

rendered by their due dates.); FTC–2022–0069– 

6090 (AFSA argued that the FTC should not seek 

comments about how widespread certain unfair or 

deceptive practice are but should instead identify 

such widespread problems on its own.). 

116FTC–2022–0069–6090 (AFSA claimed that 

limiting fees in the financial services sector would 

cool competition, raise prices, and harm consumers 

who do not use services but may be required to pay 

fees that are built into overall costs.); FTC–2022– 

0069–6045 (CUNA urged the FTC to avoid adopting 

regulatory changes that will negatively impact the 

ability of credit unions or their system partners 

from serving members.). 

117FTC–2022–0069–6044 (AFC noted that the 

CFPB has jurisdiction over several topics addressed 

in the ANPR, as reflected in the CFPB’s ‘‘Request 

for Information Regarding Fees Imposed by 

Providers of Consumer Financial Products or 

Services,’’ and recommended that the FTC 

coordinate with the CFPB and other relevant 

agencies to ensure that any rule fit within the FTC’s 

jurisdictional authority and is not duplicative or 

contradictory of CFPB rules.). 

118FTC–2022–0069–6088 (National Consumer 

Law Center submitted a comment on behalf of a 

group of civil rights, consumer rights, faith-based, 

criminal justice, and reentry organizations 

supporting rulemaking.); FTC–2022–0069–6082 

(Fines and Fees Justice Center (‘‘FFJC’’), ‘‘a national 

center for advocacy, policy, information, and 

collaboration on effective solutions to the unjust 

and harmful imposition and enforcement of fine 

and fees in the criminal legal system,’’ submitted 

a comment in support of rulemaking, and noted that 

the CFPB and FCC are considering fees imposed on 

incarcerated persons.). 

119FTC–2022–0069–6088 (NCLC noted that these 

services include money-transfer services, release 

cards, and various technology services, including 

technologies incarcerated people use to 

communicate with loved ones, such as electronic 

messaging services.); FTC–2022–0069–6082 (FFJC 

noted that these correctional services include 

money transfers, release cards, and technology 

services, such as phone calls, emails, tablets, and 

music and e-book subscriptions, and that providers 

often charge fees far in excess of the cost of the 

services to the companies providing them.). 

120FTC–2022–0069–6088 (NCLC); FTC–2022– 

0069–6082 (FFJC). 

121 Id. 

122FTC–2022–0069–6095 (CFA noted that AMG 

prevents the FTC from seeking monetary relief 

under Section 13(b) of the FTC Act, and that 

consumer contracts requiring arbitration would not 

deter misconduct or provide appropriate remedies 

for unfair and deceptive junk fee conduct.); FTC– 

2022–0069–6042 (TINA.org stated the prevalence of 

junk and hidden fees cannot be effectively 

addressed by tools currently available to the FTC, 

particularly in the wake of the AMG decision, and 

that a junk fees rule would be in the public’s best 

interest.). 

123FTC–2022–0069–6095 (CFA noted that 

advertising deceptively low prices then tacking on 

mandatory fees harms honest businesses and 

consumers, and disproportionately impacts 

vulnerable consumers, limited English-speaking 

consumers, and consumers with disabilities.). 

124FTC–2022–0069–0032 (‘‘I agree with the 

proposed rule and requiring all unavoidable fees, 

including taxes, be included in the published 

price.’’); FTC–2022–0069–0117 (‘‘I wholeheartedly 

support the FTC’s proposal to force companies to 

show ALL mandatory fees and charges in the initial 

price search or quote.’’); FTC–2022–0069–0457 

(‘‘Forcing all fees to appear in any advertised price 

would be a help. Prohibition of those fees would 

be even better’’); FTC–2022–0069–1087 (‘‘Except 

with respect to taxes and voluntary add-ons which 

exceed normal expectations, no one should be able 

to legally charge more than the price they 

advertise.’’); FTC–2022–0069–2144 (‘‘Not just for 

ticket master but for all companies. Put the real 

price up front and don’t hide behind other fees you 

earmark 2/3rds of the way down the page.’’); FTC– 

2022–0069–2178 (‘‘All fees and charges should 

always be clear and upfront in the price. Nothing 

should be hidden. It is deceptive to state 

otherwise.’’); FTC–2022–0069–3017 (‘‘[T]he rule 

should require all-in pricing, because that is the 

simplest and most honest way to disclose the actual 

cost to the consumer.’’); FTC–2022–0069–3083 

(‘‘MAKE ALL BUSINESSES SHOW THE REAL 

TRUE PRICE (TAX INCLUDED) ON THE LABEL AT 

EVERY STORE AND BUSINESS IN THE UNITED 

STATES.’’); FTC–2022–0069–3423 (‘‘I urge the FTC 

to act to bring these business practices in line with 

the customary way business has been conducted in 

our society in stores for a very long time by banning 

the practice and requiring listed and/or advertised 

prices to include all costs, beginning with the first 

time the price is presented to customers.’’); FTC– 

2022–0069–3459 (‘‘ Please move towards upfront 

pricing, for all taxes, service charges and other 

charges that are standard should be included in the 

first price you see.’’); FTC–2022–0069–3469 (‘‘The 

only way, in my opinion, to solve this problem is 

to implement a rule/law where the ONLY 

additional charges allowed for an invoice or service 

is GOVERNMENT fees and taxes. . . . There would 

be no additional costs incurred by a business/ 

service to change to this rule, just a change forcing 

them to advertise the TRUE COST for using their 

service or business.’’); FTC–2022–0069–3659 

(‘‘Please have merchants show the actual final cost 

of a product or service as opposed to providing a 

sale price and then adding additional charges.’’); 

FTC–2022–0069–3708 (‘‘Companies should be 

required to show the TOTAL price, including all 

applicable fees, on any advertisements or listings on 

their website.’’); FTC–2022–0069–3746 (‘‘The total 

cost of an e-commerce purchase should be required 

to be displayed alongside the listing for the item.’’); 

FTC–2022–0069–3859 (‘‘Corporations should be 

mandated to advertise full-prices including fees.’’); 

FTC–2022–0069–4151 (‘‘Every company in every 

scenario possible should be forced to advertise only 

the true combined total cost.’’); FTC–2022–0069– 

4176 (‘‘Please step up and make retailera [sic] at all 

levels advertise the real true cost of their goods and 

services so consumers can make reasonable choices 

without being lured or baited and switched.’’); 

FTC–2022–0069–4252 (‘‘Everyday, I am lured into 

a transaction, told I am going to pay one price, only 

to have it raised by a large percentage at checkout 

due to fees that are non-negotiable or part of 

processing. If these are standard fees, they need to 

be added to the price of the item, service etc. These 

are a bait and switch tactic that I don’t know how 

became legal.’’); FTC–2022–0069–4253 (‘‘What’s the 

point of a price if that’s not the price? Advertised 

price should be the finial [sic] price. Nothing more 

nothing less.’’); FTC–2022–0069–4255 (‘‘Fees 

should be transparent and included in advertised 

prices. This should go for everything from airbnb 

rentals, to airfare, to concert tickets, to retail, to 

grocery stores. The price you see advertised should 

be the price you pay.’’); FTC–2022–0069–5144 (‘‘All 

business should be legally required to post the allin or ‘total’ price of goods, including taxes and fees. 

Many other countries practice this, promoting 

transparency and allowing the consumer to shop 

with clear pricing.’’); FTC–2022–0069–5332 (‘‘[T]he 

advertised/shown price should be the price.’’); 

FTC–2022–0069–5517 (‘‘We need price 

transparency for the services we buy. I advocate for 

requiring all services to be forced to advertise and 

display FINAL prices, after all fees.’’); FTC–2022– 

0069–5692 (‘‘Taxes and fees should be included in 

the listed price every time. This is for every service 

and every good everywhere in the country. This 

should be for every label, advertisement, coupon, 

and other reasonable statement of price.’’). 

125FTC–2022–0069–6095 (CFA supports an 

industry-neutral rule requiring disclosure of all-in 

pricing, including all fees that are unavoidable or 

mandatory, at the beginning of transactions to allow 

legitimate reasons for disclosing fees 

other than at the beginning of sales 

transactions.115 The comments noted 

that regulating fees in the consumer 

financial services sector could have 

negative consequences such as limiting 

services and raising prices.116 The 

comments stated the FTC should 

coordinate with other agencies to 

harmonize rules.117

9. Correctional Services Fees 

Consumer and policy groups also 

commented on a number of unfair or 

deceptive practices regarding fees 

imposed on incarcerated people and 

supported rulemaking.118 These 

comments stated that incarcerated 

people are a captive audience who are 

forced to pay excessive fees by 

monopolistic or oligopolistic service 

providers in connection with private 

correctional services.119 Commenters 

stated these fees are often deceptive 

because service providers fail to comply 

with Federal disclosure requirements, 

omit fee information, and present 

pricing information in confusing ways 

that are likely to mislead consumers, for 

example, by bundling services that 

make identifying fees difficult.120

Commenters also stated these fees are 

often unfair because they cause 

substantial harm to incarcerated people 

who are the least able to afford them, 

cannot reasonably be avoided because 

the consumers are captive to private 

companies with exclusive contracts, 

provide little or no added value to 

consumers, and do not benefit 

competition.121

C. Comment Recommendations 

Many commenters argued that the 

prevalence of hidden fees cannot be 

effectively addressed by tools currently 

available to the FTC without a 

rulemaking.122 The Consumer 

Federation of America argued that a 

rulemaking is necessary to address ‘‘the 

root cause of the ‘junk fee’ problem— 

rampant deceptive advertising and 

impaired competition.’’ 123

The comments broadly supported 

FTC action to address the identified 

deceptive practices by requiring price 

transparency. Many individual 

commenters,124 consumer groups,125


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consumers to comparison shop and foster 

competition); FTC–2022–0069–6099 (CR 

recommended, as an alternative to prohibiting fees, 

requiring the clear, upfront disclosure of fees, stated 

consumers ‘‘would greatly benefit from a 

comprehensive national rule to ban hidden and 

surprise junk fees and improve the transparency 

and comparability of any truly optional add-on 

services,’’ and advocated for a ‘‘strong economywide initiative’’ to create ‘‘marketplace standards 

and ethical norms . . . in all or most economic 

sectors’’); FTC–2022–0069–6113 (UnidosUS 

endorsed the recommendation of the CFA for a rule 

that requires ‘‘all-in’’ pricing for goods and services 

at the beginning of purchase transactions, and that 

the rule identify prohibited unfair and deceptive 

conduct relating to junk and hidden fees). 

126See Section II.B. 

127FTC–2022–0069–6095 (CFA recommended 

that fees that provide little or no value to consumers 

or which consumers reasonably believe would be 

included in advertised prices should be prohibited); 

FTC–2022–0069–6099 (CR commented that junk 

fees that add little or no value or would reasonably 

be included in the base price of goods or services 

should be reduced or banned). 

128FTC–2022–0069–6099 (CR recommended, as 

an alternative to prohibiting fees, that fees ‘‘bear a 

reasonable and proportionate relationship to the 

underlying costs of providing the particular service 

for which they are charged.’’). 

129FTC–2022–0069–6095 (CFA recommended 

that the FTC develop model fee disclosures); FTC– 

2022–0069–6113 (UnidosUS recommended that a 

rule require disclosures that take into account 

consumers’ language proficiency, include model 

fees disclosures, and incorporate a reasonable 

consumer standard). 

130FTC–2022–0069–6047 (The Chamber stated 

the proposed rulemaking implicates the Major 

Questions Doctrine, Congress has not clearly 

authorized comprehensive unfair and deceptive 

fees rulemaking, and the proposed rulemaking does 

not meet the requirements of the FTC Act and 

would constitute unauthorized competition 

rulemaking to the extent it relates to concerns about 

monopoly and anticompetitive behavior. The 

Chamber also stated the FTC has not shown 

practices related to fees are unfair because requiring 

extensive fee disclosures upfront would harm 

businesses without countervailing benefits to 

consumers.). 

131FTC–2022–0069–6047 (The Chamber stated 

the FTC has not explained how existing rules are 

‘‘insufficient from a deterrence or consumerprotection standpoint.’’); FTC–2022–0069–6093 

(ANA stated the ANPR fails to discuss how the 

proposed rulemaking will apply when it overlaps 

with existing regulations related to advertising and 

disclosures.). The Commission addresses and seeks 

comment on other rules with disclosure 

requirements related to pricing information in 

Sections IX.C and X. 

132FTC–2022–0069–6047 (The Chamber stated an 

economy-wide rule would likely overlap with 

existing sectoral rules); FTC–2022–0069–6093 

(ANA urged the FTC to identify specific industries 

engaging in unfair or deceptive practices and 

narrowly tailor rulemaking to those industries.). 

133FTC–2022–0069–6093 (ANA). 

134FTC–2022–0069–6077 (Policy Integrity argued 

that the FTC has clear congressional authorization 

in the FTC Act to tackle deceptive practices related 

to fees under Section 5(a) and unfair practices 

under Section 5(n), and that regulating junk fees, 

hidden fees, and related practices would not 

implicate the Major Questions Doctrine because 

FTC regulatory and enforcement antecedents 

demonstrate that FTC action in this area would not 

be ‘‘unheralded’’ and would not represent a 

‘‘transformative’’ change in the FTC’s authority, 

under West Virginia v. EPA.). 

135FTC–2022–0069–6077 (Policy Integrity argued 

that FTC rulemaking related to all-in pricing would 

not be ‘‘unheralded’’ under West Virginia v. EPA 

given prior rulemaking related to pricing 

disclosures.). 

136FTC–2022–0069–6077 (Policy Integrity). 137The Commission can support a finding that 

practices are prevalent by showing that it has issued 

cease and desist orders or by providing information 

that indicates a widespread pattern of unfair or 

deceptive acts or practices. 15 U.S.C. 57a(b)(3). 138FTC–2022–0069–6095 (describing a survey in 

which 85% of respondents encountered fees that 

were not initially disclosed and listing a range of 

industries in which the fees occurred); supra 

Section II.B. 139See Fed. Trade Comm’n, FTC Policy Statement 

on Deception, 103 F.T.C. 174, 175 (1984) (appended 

to In re Cliffdale Assocs., Inc., 103 F.T.C. 110, 183 

(1984)), (hereinafter ‘‘Deception Policy Statement’’), 

https://www.ftc.gov/system/files/documents/ 

public_statements/410531/831014deceptionstmt.

pdf. 

140 In re Sears, Roebuck & Co., 95 F.T.C. 406, 517 

n. 9 (1980) (citing Regina Corp. v. FTC, 322 F.2d 

765, 768 (3d Cir. 1963)). 

141 Id. at 175 & 175 n. 4, 176–77. 

industry members 126 recommended an 

industry-neutral rule requiring the 

disclosure of all-in pricing that includes 

all mandatory fees. 

Many individual commenters and 

consumer groups, concerned with the 

cumulative impact of fees, also 

recommended that the FTC prohibit or 

limit fees, such as fees that are of little 

to no value to consumers,127 or require 

that fees bear a reasonable relationship 

to the cost of the services provided.128

Some consumer groups recommended 

that the rule incorporate a reasonable 

consumer standard and that the FTC 

develop model fee disclosures.129

The U.S. Chamber of Commerce and 

the Association of National Advertisers 

argued that Congress has not authorized 

comprehensive unfair or deceptive fees 

rulemaking, and that the ANPR is too 

broad to comply with rulemaking 

procedures.130 They acknowledged that 

existing FTC rules include disclosure 

requirements related to pricing, citing 

the Telemarketing Sales Rule, the 

Restore Online Shoppers’ Confidence 

Act, and the Funeral Rule, but objected 

that the FTC has not shown that existing 

rules are insufficient to protect 

consumers or explained how a proposed 

rule would work with other rules.131

They also objected to an economy-wide 

rule because it would overlap with 

industry-specific rules and 

recommended that the FTC narrowly 

tailor rulemaking to specific industries 

engaging in unfair or deceptive 

practices.132 ANA recommended 

alternatives to rulemaking, such as 

industry-specific workshops, consumer 

and business education, and individual 

enforcement actions.133

Other commenters disagreed. For 

example, Policy Integrity argued that the 

FTC has clear congressional authority to 

tackle deceptive or unfair practices 

through rulemaking, and that doing so 

would not supersede that authority.134

Policy Integrity pointed out that FTC 

rulemaking relating to all-in pricing 

would be in keeping with other FTC 

rules that relate to unfair or deceptive 

fee disclosure practices, such as the 

Unavailability Rule or Raincheck Rule, 

the Funeral Rule, the Negative Option 

Rule, the Mail, internet, or Telephone 

Order Merchandise Rule, and the 

Cooling-Off Rule.135 Policy Integrity 

pointed out that these FTC rules 

‘‘imposed disclosure requirements 

targeting unfair and deceptive feedisclosure practices that apply to a vast 

number of entities across numerous 

industries, similar to its present effort to 

regulate junk fees and hidden fees.’’ 136

III. Prevalence of Unfair and Deceptive 

Fee Practices 

This proposed rule addresses 

prevalent fee practices that are unlawful 

under Section 5 of the FTC Act, 15 

U.S.C. 45, because they are unfair or 

deceptive to consumers. The 

Commission has identified two 

practices that, for the reasons described 

herein, are unfair or deceptive practices 

under Section 5 of the FTC Act: (1) 

practices that misrepresent the total 

costs by omitting mandatory fees from 

advertised prices, and (2) practices that 

misrepresent the nature and purpose of 

fees or charges. The comments received 

in response to the ANPR and the 

Commission’s history of enforcement 

actions and other complementary work, 

discussed in Section III.C, demonstrate 

the prevalence of these practices.137

As shown in the comments received, 

advertising misrepresentations and 

unlawful practices related to pricing 

and added fees are chronic problems 

confronting consumers. These problems 

are prolific and occur across industries 

affecting a large majority of the 

population.138 The FTC uses its 

authority under Section 5 to stop 

deceptive or unfair acts or practices. 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 with regard to a product or 

service.139 False and misleading 

statements are unlawful regardless of an 

intent to deceive.140 Some deception 

cases involve omission of material 

information, the disclosure of which is 

necessary to prevent the claim, practice, 

or sale from being misleading.141 A 

practice is considered unfair under 

Section 5 if: (1) it causes, or is likely to 


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142 15 U.S.C. 45(n). 

143See discussion, supra Section II.A.1. 

144This practice would include advertisements 

where additional charges are not disclosed clearly 

and conspicuously—for example, they appear only 

in fine print—and advertisements that partition the 

total cost into various components without 

displaying the total price most prominently. 

145See discussion, supra Section II.A.1. & nn. 9– 

10. 

146Fed. Trade Comm’n, Enforcement Policy 

Statement on Deceptively Formatted 

Advertisements at 7 (2015), https://www.ftc.gov/ 

system/files/documents/public_statements/896923/

151222deceptiveenforcement.pdf (hereinafter 

‘‘Policy Statement on Deceptive Ad Formats’’) 

(describing the FTC’s enforcement actions against 

misleading door openers since at least 1976). See 

also, Intuit, Inc., Docket No. 9408 (FTC Initial 

Decision Sept. 6, 2023) (finding that Respondent’s 

advertisements employed a deceptive door opener 

claiming that consumers can file their taxes for free 

with TurboTax and that Respondent’s later 

disclosures did not clearly and conspicuously 

disclose material facts explaining the limitations on 

the free offer). 

147Policy Statement on Deceptive Ad Formats at 

7 & n. 25 (collecting cases before 2015); FTC v. 

FleetCor Techs., Inc., 620 F. Supp. 3d 1268, 1298– 

99 (N.D. Ga. 2022); FTC v. Elegant Sols., Inc., No. 

SACV 19–1333 JVS (KESx), 2020 WL 4390381, at 

*9–10 (C.D. Cal. July 6, 2020), aff’d, No. 20–55766, 

2022 WL 2072735 (9th Cir. June 9, 2022); FTC v. 

Am. Fin. Benefits Ctr., No. C 18–00806 SBA, 2018 

WL 11354861, at *9 (N.D. Cal. Nov. 29, 2018); FTC 

v. All. Document Preparation, 296 F. Supp. 3d 

1197, 1209 (C.D. Cal. 2017); FTC v. OMICS Grp. 

Inc., 302 F. Supp. 3d 1184, 1190 (D. Nev. 2017). 

148 Deception Policy Statement, 103 F.T.C. at 175 

n.4, 177; In re Int’l Harvester Co., 104 F.T.C. 949, 

1058 & n.35 (1984); Tomasella v. Nestle USA, Inc., 

962 F.3d 60, 72 & n.11 (1st Cir. 2020). 

149 Deception Policy Statement, 103 F.T.C. at 175 

n.4, 177; In re Int’l Harvester Co., 104 F.T.C. at 1058 

& n.35; Tomasella, 962 F.3d at 72, 72 n.11. 

150 Deception Policy Statement, 103 F.T.C. at 182. 

151 Id. at 182 & 182 n.55 (listing claims or 

omissions involving cost among those that are 

presumptively material); see also FleetCor Techs., 

620 F. Supp. 3d at 1303–04 (finding that 

representations about transaction fees and 

discounts were material). 

152 Deception Policy Statement, 103 F.T.C. at 175 

(listing ‘‘misleading price claims’’ among those 

claims that the FTC has found to be deceptive); see, 

e.g., Resort Car Rental Sys., Inc. v. Fed. Trade 

Comm’n, 518 F.2d 962, 964 (9th Cir. 1975) 

(upholding the Commission’s order finding that 

using the name ‘‘Dollar-A-Day’’ misrepresented the 

price of car rentals in violation of Section 5 of the 

FTC Act). 

153See, e.g., Mary Sullivan, Fed. Trade Comm’n, 

Economic Analysis of Hotel Resort Fees 4 (2017) 

https://www.ftc.gov/system/files/documents/ 

reports/economic-analysis-hotel-resort-fees/ 

p115503_hotel_resort_fees_economic_issues_

paper.pdf; Alexander Rasch et al., Drip Pricing and 

its Regulation: Experimental Evidence, 176 J. Econ. 

Behav. & Org., 353, 362–63 (2020) (‘‘[E]xperimental 

evidence suggests that consumers indeed strongly 

and systematically underestimate the total price 

under drip pricing and make mistakes when 

searching.’’); Shelle Santana et al., Consumer 

Reactions to Drip Pricing, 39 Mktg. Sci. 1, 188 

(2020), https://doi.org/10.1287/mksc.2019.1207 

(‘‘Across six studies, we find that when optional 

surcharges are dripped (versus revealed up front) 

consumers are more likely to initially select a lower 

base priced option which, after surcharges are 

included, is often more expensive than the 

alternative.’’); Howard A. Shelanski et al., 

Economics at the FTC: Drug and PBM Mergers and 

Drip Pricing, 41 Rev. Indus. Org., 314–16 (2012). 

https://doi.org/10.1007/s11151-012-9360-x; Tom 

Blake et al., Price Salience and Product Choice, 40 

Marketing Science 4, 619–36 (2021), https://doi.org/ 

10.1287/mksc2020.1261; Steffen Huck et al., The 

Impact of Price Frames on Consumer Decision 

Making: Experimental Evidence, at 4 (2015), https:// 

www.ucl.ac.uk/∼uctpbwa/papers/price-framing.pdf; 

Ellison & Ellison, Search and Obfuscation in a 

Technologically Changing Retail Environment: 

Some Thoughts on Implications and Policy, 6 NBER 

Innovation Pol’y & Econ. 18, 2–6 (2018); Busse, M., 

& Silva-Risso, J., ‘‘One Discriminatory Rent’’ or 

‘‘Double Jeopardy’’: Multi-component Negotiation 

for New Car Purchases, 100 Am. Econ. Rev. 2, 470– 

74 (2010). 

154E.g., Sullivan, supra n. 153, at 22, 24–25 

(describing empirical studies on partitioned 

pricing); Vicki G. Morowitz et al., Divide and 

Prosper: Consumers’ Reactions to Partitioned 

Prices, 35 J. Mktg. Rsch., 455 (1998) (on average, 

subjects shown partitioned pricing underestimated 

the total price relative to subjects who received the 

total price up front); Bertini, M., & Wathieu, L., 

Attention Arousal through Price Partitioning, 27 

Mktg. Sci. 2, 236, 239–41 (2008) (showing that 

when prices are partitioned, subjects give outsized 

attention to attributes associated with mandatory 

surcharges rather than the primary product). 

155See, e.g., FTC–2022–0069–6095 (describing 

harm to competition and honest businesses through 

price obfuscation). 

156FTC–2022–0069–6095 at 7–11. 

cause, substantial injury; (2) the injury 

is not reasonably avoidable by 

consumers; and, (3) the injury is not 

outweighed by benefits to consumers or 

competition.142

A. Bait-and-Switch Tactics: 

Misrepresenting Total Costs by Omitting 

Mandatory Fees From Advertised Prices 

The comment record supports a 

finding that bait-and-switch pricing 

practices are prevalent. Specifically, 

commenters identified pricing 

structures that do not disclose the total 

price for goods or services, but instead 

advertise a lower cost to consumers that 

is ultimately inflated by mandatory 

charges.143 These pricing structures take 

a variety of forms, including pure 

misrepresentations through initial 

advertisements displaying a lower price, 

advertisements that inadequately 

disclose mandatory add-on charges,144

tactics that disclose mandatory add-on 

charges late in the purchasing process, 

and sales that omit material terms such 

as requiring an additional purchase to 

make full use of the good or service.145

All of these practices render the quoted 

price misleading because they lead 

consumers to believe that the cost for 

the good or service is lower than it 

actually is—put another way, the 

advertised good or service is not 

actually attainable for the quoted price. 

Pricing structures that do not initially 

disclose the total cost of a good or 

service are deceptive even if the total 

cost is disclosed at some point during 

the transaction. It has long been the 

FTC’s position that misleading door 

openers are deceptive.146 Further, 

numerous courts have recognized that it 

is a violation of the FTC Act if a 

consumer’s first contact is induced 

through deception, even if the truth is 

clarified prior to purchase.147 Thus, 

when the initial contact with a 

consumer shows a lower or partial price 

without disclosing the total cost, it 

violates the FTC Act even if the total 

cost is later disclosed. 

It is also well established that it is 

deceptive to sell a product that is not fit 

for the purpose for which it is sold.148

By offering a good or service, a seller 

impliedly represents that it is fit for the 

purpose for which it is sold.149 As a 

result, it is deceptive when a good or 

service cannot be used for its intended 

purpose without an additional 

purchase. 

The pricing structures described in 

this section are material where they are 

likely to affect consumers’ choices or 

conduct regarding the goods or services 

at issue. Material facts are those that are 

important to consumers’ choices or 

conduct regarding a product, and 

certain categories of information are 

presumptively material.150 The 

Commission has previously recognized 

that price is a material term,151 and that 

it is a deceptive practice to misrepresent 

the price of a product.152

Pricing structures that do not clearly 

and conspicuously disclose the total 

price are also unfair under Section 5 

because they are likely to cause 

substantial injury, they are not 

reasonably avoidable by consumers, and 

the injury is not outweighed by benefits 

to consumers or competition. Unfair or 

deceptive fee practices can cause 

significant consumer harm and reduce 

competition.153 When sellers advertise 

prices that are artificially low because 

they do not include mandatory fees that 

are disclosed only later in the 

purchasing transaction, consumers end 

up transacting with those sellers under 

false pretenses. Injury to consumers can 

occur even when all fees are disclosed 

up front, but separately from the base 

price.154 Businesses that accurately 

represent the total amount consumers 

will pay up front are at a competitive 

disadvantage to those that do not.155

Often, these harms disproportionately 

impact consumers who are already 

targets of discrimination. The Consumer 

Federation of America, along with ten 

other organizations, submitted a 

comment that compiled examples of 

how unfair or deceptive fees uniquely 

harm low-income, Black, Latino, limited 

English-speaking, and disabled 

consumers.156 For example, unfair or 

deceptive fees represent a 


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157 Id. at 7, 9. 158Although the Commission generally does not 

have jurisdiction over banks and Federal credit 

unions for purposes of Section 5(a), 15 U.S.C. 45(a), 

other financial services entities are covered under 

its authority. See generally, e.g., FTC v. FleetCor 

Techs., Inc., 620 F. Supp. 3d 1268 (N.D. Ga. 2022); 

Stipulated Order, FTC v. Beam Financial Inc., No. 

3:20–cv–08119–AGT (N.D. Ca. Mar. 30, 2021); 

Compl., FTC v. LendingClub Corp., No. 3:18–cv– 

02454 (N.D. Cal. filed Apr. 25, 2018); Stipulated 

Order, FTC v. Avant, LLC, No. 19–cv–2517 (N.D. Ill. 

May 19, 2019); Stipulated Order, FTC v. Western 

Union Co., No. 1:17–cv–0110 (M.D. Pa. Jan. 20, 

2017). 

159FTC–2022–0069–6095 at 7–8. 160 Id. at 9. 161 Id. at 10–11 (describing wait time fees for 

disabled passengers who needed more time to get 

to rideshare vehicles, and paper statement fee for 

a consumer with cognitive disabilities). 

162Rasch, supra n. 153, at 6–8, 20–22, 30–31; 

Santana, supra n. 153, at 197; Blake, supra n. 153, 

at 16; Huck & Wallace, supra n. 153, at 2; Busse & 

Risso, supra n. 153, at 474. 

163Blake, supra n. 153, at 16. 

164Huck & Wallace, supra n. 153, at 2. 

165 Id. Specifically, the experiment examined 

‘‘consumer surplus,’’ which is the difference 

between the highest price a consumer is willing to 

pay and the price they ultimately pay. 

166Beth Braverman, Avoid Sneaky Hotel Fees on 

Your Next Vacation, Consumer Reports (May 29, 

2019), https://www.consumerreports.org/feesbilling/how-to-avoid-sneaky-hotel-fees/. 

167LYC 10K at 37, 60 (showing $2,238,618,000 in 

Ticketing Operations revenue and explaining that 

such revenue ‘‘primarily consists of service fees 

. . . .’’). The scale of such fees is not new. In 2015, 

resort fees reportedly accounted for $2.04 billion in 

revenue while ticket service fees accounted for 

more than $1.6 billion. Nat’l Econ. Council, The 

Competition Initiative and Hidden Fees (Dec. 2016), 

https://obamawhitehouse.archives.gov/sites/ 

whitehouse.gov/files/documents/hiddenfeesreport_

12282016.pdf. 

168FTC–2022–0069–3260 (‘‘It’s just extremely 

frustrating and I always end up spending more than 

I would like because of these practices’’); FTC– 

2022–0069–6168 (‘‘By the time I’ve done my 

research and chosen a product or service and I’m 

checking out, if a fee comes up, it’s often too late 

to make a different choice.’’); FTC–2022–0069– 

3631(‘‘Fans have no choice but to pay these fees if 

they want to see their favorite performers and 

acts.’’); FTC–2022–0069–4056 (‘‘Hidden additional 

fees cost me over four HUNDRED dollars for just 

a three-night stay, about 38% of the total cost.’’) 

169Sullivan, supra n. 153, at 4; Fed. Trade 

Comm’n, ‘‘That’s the Ticket’’ Workshop: Staff 

Perspective, 4 (May 2020), https://www.ftc.gov/ 

reports/thats-ticket-workshop-staff-perspective; see 

also Hong, H. & Shum, M. Using Price Distributions 

to Estimate Search Costs, RAND J. Econ. 37:2 (2006) 

(describing methods of estimating search costs); 

Huck & Wallace, supra n. 153, at 13 (applying 

search costs in economic models); and discussion, 

infra, Section VII. 

170E.g., FTC–2022–0069–2005 (‘‘The number of 

times I have wanted to go to a concert or book an 

Airbnb only to get to the last page before entering 

in my payment details, only to find out that the 

expected price is suddenly up to 50% higher due 

to various fees tacked on at the last second is 

absolutely ridiculous.’’); FTC–2022–0069–6099 at 

424 (including a complaint from a consumer who 

went through various ‘‘fill-in forms, adding my 

name, address, credit card number,’’ and chose a 

printed ticket for delivery, but was charged an $8.95 

‘‘delivery fee’’ and a $231.88 ‘‘Service Fee’’ on the 

last page of the transaction); FTC–2022–0069–1331 

(‘‘Turbo tax has a lot of hidden fees that make you 

spend hours of time to fill out information and then 

if you don’t pay you lose hours of input data.’’); 

FTC–2022–0069–6095 at 20 (‘‘Consumers are 

required to fill out forms, provide personal 

information, click through unrelated and difficult to 

understand links, and sometimes spend several 

hours at a dealership or loan store to obtain 

sufficient information to enable comparison 

shopping.’’). 

171See, e.g., FTC v. Amazon.com, Inc., No. C14– 

1038–JCC, 2016 U.S. Dist. LEXIS 55569, at *17 

(W.D. Wash. Apr. 26, 2016) (finding consumer 

injury included ‘‘time spent pursuing those 

refunds’’); In re LCA-Vision, No. C–4789 (Decision 

& Order entered Mar. 13, 2023) (settling allegations 

that deceptive practices caused consumers to 

‘‘waste[ ] 90 minutes to two hours of their time,’’ 

Compl. at 17), https://www.ftc.gov/system/files/ 

ftc_gov/pdf/1923157-lca-vision-consentpackage.pdf. 

172E.g., FTC–2022–0069–0032 (‘‘In some markets, 

this makes it nearly impossible to find the actual 

hotels within my price range since I have to go 

through the process of attempting to book each 

hotel to find the actual, final cost. What should be 

a 5 minutes search can turn into hours or days.’’); 

FTC–2022–0069–6095 (describing, on behalf of 

constituent consumers, the difficulty of searching 

for prices and incorporating fees into price 

comparisons); FTC–2022–0069–6082 at 12 

(describing the difficulty of comparing price for 

electronic messaging services in prisons); FTC– 

2022–0069–4424 (‘‘The consumer is left vulnerable 

and with two options. Proceed with the transaction 

and pay a higher cost than originally anticipated. 

Or decline the transaction and have wasted time 

and effort.’’); FTC–2022–0069–4773 (‘‘It is 

impossible to compare prices online for so many 

things now.’’). 

173Sullivan, supra n. 153, at 21–25; 

174 Id. at 22–24; Morwitz, supra n. 154 at 455. 

175Bertini & Wathieu, supra n. 154 at 239–41. 

disproportionately high cost for lowincome consumers and can have 

cascading effects that destabilize their 

budgets and push them to rely on 

predatory financial products.157 Black 

and Latino consumers often pay a 

disproportionate amount of junk fees in 

banking,158 have been targeted with 

junk fees in auto-lending, and because 

of inequities in generational wealth are 

more likely to be harmed more severely 

by foreclosure.159 Fees that are not 

clearly and conspicuously disclosed, 

such as those that are obscured in fine 

print, while affecting all consumers, can 

be especially difficult to spot for 

consumers whose English proficiency is 

limited.160 Finally, the comment 

provided examples of disabled 

consumers being charged extra fees to 

accommodate the consumers’ 

disabilities while providing the agreed 

upon services.161

Injury to consumers comes in the 

form of higher prices and search costs. 

Several studies have shown that 

consumers spend more money on the 

same goods when they are not shown 

the total price up front.162 For example, 

a study by the live-event ticket seller 

StubHub found that consumers spent 

more money—they purchased more 

tickets and upgraded to more expensive 

seats—when the total price was not 

displayed at the beginning of the 

transaction.163 One laboratory 

experiment examined, among other 

things, how consumers reacted when 

the total price was divided into three 

parts, with each part being revealed at 

different points in the transaction.164

This experiment found that a 

measurement of consumer savings was 

reduced by 22%.165 Further, the 

monetary cost to consumers is 

significant. For example, in 2018 resort 

fees generated an estimated $2.9 billion 

in revenue for the hotel industry,166 and 

in the most recent fiscal year, ‘‘service’’ 

fees for Live Nation Entertainment, the 

largest business in the live-event ticket 

market, accounted for over $2.2 billion 

in revenue.167 Many consumer 

comments in response to the ANPR 

stated they paid more as a result of 

businesses failing to disclose the total 

price up front.168

In addition, consumers who wish to 

compare prices incur additional search 

costs to make direct comparisons of 

products when the full price is not 

disclosed up front.169 For example, in 

an online transaction, consumers cannot 

simply view the first price displayed on 

each website, but instead need to 

navigate to subsequent pages or even 

enter all their payment information and 

reach the checkout page for each 

website to determine the total price.170

Such search costs that result from unfair 

or deceptive practices are legally 

cognizable injuries under the FTC 

Act.171 Consumer comments also 

describe harms in the form of search 

costs.172

Where mandatory fees are disclosed at 

the same time as but separately from the 

base price, consumers are nevertheless 

harmed. The practice of dividing the 

price into multiple components without 

disclosing the total, generally referred to 

as partitioned pricing, distorts consumer 

choice.173 Consumers confronted with 

partitioned pricing, on average, 

underestimate the total cost of the good 

or service, likely because they use 

mental shortcuts to estimate the price 

that do not fully account for each 

component.174 Partitioned pricing also 

leads consumers to pay disproportionate 

attention to secondary features of a 

product associated with ancillary fees, 

which impedes consumers’ ability to 

accurately compare products.175

Consumers cannot reasonably avoid 

these injuries. First, as explained in this 

section, the search costs necessary to 

avoid the harm of paying higher prices 

are themselves a harm to consumers. As 

the Institute for Policy Integrity 

explained in its petition for a 

rulemaking on these practices, also 


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176 Inst. for Policy Integrity, Pet. for Rulemaking 

Concerning Drip Pricing at 17 (2021), https://

www.regulations.gov/docket/FTC-2021-0074/ 

document. 177 Id. at 18. 178Huck & Wallace, supra n. 153, at 32. 179 David A. Friedman, Regulating Drip Pricing, 

31 Stan. L. & Pol’y Rev. 51, 55 n.13 (2020). 180FTC–2022–0069–6088 at 13; FTC–2022–0069– 

6095 at 3, 6; FTC–2022–0069–6082 at 12. 181Fed. Trade Comm’n, ‘‘That’s the Ticket’’ 

Workshop: Staff Perspective, supra n. 163, at 4 & 

n.15. 182 Inst. for Policy Integrity, Pet. for Rulemaking 

Concerning Drip Pricing at 20 (2021), https://

policyintegrity.org/documents/

Petition_for_Rulemaking_Concerning_Drip_Pricing

.pdf. 

183Friedman, supra n. 179, at 65–66; U.K. Off. 

Fair Trading, Advertising of Prices at 25 (2010), 

https://webarchive.nationalarchives.gov.uk/

20140402173016/http://oft.gov.uk/shared_oft/ 

market-studies/AoP/OFT1291.pdf. 

184More than 250 comments identified 

misrepresentations across many industries about 

the nature and purpose of fees. 

185E.g., FTC–2022–0069–2389; FTC–2022–0069– 

0874; FTC–2022–0069–1571; FTC–2022–0069– 

2359; FTC–2022–0069–5078; see also FTC–2022– 

0069–5665 (describing a daily cleaning fee for 

cleaning services that were not provided until the 

end of the stay). 

186E.g., FTC–2022–0069–6166; see also FTC– 

2022–0069–0634 (describing misleading fees for 

‘‘maintenance’’ that do not correspond to the actual 

maintenance of a product); FTC–2022–0069–0700 

(describing a ‘‘service’’ fee that a business claimed 

covered water and other services but the consumer 

was not provided water); FTC–2022–0069–0729 

(describing ‘‘amenity’’ fees for amenities that were 

not available because of COVID–19); FTC–2022– 

0069–5991 (describing resort fees to cover services 

that were already provided through a consumer 

loyalty plan); FTC–2022–0069–1746 (describing an 

apartment rental fee for valet trash services that 

were not usually provided). 

187FTC–2022–0069–6095 at 14; FTC–2022–0069– 

0138; FTC–2022–0069–0765; FTC–2022–0069– 

1600; FTC–2022–0069–2387; FTC–2022–0069– 

0637; FTC–2022–0069–2338; FTC–2022–0069– 

3036. 

188FTC–2022–0069–1676 (‘‘Turbo tax. Waiting 

until I’ve done all of my paperwork to tell me that 

I need to upgrade my package to file.’’); FTC–2022– 

0069–2986 (‘‘the cruise line included room service 

at no charge,’’ but ‘‘they added a $9,95 [sic] plus 

18% gratuity charge to all room service services’’); 

FTC–2022–0069–0688 (‘‘During on-line Christmas 

shopping, one company offered ‘Free Shipping’ as 

a promotion. At checkout, even though there was 

a $0 charge for ‘Shipping’, I was charged $2.99 for 

‘Shipping Service Fees’. How is this considered 

FREE shipping?’’). 

189E.g., FTC–2022–0069–0556; FTC–2022–0069– 

1545; FTC–2022–0069–2096; FTC–2022–0069– 

2190. 

190 Deception Policy Statement, 103 F.T.C. at 175 

n.5; FTC v. Direct Mktg. Concepts, Inc., No. 04– 

11136–GAO, 2004 U.S. Dist. Lexis 11628, *13 (D. 

Mass. June 23, 2004) (citing In re Thompson Med. 

Co., 104 F.T.C. 648, 788, 818–19 (1984)). 

191 FTC v. Cyberspace.com, 453 F.3d 1196, 1201 

(9th Cir. 2006) (quoting Cliffdale Assocs., Inc., 103 

F.T.C. 110, 165 (1984)). 

192 See, e.g., FleetCor Techs., 620 F. Supp. at 

1310 (finding it was deceptive to charge fees with 

different names that were functionally transaction 

fees after stating that consumers would not be 

charged transaction fees). 

193See FTC v. Windward Mktg., Ltd., No. Civ. A. 

1:96–CV–615F, 1997 WL 33642380, at *10 (N.D. Ga. 

Sept. 30, 1997) (‘‘[A]ny representations concerning 

the price of a product or service are presumptively 

material.’’); see, e.g., FTC v. MOBE Ltd., No. 6:18– 

cv–862–Orl–37DCI, 2020 WL 3250220, at *4 (M.D. 

Fla. Mar. 26, 2020), adopted by, 2020 WL 1847354 

(M.D. Fla. Apr. 13, 2020) (finding that 

representations about the availability of refunds and 

money-back guarantees were presumptively 

material); FTC v. Ewing, No. 2:14–cv–00683–RFB– 

VCF, 2017 WL 4797516, at *6 (D. Nev. Oct. 24, 

2017) (finding that ‘‘100% no strings-attached 

refund policy’’ was presumptively material); FTC v. 

Lead Express, Inc., No. 2:20–cv–00840–JAD–NJK, 

2020 WL 2615685, at *7 (D. Nev. May 19, 2020) 

(prohibiting misrepresentations about material 

called drip pricing, ‘‘either the 

consumer must spend additional time 

searching for full pricing information to 

engage in comparison shopping, or must 

make an uninformed decision.’’ 176

Moreover, studies suggest that cognitive 

biases may exist that prevent consumers 

from avoiding injury. Several 

psychological theories explain why 

consumers make errors when the total 

price is not revealed up front: (1) under 

the anchoring theory, consumers who 

first learn of a lower price do not 

properly adjust their calculations when 

additional fees are added, thereby 

underestimating the total cost; 177 (2) 

under the endowment theory, 

consumers attach value to things they 

perceive to be theirs and when 

consumers begin the purchase process 

their perception shifts so that stopping 

the transaction feels like a loss; 178 and 

(3) under the sunk cost fallacy, 

consumers who have already invested 

in an endeavor, such as by taking time 

to make selections on a website or travel 

to a store, continue that endeavor even 

if it would benefit them more to begin 

again elsewhere.179 In addition, the 

market cannot correct for these injuries 

because the practice of displaying 

incomplete initial prices is so prevalent 

that honest businesses cannot 

compete.180 For example, after StubHub 

unilaterally adopted an all-in pricing 

model in 2014, it soon reverted back to 

its original model after it lost significant 

market share when customers 

incorrectly perceived StubHub’s prices 

to be higher.181

Finally, consumer injury is not 

outweighed by benefits to consumers or 

competition. The practice of advertising 

prices that are not the full price does not 

benefit consumers or competition. 

Consumers do not receive any benefit 

from the misleading price 

presentation.182 Even where the 

undisclosed fees are used to pay for 

something of value to consumers, 

omitting that fee from the initial price 

does not benefit consumers. Nor does 

this practice benefit competition, as it 

acts as a hindrance to businesses that 

opt to disclose the true price, as 

illustrated by real-world examples.183

This price obfuscation, in turn, 

undermines the ability of businesses to 

compete on price and inhibits the 

market from driving down prices 

overall. 

B. Misrepresenting the Nature and 

Purpose of Charges 

The comment record supports a 

finding that practices that misrepresent 

the nature and purpose of fees are 

prevalent. Specifically, commenters 

identified pricing structures that 

misrepresented information about the 

nature and purpose of fees and 

charges.184 These complaints included 

instances in which consumers were 

misled about the identity of the good or 

service for which a fee was charged, 

such as a ‘‘cleaning fee’’ for a vacation 

rental where the consumer was also 

required to conduct extensive 

cleaning,185 or a ‘‘convenience fee’’ to 

purchase a ticket when the purchasing 

method is not more convenient to the 

consumer than any alternative.186 They 

also included instances in which 

consumers were misled about other 

material aspects of the fee or charge. For 

example, consumers complained that 

businesses led them to believe a charge 

was a mandatory tax on consumers 

imposed by the government when it was 

actually a charge the business chose to 

impose to offset increased costs to the 

business.187 Consumers also commented 

that they were misled about the amount 

of fees, particularly when a service was 

advertised as ‘‘free’’ but nevertheless 

incurred a fee.188 Consumers also 

complained that they believed certain 

charges for goods or services were 

refundable and discovered only after the 

purchase that they were either not 

refundable at all or that a portion of the 

fees was not refundable.189

Charges that misrepresent their nature 

and purpose are deceptive because they 

mislead reasonable consumers. False 

claims and those that lack a reasonable 

basis are inherently likely to mislead 

consumers.190 Further, the nature and 

purpose of charges are core 

characteristics that affect the value to 

consumers of the goods or services 

being offered. A representation is 

material if it conveys information ‘‘ ‘that 

is important to consumers and, hence, 

likely to affect their choice of, or 

conduct regarding, a product.’ ’’ 191

Whether a consumer is required to pay 

a charge, and what goods or services 

they will receive in exchange for the 

charge, necessarily affect a consumer’s 

choice whether to pay a charge.192 Other 

characteristics included in the nature 

and purpose of a charge, such as the 

amount of the charge and whether it is 

refundable, are also material.193


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terms, including fees and payment amounts); FTC 

v. BlueHippo Funding, LLC, 762 F.3d 238, 246 (2d 

Cir. 2014) (stating that refund information would 

have influenced consumer purchasing decisions 

and remanding to the district court to determine 

whether to apply a presumption of reliance in 

calculating damages); FTC v. Lucaslaw Ctr. Inc., No. 

SACV 09–0770 DOC (ANx), 2010 WL 11506885, at 

*6 (C.D. Cal. June 3, 2010) (finding that the 

representations that a large up-front fee was 

refundable if a loan modification was not approved 

were material), aff’d sub nom. FTC. v. Lucas, No. 

10–56985, 483 F. App’x 378 (9th Cir. 2012). 

194Am. Fin. Servs. Ass’n v. FTC, 767 F.2d 957, 

972 (D.C. Cir. 1985); Orkin Exterminating Co. v. 

FTC, 849 F.2d 1354, 1365 (11th Cir. 1988). 

195E.g., FleetCor Techs., 620 F. Supp. 3d at 1334 

(N.D. Ga. 2022) (finding that fees that were not 

listed, ‘‘obscured by vague language and tiny print’’ 

in the terms and conditions, or described vaguely 

in billing statements, were not unavoidable). 

196Compl. ¶¶ 42–44, 50, United States v. Funeral 

Cremation Grp. of N. Am., LLC (‘‘Legacy Cremation 

Servs.’’), No. 0:22–cv–60779 (S.D. Fla. filed Apr. 22, 

2022) (alleging defendants advertised artificially 

low prices for cremation services which ultimately 

included undisclosed additional charges and, in 

some cases where consumers contested these 

charges, defendants refused to return remains); 

Compl. ¶ 9, FTC v. Liberty Chevrolet, Inc. (‘‘Bronx 

Honda’’), No. 1:20–cv–03945 (S.D.N.Y. filed May 

21, 2020) (alleging defendants advertised low sales 

prices but later told consumers they were required 

to pay additional charges including certification 

charges); Compl. ¶ 13, FTC v. NetSpend Corp., No. 

1:16–cv–04203 (N.D. Ga. filed Apr. 11, 2017) 

(alleging in part that defendant charged 

maintenance and usage fees to consumers who were 

unable to use all, or even a portion of, the funds 

of their prepaid debit cards); see also Compl. ¶¶ 

24–25, 40–42, FTC v. AT&T Mobility LLC, No. 3:14– 

cv–04785 (N.D. Cal. filed Oct. 28, 2014) (alleging 

defendant did not adequately disclose the 

limitations of defendant’s data plan offerings and 

subsequently charged high cancellation fees for 

consumers who chose to end their contracts); 

Compl. ¶¶ 1, 26, 39–40, FTC v. Millennium 

Telecard, Inc., No. 2:11–cv–02479 (D.N.J. filed May 

2, 2011) (alleging defendants deceptively marketed 

prepaid credit calling cards by failing to adequately 

disclose fees that substantially limited the number 

of minutes consumers had purchased); Compl. ¶ 15, 

FTC v. CompuCredit Corp., No. 1:08–cv–01976 

(N.D. Ga. filed June 10, 2008) (alleging in part that 

defendants misrepresented the credit limits on 

various credit cards and failed to disclose fees 

charged upfront); Compl. ¶¶ 15–17, FTC v. 

Nationwide Connections, Inc., No. 06–cv–80180 

(S.D. Fla. filed Feb. 27, 2006) (alleging in part that 

defendants crammed unauthorized charges for long 

distance service onto consumers’ phone bills). 

197E.g., Compl. ¶¶ 42–44, 50, Funeral & 

Cremation Grp. of N. Am., No. 0:22–cv–60779, 

supra n. 196; Compl. ¶¶ 39–46, FTC v. Vonage 

Holdings Corp., No. 3:22–cv–6435 (D.N.J. filed Nov. 

3, 2022). 

198E.g., Compl. ¶ 13, NetSpend Corp., No. 1:16– 

cv–04203, supra n. 196 (N.D. Ga. filed Apr. 11, 

2017); Compl. ¶¶ 1, 26, 39–40, Millennium 

Telecard, No. 2:11–cv–02479, supra n. 196. 

199Compl. ¶¶ 42–57, Funeral & Cremation Grp. 

of N. Am., LLC, No. 0:22–cv–60779, supra n. 196. 

200Stipulated Order at 7–10, U.S. v. Funeral & 

Cremation Grp. of N. Am., LLC, No. 0:22–cv–60779 

(S.D. Fla. Apr. 6, 2023). 

201Compl. ¶¶ 10, 29–31, 36, 96–98, 102–04, FTC 

v. FleetCor Techs., Inc., No. 1:19–cv–05727, 2019 

WL 13081514 (N.D. Ga. filed Dec. 20, 2019). The 

Court granted summary judgment on the FTC’s 

claims, among others, that FleetCor falsely 

represented that customers would not pay 

transaction fees. FleetCor Techs., 620 F. Supp. 3d 

at 1307–10. 

202Compl. ¶¶ 9, 10, 12–16, 22–25, FTC v. 

LendingClub Corp., No. 3:18–cv–02454 (N.D. Cal. 

filed Apr. 25, 2018). 

203Compl. ¶¶ 1, 26, 39–40, Millennium Telecard, 

No. 2:11–cv–02479, supra n. 196. 

204Compl. ¶¶ 39–46, Vonage Holdings, No. 3:22– 

cv–6435, supra n. 197 (alleging in part that 

defendant charged undisclosed large cancellation 

fees); Compl. ¶¶ 61–63, FTC v. Benefytt Techs., 

Inc., No. 8:22–cv–1794 (M.D. Fla. filed Aug. 8, 

2022) (alleging in part that defendants bundled and 

charged fees for unwanted products with sham 

health insurance plans); Compl. ¶¶ 17–20, FTC v. 

Passport Auto Grp., Inc., No. 8:22–cv–02670 (D. 

Md. filed Oct. 18, 2022) (alleging in part that 

defendants advertised vehicle prices that did not 

include redundant fees ranging from hundreds to 

thousands of dollars for inspection, reconditioning, 

preparation, and certification); Compl. ¶¶ 3, 33, 41, 

FTC v. N. Am. Auto. Serv., Inc. (‘‘Napleton Auto’’), 

No. 1:22–cv–01690 (E.D. Ill. filed Mar. 31, 2022) 

(alleging defendants charged consumers for 

additional products and services without their 

consent and misrepresented the fees as mandatory, 

resulting in artificially low advertised prices); Final 

Compl. ¶¶ 50–51, In re Amazon.com, Inc. 

(‘‘Amazon Flex’’), No C–4746 (F.T.C. filed June 10, 

2021) (alleging respondents falsely represented that 

100% of tips would go to the driver in addition to 

the pay respondents offered drivers); Compl. ¶¶ 37– 

39, FTC v. Lead Express, Inc., No. 2:20–cv–00840 

(D. Nev. filed May 11, 2020) (alleging in part that 

defendants did not clearly and conspicuously 

disclose material information related to the total 

amount of payments related to loans and also 

withdrew significantly more than the stated total 

cost of the loan from consumers’ accounts); Compl. 

¶¶ 9–10, FleetCor Tech., No. 1:19–cv–05727, 2019 

WL 13081514 (alleging defendants charged 

consumers arbitrary and unexpected fees related to 

pre-paid fuel cards without consumers’ consent); 

Compl. ¶¶ 4, 30–32, 36–37, FTC v. BCO Consulting 

Servs., Inc., No. 8:23–cv–00699 (C.D. Cal. filed Apr. 

24, 2023) (alleging defendants enticed consumers 

with false promises to alleviate student loan debt 

despite not applying any payments to the student 

Continued 

Moreover, it is unfair for businesses to 

misrepresent the nature and purpose of 

charges. Charging consumers under 

false pretenses causes substantial injury, 

including where the injury is a ‘‘small 

harm to a large number of people’’ or 

‘‘where it raises a significant risk of 

concrete harm.’’ 194 Where businesses 

obscure information about the nature 

and purpose of fees or provide false 

information to consumers, injury from 

the misrepresentations is not reasonably 

avoidable.195 Such practices have no 

countervailing benefits to consumers 

and competition—they simply make it 

more difficult for consumers to 

comparison shop and for truthful 

businesses to compete on price. 

To prevent the misrepresentations 

described in this section, it is necessary 

for businesses to clearly and 

conspicuously disclose the nature and 

purpose of any amount a consumer may 

pay that is excluded from the total price. 

Where charges are excluded from the 

total price, disclosures of the nature and 

purpose of such charges are necessary to 

determine whether such fees are truly 

optional and properly excluded from 

the total price, and for the consumer to 

decide whether to accept the optional 

charge. 

The FTC has brought many cases 

concerning misrepresentations of the 

total price of goods or services and the 

nature and purpose of charges, which 

are described in greater detail in Section 

III.C. 

C. Law Enforcement Actions and Other 

Responses 

The Commission’s prior work, and 

complementary actions by State and 

private actors, further support a finding 

that the unfair or deceptive practices 

identified in Sections III.A. and III.B. are 

prevalent. To address these unfair or 

deceptive practices, the Commission has 

brought enforcement actions and 

engaged in other efforts to address 

unfair or deceptive fee practices. The 

Commission has brought numerous 

cases alleging businesses have 

misrepresented the total costs of goods 

and services because their prices do not 

include all mandatory fees.196 Among 

the challenged fees were undisclosed 

fees that increased the total cost to 

consumers 197 and fees that diminished 

the value of the good or service the 

consumer received.198 For example, in 

United States v. Funeral & Cremation 

Group of North America, LLC, the 

Department of Justice brought suit on 

behalf of the Commission alleging the 

defendants misrepresented the price of 

funeral services by listing low prices on 

websites that were later inflated with 

various fees.199 The case resulted in a 

settlement requiring, among other 

things, that the defendants provide 

accurate price lists during or 

immediately after their first interaction 

with consumers and pay a civil 

penalty.200 Similarly, in FTC v. FleetCor 

Technologies, Inc., the FTC alleged the 

defendant misrepresented the cost of its 

fuel cards when it ‘‘charged customers 

at least hundreds of millions of dollars 

in unexpected fees.’’ 201 In FTC v. 

LendingClub Corp., the FTC charged 

that the loan company offered loan 

applicants specific loan amounts with 

‘‘no hidden fees,’’ but actually deducted 

hundreds or even thousands of dollars 

of hidden upfront fees from consumers’ 

loan disbursements.202 And in FTC v. 

Millennium Telecard, Inc., the 

Commission alleged the defendants 

advertised prepaid calling cards, 

including a specified dollar value for a 

certain number of minutes, but failed to 

disclose numerous fees that reduced the 

number of available minutes.203

The Commission has similarly 

brought numerous cases alleging 

businesses have mispresented the 

nature and purpose of fees.204 For 


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loan balances and collecting illegal advance fees 

without providing any services); Compl. ¶¶ 31–36, 

FTC v. OMICS Grp. Inc., No. 2:16–cv–02022 (D. 

Nev. filed Aug. 25, 2016) (alleging in part 

defendants misrepresented the publishing process 

of academic papers and only disclosed large 

publishing fees after notifying consumers that their 

papers had been approved for publication); Compl. 

¶¶ 12, 23–25, FTC v. LendingClub Corp., No. 3:18– 

cv–02454 (N.D. Cal. filed Apr. 25, 2018) (alleging 

defendant charged consumers an upfront fee based 

on a percentage of the loan requested that was not 

clearly and conspicuously disclosed; this hidden 

fee caused loans received to be substantially smaller 

than advertised); Compl. ¶ 37, FTC v. T-Mobile 

USA, Inc., No. 2:14–cv–00967 (W.D. Wash. filed 

July 1, 2014) (alleging defendant added 

unauthorized third-party charges to the telephone 

bills of consumers); Am. Compl. ¶¶ 21–22, FTC v. 

Websource Media, LLC, No. 4:06–cv–01980 (S.D. 

Tex. filed June 21, 2006) (alleging defendants 

placed charges on consumer telephone bills despite 

representations that there would be no charges or 

obligations); FTC v. Mercury Mktg. of Del., Inc., No. 

00–cv–3281, 2004 WL 2677177, *1 (E.D. Pa. Nov. 

22, 2004) (finding defendants billed consumers 

without their consent after misleading consumers 

about introductory internet packages); Compl. ¶¶ 

25–27, FTC v. Stewart Fin. Co., No. 1:03–cv–02648 

(N.D. Ga. filed Sept. 4, 2003) (alleging in part that 

defendants package undisclosed add-on products 

with consumer loans and in some cases describe 

those add-on products as mandatory); Compl. ¶¶ 

19–21, 24, FTC v. Hold Billing Serv., Ltd., No. SA– 

98–CA–0629–FB (W.D. Tex. filed July 16, 1998) 

(alleging defendants had previously added thirdparty charges to consumers’ phone bills without 

permission by using sweepstakes entry forms as 

contracts to authorize charges); Compl. ¶¶ 18, 33, 

56–58, FTC v. Lake, No. 8:15–cv–00585–CJC–JPR 

(C.D. Cal. filed Apr. 14, 2015) (alleging defendants 

misrepresented that trial loan payments or 

reinstatement fee payments would be held in 

escrow and refunded to the consumer if the loan 

modification was not approved); FTC. v. Hope for 

Car Owners, LLC, No. 2:12–CV–778–GEB–EFB, 

2013 WL 322895, at *3–4 (E.D. Cal. Jan. 24, 2013) 

(finding that the FTC sufficiently stated a claim for 

misrepresentation of the refundability of vehicle 

loan modification fees and entering default 

judgment); Am. Compl. ¶¶ 38–39, 58–60, FTC v. 

U.S. Mortg. Funding, Inc., No. 9:11–cv–80155–JIC 

(S.D. Fla. filed July 26, 2011) (alleging defendants 

misrepresented that an upfront loan modification 

fee was refundable); FTC v. Nat’l Bus. Consultants, 

Inc., 781 F. Supp. 1136, 1143 (E.D. La. 1991) (‘‘The 

defendants’ misrepresentations regarding the ease 

with which the ‘performance deposit’ could be 

refunded composed a large part of the various and 

sundry misrepresentations.’’). 

205Final Compl. ¶¶ 7–8, 12–20, 26–34, 50–52, 

Amazon Flex, No. C–4746, supra n. 204. 

206 Id. at ¶¶ 26–34. 

207Press Release, Fed. Trade Comm’n, FTC 

Returns Nearly $60 Million to Drivers Whose Tips 

Were Illegally Withheld by Amazon (Nov. 2, 2021), 

https://www.ftc.gov/news-events/news/pressreleases/2021/11/ftc-returns-nearly-60-milliondrivers-whose-tips-were-illegally-withheld-amazon. 

208Compl. ¶¶ 20–24, 60–70, Benefytt Techs., No. 

8:22–cv–1794, supra n. 204. 

209E.g., Stipulated Order against corporate 

defendants at 8–9, 26, 27, Benefytt Techs., No. 8:22– 

cv–1794 (M.D. Fla. Aug. 11, 2022). 

210Compl. ¶¶ 25–27, 54–56, Stewart Fin. Co., No. 

1:03–cv–02648, supra n. 204. 

211AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341, 

1352 (2021) 

212Stipulated Final J. against defendants and 

relief defendant 12–16, Stewart Fin. Co., No. 1:03– 

cv–02648 (N.D. Ga. Oct. 28, 2003). 

213Am. Compl. ¶¶ 20–21, Websource Media, No. 

4:06–cv–01980, supra n. 204. 

214E.g., Stipulated Final J. against Websource 

Media, et al. 7–12, Websource Media, No. 4:06–cv– 

01980 (S.D. Tex. July 17, 2007); Stipulated Final J. 

against Steven L. Kennedy 6–9, Websource Media, 

No. 4:06–cv–01980 (S.D. Tex. July 29, 2009). 

215Am. Compl. ¶¶ 38–39, 58–60, U.S. Mortg. 

Funding, No. 9:11–cv–80155–JIC, supra n. 204. 

216Press Release, Fed. Trade Comm’n, FTC 

Action Leads to Ban on Alleged Mortgage Relief 

Scammers Who Harmed Thousands of Consumers 

(Feb. 14, 2012), https://www.ftc.gov/news-events/ 

news/press-releases/2012/02/ftc-action-leads-banalleged-mortgage-relief-scammers-who-harmedthousands-consumers. 

217Fed. Trade Comm’n, The Economics of Drip 

Pricing (May 21, 2012), https://www.ftc.gov/newsevents/events/2012/05/economics-drip-pricing. 

218Press Release, Fed. Trade Comm’n, FTC Warns 

Hotel Operators that Price Quotes that Exclude 

‘‘Resort Fees’’ and Other Mandatory Surcharges 

May Be Deceptive (Nov. 28, 2012), https://

www.ftc.gov/news-events/news/press-releases/2012/ 

11/ftc-warns-hotel-operators-price-quotes-excluderesort-fees-other-mandatory-surcharges-may-be. 

219Sullivan, supra n. 153. As used in this NPRM, 

the term shrouded pricing includes practices 

related to both drip pricing and partitioned pricing, 

which the Commission has previously defined as 

follows: ‘‘Partitioned pricing entails dividing the 

price into multiple components without disclosing 

the total. Drip pricing is the practice of advertising 

only part of a product’s price upfront and revealing 

additional charges later as consumers go through 

the buying process.’’ Id. at v. 

example, in The Matter of Amazon.com, 

the Commission alleged Amazon made 

unlawful misrepresentations in 

violation of Section 5 of the FTC Act 

when it claimed that it would give to 

Amazon Flex drivers, in addition to 

their regular pay, 100% of tips 

consumers elected to leave.205 Instead, 

the FTC alleged, Amazon used the tips 

to subsidize its own pay to drivers.206

The case, which was brought under the 

FTC’s Section 19 administrative 

procedure, resulted in a settlement 

through which the FTC returned nearly 

$60 million to Amazon Flex drivers.207

The Commission similarly addressed 

misrepresentations about what charges 

were for in FTC v. Benefytt 

Technologies Inc., alleging in part that 

the defendants misled consumers about 

whether ancillary products were 

included in the price of an insurance 

plan, using dark patterns in the 

enrollment process and a single bill to 

obscure the boundaries of each separate 

product.208 The parties agreed to a 

settlement, providing $100 million in 

redress to consumers and prohibiting 

defendants from misrepresenting the 

nature of their products, among other 

terms.209

The Commission also addressed 

misrepresentations about the nature and 

purpose of fees, including their amount 

and whether they were mandatory, in 

FTC v. Stewart Finance Company 

Holdings. The Commission alleged in 

part that defendants misrepresented 

optional ancillary products as 

mandatory and misrepresented the cost 

of a direct deposit option as free when 

it incurred a monthly charge.210 The 

case, which was resolved before the 

Supreme Court’s decision in AMG 

Capital Management v. FTC limited 

avenues for the Commission to obtain 

monetary relief,211 resulted in a 

settlement that provided monetary 

redress to consumers and, among other 

terms, prohibited the defendants from 

misrepresenting the cost, benefit, or 

optional nature of any ancillary loan 

products and from misrepresenting 

direct deposit as a ‘‘free’’ service, or 

misrepresenting its costs and terms.212

Similarly, in FTC v. Websource Media, 

LLC, the Commission addressed 

misrepresentations about the amount of 

fees when it alleged defendants offered 

a free trial for a website design but 

added fees for the website to consumers’ 

telephone bills.213 Settlements reached 

in 2007 and 2009 provided monetary 

redress to consumers and prohibited the 

defendants from making various 

misrepresentations.214 In FTC v. U.S. 

Mortgage Funding, Inc., the Commission 

alleged the defendants violated Section 

5 of the FTC Act when they 

misrepresented that large upfront fees 

charged to homeowners to negotiate 

loan modifications would be refunded if 

a modification was not obtained.215 The 

case resulted in default judgments 

against two defendants and settlements 

with the remaining four defendants that 

included monetary judgments and bans 

on providing mortgage relief services, 

among other things.216

To complement its law enforcement 

efforts, the FTC has engaged with the 

public through a variety of measures 

over more than a decade to address 

unfair or deceptive practices related to 

fees. For example, in 2012, the FTC’s 

Bureau of Economics held a conference 

designed to ‘‘examine the theoretical 

motivation for drip pricing and its 

impact on consumers, empirical studies, 

and policy issues pertaining to drip 

pricing.’’ 217 The conference brought 

together a variety of experts including 

economists and policy experts to give an 

overview of drip pricing and look at its 

impact on the market. Following the 

workshop, Commission staff sent 

warning letters to hotels and online 

travel agents, stating that they were not 

adequately disclosing resort fees or 

including those fees in the total price.218

Likewise, in 2017, the Commission 

published a report that reviewed the 

existing literature on shrouded pricing 

and examined the costs and benefits of 

disclosing resort fees.219 In 2019, the 

Commission hosted a workshop that 

examined pricing and fee issues in the 


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220Fed. Trade Comm’n, ‘‘That’s the Ticket’’ 

Workshop: Staff Perspective, 4 (May 2020). 

221See, e.g., Assurance of Voluntary Compliance 

¶ 2, Texas v. Marriott Int’l, Inc., No. 2023CI09717 

(Tex. Dist. Ct. May 16, 2023) (alleging defendant 

misrepresented various fees, including resort fees, 

and did not include all mandatory fees in the 

advertised room rate in violation of the Texas 

Deceptive Trade Practices Act); Plaintiff’s Original 

Pet. ¶ 1, Texas v. Hyatt Hotels Corp., No. C2023– 

0884D (Tex. Dist. Ct. May 15, 2023) (alleging 

defendant did not include mandatory fees in 

advertised room rates in violation of the Texas 

Deceptive Trade Practices Act); Consent Order ¶ 6, 

District of Columbia v. Maplebear, Inc., No. 2020 

CA 003777B (D.C. Super. Ct. Aug. 19, 2022) 

(prohibiting defendant from misrepresenting the 

nature and purpose of fees applied to consumers’ 

orders); Compl. ¶¶ 2, 5–8, District of Columbia v. 

Grubhub Holdings, Inc., No. 2022 CA 001199 B, 

(D.C. Super. Ct. filed Mar. 21, 2022) (alleging in part 

that defendants misrepresented to consumers that 

defendants’ only fee was a ‘‘Delivery Fee’’ while 

obscuring a ‘‘Service Fee’’ or disclosing a ‘‘Small 

order fee’’ only at the end of the checkout process); 

Assurance of Voluntary Compliance ¶ 2, 

Commonwealth v. Marriott Int’l, Inc., No. GD–21– 

014016 (Pa. Ct. C.P. Nov. 16, 2021) (alleging 

defendant misrepresented its room rates by failing 

to include items such as mandatory fees in its 

pricing); Consent Order ¶ 3.1–3.18, In re Drivo LLC, 

N.J. Div. Consumer Aff. (Sept. 16, 2020) (prohibiting 

unfair and deceptive practices relating to damage 

fees and third party reservation fees for rental 

vehicles); Agreed Final J. ¶ 8, Texas v. Guided 

Tourist, LLC, No. D–1–GN–19–001618 (Tex. Dist. 

Ct. Mar. 26, 2019) (enjoining defendant from 

advertising ticket prices other than the total ticket 

price, including all mandatory fees); Settlement 

Agreement ¶¶ 8(b)–(c), Florida v. Dollar Thrifty 

Auto. Grp., Inc., Case No. 16-2018–cv–005938, (Fla. 

Cir. Ct. Jan. 14, 2019) (alleging in part that 

defendant misrepresented optional charges as 

mandatory and did not sufficiently disclose tollrelated fees). Additionally, Intuit recently entered 

into a multistate settlement of allegations that it 

misrepresented its tax filing products would come 

at no cost. See generally, Assurance of Voluntary 

Compliance, Commonwealth v. Intuit Inc., No. 

220500324 (Pa. Ct. C.P. May 4, 2022). 

222See, e.g., Compl. ¶¶ 4–6, Hecox v. DoorDash, 

Inc., No. 1:23–cv–01006 (D. Md. filed Apr. 14, 2023) 

(alleging in part that defendant employs deceptively 

named fees leading consumers to mistakenly 

believe the fees were for delivery people or the 

municipality); Class Action Compl. ¶¶ 7–16, 

Ramirez v. Bank of Am., N.A., No. 5:22–cv–00859 

(N.D. Cal. filed Feb. 10, 2022) (alleging 

misrepresentations about the refundability of fees); 

Compl. ¶¶ 2–3, Abdelsayed v. Marriot Int’l, Inc., 

No. 3:21–cv–00402 (S.D. Cal. filed Mar. 5, 2021) 

(alleging defendant engaged in drip pricing by 

baiting consumers with lower prices and adding 

charges, such as resort fees, amenity fees, and 

destination fees, throughout the vending process); 

Compl. ¶¶ 1, 3–5, Travelers United v. MGM Resorts 

Int’l, Inc., No. 2021–CA–00477–B (D.C. Super. Ct. 

filed Feb. 18, 2021) (alleging defendant hid portions 

of daily room rates via resort fees and ultimately 

misled consumers); Compl. ¶¶ 18, 31, 43, Lee v. 

Ticketmaster LLC, No. 18–cv–05987 (N.D. Cal. filed 

Sept. 28, 2018) (alleging, in part, that defendants 

were unjustly enriched through service charges 

added to resale tickets); Second Am. Compl. ¶¶ 1– 

2, Wang v. Stubhub, Inc., No. CGC–18564120 (Cal. 

Super. Ct. filed Feb. 25, 2019) (alleging defendant 

intentionally hid additional fees in order to 

advertise artificially low ticket prices); Class Action 

Compl. ¶¶ 1, 33–34, Holl v. United Parcel Service, 

Inc., No. 3:16–cv–05856 (N.D. Cal. filed Oct. 11, 

2016) (alleging misrepresentations about the 

amount of fees); Class Action Compl. ¶¶ 27, 36, 46– 

51, Cross v. Point and Pay LLC, No. 6:16–cv–01182 

(M.D. Fla. filed June 29, 2016) (same). See also 

FTC–2022–0069–6042 (tracking class action cases 

related to unfair and deceptive fees). 

223Cal. S.B. 478, (2023–2024) Regular Session. 

224H.B. 636 (2023–2024) (Pa. 2023). 

225N.Y. Arts & Cult. Aff. Law Sec. 25.01–25.33 

(McKinney 2023); see also Governor Hochul Signs 

Legislation Targeting Unfair Ticketing Practices in 

Live Event Industry (June 30, 2022), https://

www.governor.ny.gov/news/governor-hochul-signslegislation-targeting-unfair-ticketing-practices-liveevent-industry. 

226An Act Ensuring Transparent Ticket Pricing, 

H.259, 193rd Gen. Court (Mass. 2023) (would 

amend Massachusetts’ law licensing the sale of 

admission tickets, Mass. Gen. Laws ch. 140, Sec. 

182A, to require the truthful, non-deceptive, clear, 

and conspicuous disclosure of the total cost of a 

ticket, and what portions represent a service charge 

or other ancillary fee, prior to selection, and to 

prohibit the price from increasing, except for 

certain delivery fees, prior to payment). 

227Competition Act, R.S.C., 1985, c. C–34, ¶ 

74.01(1.1) (Can.), https://laws.justice.gc.ca/eng/ 

acts/C-34/FullText.html. 

228See, e.g., several deceptive pricing cases, 

among others, made public by the Canadian 

Competition Bureau at https://ised-isde.canada.ca/ 

site/competition-bureau-canada/en/deceptivemarketing-practices/cases-and-outcomes. 

229Competition and Consumer Act 2010,Vol. 4, 

Sched. 2, Ch. 3, P. 3–1, Sec. 48 (Austl.), https://

www.legislation.gov.au/Details/C2023C00043. 

230 Directive 2005/29/EC of the European 

Parliament and of the Council of 11 May 2005 

concerning unfair business-to-consumer 

commercial practices in the internal market, https:// 

eur-lex.europa.eu/legal-content/EN/TXT/

?uri=CELEX%3A02005L0029-20220528; see also 

Directive 2011/83/EU of the European Parliament 

and of the Council of 25 October 2011 on consumer 

rights, https://eur-lex.europa.eu/legal-content/EN/ 

TXT/?uri=CELEX%3A02011L0083-20220528. 

Additionally, a 1998 Directive required that the 

selling price should be indicated for all products 

referred to in the Article, which means a price that 

is the final price for a unit of the product including 

VAT and all other taxes. Directive 98/6/EC of the 

European Parliament and of the Council of 16 

February 1998 on consumer protection in the 

indication of the prices of products offered to 

consumers, https://eur-lex.europa.eu/legal-content/ 

EN/TXT/?uri=CELEX%3A01998L0006-20220528. 

231UK Department for Business & Trade, 

Estimating the Prevalence and Impact of Online 

Drip Pricing (2023), https://assets.publishing.

service.gov.uk/government/uploads/system/ 

uploads/attachment_data/file/1182208/estimatingthe-prevalence-and-impact-of-online-drippricing.pdf; UK Department for Business & Trade, 

Smarter Regulation: Consultation on Improving 

Price Transparency and Product Information for 

Consumers (2023), https://assets.publishing.

service.gov.uk/government/uploads/system/ 

uploads/attachment_data/file/1182962/ 

consultation-on-improving-price-transparency-andproduct-information-for-consumers.pdf. 

live-event tickets market and 

subsequently issued a staff report on the 

subject.220

The Commission’s law enforcement 

partners have also brought actions 

addressing unfair or deceptive practices 

relating to fees. For example, State 

Attorneys General have brought cases 

against hotel chains and delivery apps 

involving unfair or deceptive fees.221

Numerous private lawsuits have 

involved unfair or deceptive fees across 

various industries.222

Some States have also taken 

legislative or regulatory action involving 

unfair or deceptive fees. For example, 

California 223 and Pennsylvania 224

legislators have introduced legislation 

prohibiting advertising prices that do 

not include all mandatory fees, with 

some exceptions. In June 2022, New 

York passed legislation directed at 

increasing transparency during the 

ticket-buying process, banning hidden 

fees for live events, and prohibiting 

delivery fees on tickets delivered 

electronically or printed at home.225

Similar legislation has been introduced 

in Massachusetts.226

Regulators in countries such as 

Canada and Australia, as well as 

international bodies such as the 

European Union, have also begun 

regulating unfair and deceptive fee 

practices. In September 2023, the 

United Kingdom solicited public 

comment on drip pricing. That 

numerous countries outside of the 

United States have addressed fees and 

deceptive pricing through legislation 

and law enforcement lends additional 

support to the conclusion that these 

types of fees are prevalent. Paragraph 

74.01(1.1) of the Canadian Competition 

Act 227 regulates drip pricing and has 

resulted in actions against online ticket 

sellers, car rental services, and flightbooking services.228 Similarly, the 

Australian Competition and Consumer 

Act of 2010 requires businesses to 

prominently display a figure that 

represents the single price for goods or 

services.229 European Union law 

prohibits misleading and aggressive 

commercial practices toward 

consumers, with specific directives 

requiring that consumers be informed of 

the total price of goods and services.230

The UK Department for Business & 

Trade commissioned research 

demonstrating that drip pricing is 

prevalent across the economy and 

started a ‘‘consultation’’ soliciting 

public views.231

IV. Reasons for the Proposed Rule on 

Unfair or Deceptive Fees 

The Commission believes that the 

proposed rule will substantially 

improve its ability to combat the most 

prevalent unfair or deceptive practices 

relating to fees and other charges and 

may also strengthen deterrence against 

these practices in the first instance. 

While unfair or deceptive practices 

relating to fees are already unlawful 

under Section 5 of the FTC Act, which 

prohibits unfair or deceptive acts or 

practices, the proposed rule (if 

finalized) will allow the Commission to 

seek civil penalties against violators and 


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232AMG Cap. Mgmt., 141 S. Ct. 1341. 

233Fed. Trade Comm’n, ANPR: Unfair or 

Deceptive Fees Trade Regulation Rule Commission 

Matter No. R207011, 87 FR 67413 at 67415 (Nov. 

8, 2022), https://www.federalregister.gov/ 

documents/2022/11/08/2022-24326/unfair-ordeceptive-fees-trade-regulation-rule-commissionmatter-no-r207011. 

234See 15 U.S.C. 57b(a)(2) (‘‘If the Commission 

satisfies the court that the act or practice to which 

the cease and desist order relates is one which a 

reasonable man would have known under the 

circumstances was dishonest or fraudulent, the 

court may grant relief.’’). 

235Compare 15 U.S.C. 57b(a)(1) (rule violations), 

with id. 57b(a)(2) (Section 5 violations). 

236 16 CFR 310. 

237 15 U.S.C. 8401–8405. 

238 16 CFR 425. 

239 16 CFR 453. 

240See discussion supra Section III.C. 

more readily obtain monetary redress 

for the consumers who are harmed. 

The Commission’s objectives in 

commencing this rulemaking are to 

deter deceptive and unfair acts or 

practices involving fees, to promote a 

level playing field that enables 

comparison shopping and allows honest 

businesses to compete, and to expand 

the available remedies where such 

practices are uncovered. In the ANPR, 

the Commission described how a recent 

U.S. Supreme Court decision,232 which 

overturned 40 years of precedent from 

the U.S. Circuit Courts of Appeal that 

uniformly held the Commission could 

take action under Section 13(b) of the 

FTC Act to return money unlawfully 

taken from consumers through unfair or 

deceptive acts or practices, has made it 

significantly more difficult for the 

Commission to return money to injured 

consumers.233 Without Section 13(b) as 

it had historically been understood, the 

Commission’s only means to return 

money unlawfully taken from 

consumers is Section 19, which 

provides two paths for consumer 

redress. The longer path under Section 

19(a)(2) requires the Commission to first 

obtain a final administrative order. 

Then, to recover money for consumers, 

the Commission must prove in Federal 

court that the violator engaged in 

fraudulent or dishonest conduct.234 The 

shorter path under Section 19(a)(1), 

which allows the Commission to 

recover consumer redress directly 

through a Federal court action or obtain 

civil penalties, is available only when a 

rule has been violated.235

The proposed rule will make available 

the shorter path in a broader set of 

Commission enforcement actions so that 

it can more efficiently redress 

consumers. Currently, the Commission 

can directly pursue in Federal court 

Section 19 remedies, including civil 

penalties and consumer redress, for 

unfair or deceptive practices relating to 

fees only if those practices violate 

certain other rules or statutes enforced 

by the Commission, such as the 

Commission’s Telemarketing Sales Rule 

(‘‘TSR’’),236 the Restore Online 

Shoppers’ Confidence Act 

(‘‘ROSCA’’),237 Negative Option Rule,238

or Funeral Rule,239 which prohibit 

unfair or deceptive pricing practices, 

but apply only in specific contexts. 

Further, the FTC has addressed unfair or 

deceptive fee practices through 

numerous enforcement actions, warning 

letters, workshops, and reports spanning 

more than a decade.240 Despite these 

efforts, the issues associated with unfair 

or deceptive fees have persisted. 

Prohibiting unfair or deceptive practices 

relating to fees across industries 

expands the Commission’s enforcement 

toolkit and allows it to deliver on its 

mission by stopping and deterring 

harmful conduct and making American 

consumers whole when they have been 

wronged. Because unfair or deceptive 

practices relating to fees are so prevalent 

and so harmful, the unlocking of 

additional remedies through this 

rulemaking, particularly the possibility 

of seeking civil penalties against 

violators as well as obtaining redress for 

consumers who are harmed, will allow 

the Commission to more effectively 

police unfair or deceptive fee practices. 

V. Overview and Scope of the Proposed 

Rule on Unfair or Deceptive Fees 

The Commission’s proposed rule is 

straightforward. It borrows from existing 

rules and statutory definitions by 

declaring that unfair or deceptive 

practices with respect to fees are 

unlawful. These unfair or deceptive 

practices include bait-and-switch 

pricing and misrepresenting the nature 

and purpose of fees. As noted in Section 

III, case law, the Commission’s 

experience, the experience of 

commenters, and other evidence cited 

herein are replete with examples of such 

unfair or deceptive practices. 

Several commenters raised questions 

about jurisdiction. The Commission’s 

enforcement of the proposed rule is 

subject to all existing limitations of the 

law: of unfair or deceptive acts or 

practices under the FTC Act; of the 

FTC’s jurisdiction; and of the U.S. 

Constitution—the Commission cannot 

bring a complaint to enforce the rule if 

the complaint would exceed the 

Commission’s jurisdiction or offend the 

Constitution. 

The Commission invites written 

comments on the proposed Rule, and, in 

particular, answers to the specific 

questions set forth in Section X. 

A. § 464.1 Definitions 

Proposed § 464.1 contains definitions 

for the following terms: ‘‘Ancillary Good 

or Service,’’ ‘‘Business,’’ ‘‘Clear(ly) and 

Conspicuous(ly),’’ ‘‘Government 

Charges,’’ ‘‘Pricing Information,’’ 

‘‘Shipping Charges,’’ and ‘‘Total Price.’’ 

Each of these terms is used in the 

proposed Rule. 

‘‘Ancillary Good or Service’’ is 

defined as any additional good(s) or 

service(s) offered to a consumer as part 

of the same transaction. This would 

include goods or services not necessary 

to render the primary good or service fit 

for its intended use but are nevertheless 

offered as part of the same transaction. 

An Ancillary Good or Service may be 

mandatory or optional. For example, if 

a hotel offers a consumer the option to 

purchase or decline trip insurance with 

a room reservation, the insurance would 

be an optional ancillary service. If a 

housing rental agreement includes a fee 

that the consumer cannot reasonably 

avoid for a trash valet service, it would 

be a mandatory ancillary service. If a 

business includes a fee the consumer 

cannot reasonably avoid to process the 

payment for any good or service, such 

payment processing would be a 

mandatory ancillary service. 

‘‘Business’’ is defined as an 

individual, corporation, partnership, 

association, or any other entity that 

offers goods or services, including, but 

not limited to, online, in mobile 

applications, and in physical locations. 

This definition is industry neutral. 

However, this definition contains a 

carveout for certain motor vehicle 

dealers that must comply with 16 CFR 

463, requiring a cash price disclosure 

and prohibiting misrepresentations. On 

July 13, 2022, the Commission 

published in the Federal Register a 

notice of proposed rulemaking for a 

Motor Vehicle Dealers Trade Regulation 

Rule, which if finalized would be 

published at 16 CFR 463. The proposed 

Motor Vehicle Dealers Rule would 

require covered motor vehicle dealers 

to, among other things, disclose the true 

‘‘Offering Price’’ of a vehicle in 

advertisements or communications that 

reference a specific vehicle or any 

monetary amount or financing term for 

any vehicle, and would prohibit dealers 

from making certain misrepresentations. 

The proposed Rule on Unfair or 

Deceptive Fees provides that if the 

Commission finalizes the proposed 

Motor Vehicle Dealers Rule’s Offering 

Price and misrepresentations provisions 

and such rule is published and in effect 

at 16 CFR 463, motor vehicle dealers 

subject to that part would be excluded 

from coverage under the proposed Rule 


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241 15 U.S.C. 57a(a)(1)(B) (‘‘Rules under this 

subparagraph may include requirements prescribed 

for the purpose of preventing such acts or 

practices.’’). 

on Unfair or Deceptive Fees. If there is 

no provision published and in effect at 

16 CFR 463 requiring motor vehicle 

dealers to disclose the cash price and 

prohibiting misrepresentations, motor 

vehicle dealers would not be exempt 

from the definition of ‘‘Business’’ and 

therefore would be subject to the 

proposed Rule on Unfair and Deceptive 

Fees. 

‘‘Clear(ly) and Conspicuous(ly)’’ is 

defined consistently with longstanding 

Commission interpretation and practice. 

‘‘Government Charges’’ means all fees 

or charges imposed on consumers by a 

Federal, State, or local government 

agency, unit, or department. This 

definition covers only fees or charges 

imposed by the government on 

consumers and does not encompass fees 

or charges that the government imposes 

on a business and that the business 

chooses to pass on to consumers. 

‘‘Pricing Information’’ is defined as 

any information relating to any amount 

a consumer may pay. 

‘‘Shipping Charges’’ is defined as all 

fees or charges that reasonably reflect 

the amount a Business incurs to send 

physical goods to a consumer through 

the mail, including private mail 

services. This definition does not 

include delivery through couriers, such 

as those in mobile delivery applications. 

This definition is limited to the amount 

that reasonably reflects what a Business 

incurs to send goods. Thus, for the 

purposes of the provision that 

references Shipping Charges, a Business 

cannot artificially inflate the cost of 

shipping. 

‘‘Total Price’’ is defined as the 

maximum total of all fees or charges a 

consumer must pay for a good or service 

and any mandatory Ancillary Good or 

Service, except that Shipping Charges 

and Government Charges may be 

excluded. The use of the phrase 

‘‘maximum total’’ would allow 

businesses to apply discounts and 

rebates after disclosing the Total Price. 

Because the Total Price includes all 

charges that a consumer must pay, it 

covers mandatory charges. As explained 

in Section III.A., because there is an 

implied representation that a good or 

service offered for sale is fit for the 

purposes for which it is sold, a Business 

cannot treat a feature as optional if it is 

necessary to render the good or service 

fit for its intended use. The Total Price 

need not include Shipping Charges (all 

fees or charges that reasonably reflect 

the amount a Business incurs to send 

physical goods to a consumer through 

the mail, including private mail 

services) and Government Charges (all 

fees or charges imposed on consumers 

by a Federal, State, or local government 

agency, unit, or department). Because 

the Shipping Charges must reasonably 

reflect the amount a Business incurs, a 

Business cannot artificially inflate the 

cost of shipping that is excluded from 

the Total Price. A Business likewise 

cannot artificially inflate taxes excluded 

from the Total Price because the 

definition of Government Charges 

covers only those charges imposed by 

the government on consumers. 

B. § 464.2 Hidden Fees Prohibited 

The prohibition against bait-andswitch pricing in proposed § 464.2(a) 

would cover unlawful conduct by 

Businesses that offer, display, or 

advertise an amount a consumer may 

pay without Clearly and Conspicuously 

disclosing the Total Price. In this rule, 

the Total Price includes all charges that 

a consumer must pay for a good or 

service, including any mandatory 

Ancillary Good or Service. As explained 

in Section V.A., Total Price need not 

include Shipping Charges and 

Government Charges. Proposed 

§ 464.2(b) clarifies that a Business that 

is required to disclose the Total Price in 

an offer, display, or advertisement 

under § 464.2(a) must disclose it more 

prominently than any other Pricing 

Information. 

The prohibition on hidden fees 

applies to amounts ‘‘offered, displayed, 

or advertised’’ by a Business even if a 

different entity provides the good or 

service. For example, if an online travel 

agent advertises a price for a hotel room 

provided by a hotel chain, the online 

travel agent must display the Total 

Price, inclusive of mandatory fees 

charged by the hotel chain. Similarly, if 

a Business advertises a price for a 

product that it provides to the consumer 

and requires an ancillary good or service 

provided by another entity, such as 

payment processing, the charge for the 

mandatory ancillary good or service 

must be included in the Total Price. 

The Commission anticipates the 

possibility of providing certain 

exclusions from the proposed rule, 

including for some financial products 

where the Total Price cannot practically 

be determined. As discussed in Section 

X, the Commission is seeking comment 

on the proper scope of any such 

exclusion. Further, as discussed in 

Section V.A., the proposed rule also 

contains a carveout for certain motor 

vehicle dealers that must comply with 

16 CFR 463, which requires cash price 

disclosures and prohibits certain 

misrepresentations. 

B. § 464.3 Misleading Fees Prohibited 

The prohibition against 

misrepresenting the nature and purpose 

of any amount a consumer may pay in 

§ 464.3(a) covers misrepresentations 

about a fee’s nature and purpose, which 

includes the refundability of such fees 

as well as the identity of any good or 

service for which fees are charged. 

Section 464.3 includes a preventative 

disclosure requirement pursuant to the 

Commission’s Section 5 authority.241

The preventative disclosure requirement 

in § 464.3(b) requires Businesses to 

disclose, Clearly and Conspicuously and 

before the consumer consents to pay, 

the nature and purpose of any amount 

a consumer may pay that is excluded 

from the Total Price. An amount a 

consumer may pay that is excluded 

from the Total Price includes any 

Shipping Charges, Government Charges, 

optional fees, voluntary gratuities, and 

invitations to tip. As with § 464.3(a), the 

nature and purpose of fees includes the 

refundability of such fees and the 

identity of any good or service for which 

fees are charged. By requiring disclosure 

of the nature and purpose of fees, this 

provision helps prevent Businesses from 

omitting mandatory fees from the Total 

Price in violation of § 464.2(a) and 

misrepresenting the nature and purpose 

of fees in violation of § 464.3(a). For 

example, if a Business discloses the 

identity of the good or service for which 

an additional fee is charged, it becomes 

apparent what benefit a consumer can 

reasonably expect from it and whether 

the feature is something that is 

necessary for the intended use of the 

primary purchase. This information is 

necessary for a consumer to understand 

what they are purchasing and to decide 

whether to consent to the charge. 

Sections 464.3(a) and (b) operate 

together to prohibit Businesses from 

misrepresenting the nature and purpose 

of fees by using vague descriptions. For 

example, a meal delivery app that 

chooses to itemize a mandatory service 

charge as part of the Total Price cannot 

mislead consumers about the service for 

which the fee is charged. If a portion of 

the service charge is used to compensate 

a delivery driver while another portion 

is used to compensate the Business for 

providing the online application, a 

description that combines both portions 

without specifying the recipient of each 

portion of the service charge would 

violate § 464.3(a). Similarly, a Business 

must disclose, and cannot misrepresent 

the nature and purpose of, Shipping 

Charges, Government Charges, optional 

fees, voluntary gratuities, and 

invitations to tip that are excluded from 


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77440 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

242The Commission may still do so later, on its 

own initiative or in response to a persuasive 

showing from a commenter. 

243See, e.g., FTC–2022–0069–6095 (describing 

harm to competition and honest businesses through 

price obfuscation); Sullivan, supra n. 153, at 4; 

Rasch, supra n. 153, at 362–63 (‘‘[E]xperimental 

evidence suggests that consumers indeed strongly 

and systematically underestimate the total price 

under drip pricing and make mistakes when 

searching’’); Shelanski, supra n. 153, at 314–16; 

Blake, supra n. 153, at 16; Huck & Wallace, supra 

n. 153, at 4; Ellison & Ellison, supra n. 153, at 2– 

6; Busse & Silva Risso supra n. 153, at 470–74; 

National Economic Council, The Competition 

Initiative and Hidden Fees, supra n. 167. 

244 15 U.S.C. 57b(a)(2). Depending on the 

egregiousness of the misconduct and the harm it is 

causing, the Commission also may seek preliminary 

injunctive relief in Federal court. 15 U.S.C. 53(b). 

the Total Price. If a delivery application 

includes an invitation to tip a delivery 

driver without disclosing that a portion 

of the tip is allocated to offset the 

delivery driver’s base wages or benefits, 

it would violate § s 464.3(a) and (b), in 

addition to any other laws or regulations 

relating to the distribution of tips. 

D. § 464.4 Relation to State Laws 

Provision 

The relation to State laws provision in 

§ 464.4 would prevent the rule from 

superseding State laws unless there is 

an inconsistency. 

VI. The Rulemaking Process 

The Commission can decide to 

finalize the proposed rule if the 

rulemaking record, including the public 

comments in response to this NPRM, 

supports such a conclusion. The 

Commission may, either on its own 

initiative or in response to a 

commenter’s request, engage in 

additional processes, which are 

described in 16 CFR 1.12 and 1.13. If the 

Commission on its own initiative 

decides to conduct an informal hearing, 

or if a commenter files an adequate 

request for such a hearing, then a 

separate notice will issue under 16 CFR. 

1.12(a). Based on the comment record 

and existing prohibitions against unfair 

or deceptive practices relating to fees 

under Section 5 of the FTC Act, the 

Commission does not currently identify 

any disputed issues of material fact that 

need to be resolved at an informal 

hearing.242

VII. Preliminary Regulatory Analysis 

Under Section 22 of the FTC Act, the 

Commission, when it publishes any 

NPRM, must include a ‘‘preliminary 

regulatory analysis.’’ 15 U.S.C. 57b– 

3(b)(1). The required contents of a 

preliminary regulatory analysis are (1) 

‘‘a concise statement of the need for, 

and the objectives of, the proposed 

rule,’’ (2) ‘‘a description of any 

reasonable alternatives to the proposed 

rule which may accomplish the stated 

objective,’’ and (3) ‘‘a preliminary 

analysis of the projected benefits and 

any adverse economic effects and any 

other effects’’ for the proposed rule and 

each alternative, along with an analysis 

‘‘of the effectiveness of the proposed 

rule and each alternative in meeting the 

stated objectives of the proposed rule.’’ 

15 U.S.C. 57b–3(b)(1)(A)–(C). 

A. Concise Statement of the Need for the 

Rule and Its Objectives 

This proposed rule is needed to 

address the prevalent business practices 

of presenting incomplete pricing 

information that obscures the total price 

and misrepresenting the nature and 

purpose of fees, which are unfair or 

deceptive practices. The proposed rule 

aims to (a) prohibit and prevent these 

unlawful practices, (b) foreclose 

businesses from circumventing the 

purpose of the rule, such as by 

mischaracterizing essential components 

of a product as optional add-on 

components, shipping, or taxes, (c) 

promote a level playing field that 

enables comparison shopping and 

allows honest businesses to compete, 

and (d) empower the Commission to 

provide monetary redress to consumers 

and to seek civil penalties if warranted. 

Section IV provides more detail 

regarding the need for, and the 

objectives of, the proposed rule. The 

NPRM addresses the other requirements 

in this section. 

B. Reasonable Alternatives and 

Anticipated Costs and Benefits 

The Commission believes that the 

benefits of proceeding with the 

rulemaking will significantly outweigh 

the costs, but it welcomes public 

comment and data (both qualitative and 

quantitative) on any benefits and costs 

to inform a final regulatory analysis. 

Critical to the Commission’s analysis is 

the legal consequence that any eventual 

rule would allow not only for the ability 

to redress consumers who are harmed 

by rule violations, but also for the 

deterrence value of the threat of civil 

penalties against violators. Such results 

are likely to provide benefits to 

consumers and competition, as well as 

to the agency, without imposing any 

significant costs on consumers or 

competition. It is difficult to quantify 

with precision what all those benefits 

may be, but it is possible to describe 

them qualitatively. 

It is useful to begin with the scope of 

the problem the proposed rule would 

address. As discussed in the ANPR and 

documented in the comments received 

and existing literature on shrouded 

pricing, unfair or deceptive practices 

relating to fees pervade various 

industries, harming consumers and 

competition. For example, empirical 

and theoretical models suggest that 

mandatory hidden fees may lead 

consumers to pay more than they 

otherwise would in a truly transparent 

marketplace. This can lead to a transfer 

of wealth away from consumers to the 

firms who successfully hide their true 

prices. Studies suggest that unfair or 

deceptive pricing strategies may also 

lead consumers to put less effort into 

searching for lower prices. Deceptive 

pricing may harm competition by 

directing consumers away from 

businesses with the best price and 

honest practices to businesses with 

prices that are higher, less transparent, 

and more deceptive. This makes it 

harder for the genuine price cutter to 

attract consumers and enables the 

higher-priced rival to effectively shroud 

its comparatively higher prices, thereby 

reducing real price competition.243

Given the proliferation of unfair or 

deceptive pricing practices relating to 

fees, it is not surprising that cases 

relating to unfair or deceptive fee 

practices have recently constituted, and 

are likely to constitute in the future, a 

meaningful share of Commission 

enforcement actions, and in many of 

those actions a rule may prove to be the 

only or the most practicable means for 

achieving consumer redress. As such, a 

significant anticipated benefit of a final 

rule is the ability to obtain monetary 

relief, especially consumer redress, as 

well as civil penalties. While such relief 

could also be obtained for certain feerelated practices with an existing rule or 

statute, such as the TSR, ROSCA, and 

the Negative Option Rule, by no means 

do all unfair or deceptive practices 

relating to fees implicate an existing 

rule or statute. 

To succeed at obtaining consumer 

redress without a rule violation, the 

Commission must first obtain an 

administrative cease-and-desist order 

based on Section 5 violations. Then, to 

secure consumer redress for victims, the 

Commission must file an action in 

Federal court under Section 19(a)(2) and 

persuade a court in each case that the 

conduct at issue is ‘‘one which a 

reasonable man would have known 

under the circumstances was dishonest 

or fraudulent.’’ 244 Although this 

standard is likely to be met in some 

cases relating to unfair or deceptive 

practices relating to fees, having to 

prove as much in each case requires a 


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245See, e.g., Press Release, Fed. Trade Comm’n, 

Marketers of Ab Force Weight Loss Device Agree to 

Pay $7 Million for Consumer Redress (Jan. 14, 

2009), https://www.ftc.gov/news-events/news/pressreleases/2009/01/marketers-ab-force-weight-lossdevice-agree-pay-7-million-consumer-redress 

(describing a 2009 settlement of a follow-on Section 

19 action against Telebrands Corp. that was brought 

after litigation finally concluded of a 2003 

administrative complaint alleging violations of 

Section 5—in this case, the Section 19 action settled 

instead of being litigated to judgment, which would 

have taken more time). 

246 In its comment, the National Automobile 

Dealers Association, FTC–2022–0069–6043, noted 

that ‘‘the Commission’s desire for monetary penalty 

authority over a practice that is already 

impermissible under current law is not a legally 

adequate basis for the issuance of a trade regulation 

rule.’’ This argument misses the mark because an 

eventual rule would not merely constitute a 

restatement of existing law. As noted in this 

preamble, the Commission has carefully analyzed 

the unfair or deceptive nature of failing to include 

mandatory fees and charges in total price quotes 

and misrepresenting the nature or purpose of fees. 

Moreover, an eventual rule would provide 

consumers with monetary relief in cases where the 

Commission is unable to allege a rule violation 

currently, and it would have a deterrent effect on 

businesses that, to date, continue to engage in these 

unfair or deceptive pricing practices. 

247As part of its broader analysis, this NPRM 

considered the costs and benefits of the proposed 

rule as it applied to three specific industries: shortterm lodging, live-event ticketing, and restaurants. 

There is a potential cost savings associated with not 

requiring compliance with the proposed rule for 

industries outside of live-event ticketing and shortterm lodging. Further, there may be unintended 

consequences of the proposed rule on some 

industries. This NPRM seeks comment on these 

potential unintended consequences and seeks data 

that would facilitate further analysis of the costs 

and benefits of narrowing the proposed rule to 

specific sectors. 

greater expenditure of Commission 

resources than in cases with a rule 

violation, which allow the Commission 

to proceed directly in Federal court and 

do not require separate proof of 

knowledge that the conduct was 

dishonest or fraudulent. 

Accordingly, without a rule, the 

Section 19(a)(2) path often requires 

consumer victims to wait many years 

before the Commission can deliver 

redress to them, even six years or 

more.245 The Commission’s experience 

supports a reasonable estimate that 

administrative litigation can take at least 

twice as long as Federal litigation with 

a rule violation. Because of the 

prevalence of unfair or deceptive 

practices relating to fees, the 

Commission will not have a shortage of 

actors to investigate. Having a rule 

would result in a savings of enforcement 

resources, which could be invested into 

investigating and, where the facts 

warrant, bringing additional 

enforcement actions. In sum, significant 

potential benefits of a rule are that the 

Commission could put a stop to more 

unfair or deceptive practices relating to 

fees, return money to more victims, and 

obtain that redress more quickly. 

Another potential significant benefit 

is deterrence of unfair or deceptive 

practices relating to fees. The 

Commission anticipates that most 

companies that are subject to any 

eventual rule would comply with it 

right away, especially as their 

competitors would also be bound by it. 

And for companies that do not 

immediately comply, an eventual rule 

that makes it less likely they could 

evade redressing consumers and more 

likely that they have to pay civil 

penalties can have only helpful 

deterrence effects, whatever their 

magnitude.246 Any eventual rule could 

also have the salutary effect of 

complementing the Commission’s 

consumer education work by elevating 

public awareness of these prevalent 

unfair or deceptive practices relating to 

fees, which could increase how often 

they are detected and reported. 

In analyzing the potential costs and 

benefits of the proposed rule, the 

Commission also considered several 

alternatives to the rule including 

terminating the rulemaking, pursuing 

narrower rule alternatives and pursuing 

broader rule alternatives. One 

potentially reasonable alternative to the 

proposed rule is to terminate the 

rulemaking and rely instead on the 

existing tools that the Commission 

currently possesses to combat unfair or 

deceptive practices relating to fees, such 

as consumer education and enforcement 

actions brought under Sections 5 and 

19(a)(2) of the FTC Act. Termination of 

the rulemaking would offer the benefit 

of preserving some Commission 

resources that would be required to 

continue the rulemaking in the short 

term, but it would come at a significant 

cost. The cost that is most significant is 

the failure to strengthen the set of tools 

available in support of the 

Commission’s enforcement program 

against unfair or deceptive practices 

relating to fees, depriving it of the 

benefits outlined in this section. 

Other potential reasonable 

alternatives to the proposed rule could 

narrow the proposed rule’s scope. As 

discussed in Section III, bait-and-switch 

pricing and misrepresentations relating 

to fees are prevalent across the 

economy. However, much media 

attention has been focused on fees 

related to live-event ticketing and shortterm lodging, and the Commission 

received many comments related to 

these two sectors in response to the 

ANPR. An alternative to the proposed 

rule would be to propose a rule 

addressing pricing only in these specific 

sectors. The Commission believes, 

however, that limiting the proposed rule 

to specific sectors that have received 

extensive attention would leave the 

door open to widespread unfair or 

deceptive practices in other sectors. One 

benefit of the proposed industry-neutral 

rule is that consumers will likely have 

greater confidence in knowing when the 

rule applies to their purchases 

compared to a sectoral rule in which 

only certain industries are required to 

show Total Price. Further, comments 

received in response to the ANPR, 

described in Section II, noted the 

importance of applying a proposed rule 

to all market sector members to 

establish a level playing field and to 

avoid granting individual industry 

members competitive advantages by 

excluding them from rule coverage. A 

narrower alternative rule could fail to 

address the identified unfair or 

deceptive fee practices in large swaths 

of the economy and give some 

businesses an unfair competitive 

advantage.247

In addition, the proposed rule could 

have been subject to further narrowing 

principles, including proposing a rule 

that exempted small businesses or 

focused solely on online-only 

transactions. An alternative rule that 

exempted small businesses from the 

proposed requirements in § 464.2 could 

have the benefit of avoiding compliance 

costs borne by small businesses with 

smaller profit margins that might cause 

them to be impacted disproportionately 

by the proposed rule. On the other 

hand, a rule exempting small businesses 

might impose more uncertainty and 

compliance costs for businesses to 

determine whether the rule applies to 

them and, as noted in this section, 

comments from industry favored a rule 

that applied to industry members 

equally to avoid the creation of 

competitive advantages. Narrowing the 

scope of the rule in this way could also 

reduce consumer benefits arising from 

increased price transparency across 

markets and lower consumer confidence 

regarding whether the rule applies to 

specific purchases. 

Another narrower alternative rule 

focused on online-only transactions 

could preserve many benefits discussed 

in this section of an industry-neutral 

rule because it would cover many of the 

industries about which the Commission 

received a large number of comments. 

As a result, this alternative would likely 

still benefit a large number of 

consumers. It may also avoid 

unintended consequences in some 

industries, particularly those with 

complicated pricing structures. 


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77442 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

248For example, many commenters flagged 

common practices in the hotel and car rental 

industries that occur at the check-in or check-out 

counter after the initial ‘‘online’’ booking. FTC– 

2022–0069–0821 (‘‘Another hidden fee is the cost 

to park your vehicle. You’re trapped at the check 

in desk when you’re told it’s $60 per night to self 

park.’’); FTC–2022–0069–1746 (‘‘Tricky or 

deceptive rental car insurance packages that the 

companies try to sell you at a desk. These details 

are either not online or very difficult to find.’’); 

FTC–2022–0069–2668 (describing a ‘‘destination 

fee’’ charged in person at a hotel); FTC–2022–0069– 

5937 (‘‘When I tried to check in I was told a 

different price for my suite than the one I had 

booked online. I explained to the front desk 

assistance that I had booked at a different price. She 

informed me that their prices include a ‘resort fee,’ 

which covers use of the pool, phone, and gym.’’); 

FTC–2022–0069–5944 (describing car rental fees 

‘‘not even mentioned to the consumer until they 

reach the checkout counter’’). See also Compl. ¶ 8, 

Abdelsayed, supra n. 222 (‘‘When a consumer 

books online, they cannot tell . . . what they will 

be separately charged for upon arrival and/or at 

checkout, well past the point the consumer could 

make an informed decision.’’); Settlement 

Agreement ¶ 6, Dollar Thrifty Auto. Grp., Inc., supra 

n. 221 (settling claims that defendant 

misrepresented toll-related fees charged after the 

consumers drove rental cars on toll roads); Compl. 

¶¶ 1, 3–5, 8, Travelers United, supra n. 222 

(describing resort fees due separately at the 

property); Compl. ¶ 13, Shahar v. Hotwire, Inc. et 

al., No. 12–CV–6027 (N.D. Cal. filed Nov. 27, 2012) 

(‘‘[W]hen the customer arrives at the airline ticket 

counter, hotel check-in desk, or car rental desk, he 

learns for the first time that he will be unable to 

obtain the promised services for the agreed upon 

price, but instead must pay significantly more.’’). 

249Within the Commission’s Preliminary 

Regulatory Analysis is a preliminary analysis of the 

costs and benefits of the proposed rule, which 

includes analyses of subsets of the proposed rule. 

The Commission seeks comment on whether any 

narrower subset of the proposed rule would 

constitute a better rule than the proposed rule. 

250See infra Section VII.C.5. 

However, a rule that focused exclusively 

on online-only transactions could fail to 

address prevalent unfair and deceptive 

practices that occur in-person or 

incentivize businesses with online and 

in-person customer interactions to 

bifurcate transactions.248 Further, it 

might introduce uncertainty and 

compliance costs for businesses that 

operate both online and in-person. 

Section X seeks comment on these 

potential narrowing alternatives, 

including requests for data not currently 

available to the Commission to develop 

a quantitative analysis of the costs and 

benefits. 

As noted in Section II, many 

comments to the ANPR expressed 

frustration with fees commenters 

deemed ‘‘excessive’’ or ‘‘worthless.’’ An 

alternative to the proposed rule would 

be to address these fees explicitly. Such 

an alternative would benefit consumers 

who are paying excessive amounts for 

basic goods or services and those who 

are paying for goods or services that 

provide them little to no value by 

prohibiting businesses from charging 

such fees. This economic transfer would 

allow consumers to save their money or 

spend it elsewhere on other goods or 

services that do provide them value. 

However, a rule prohibiting worthless 

and excessive fees could incur 

additional costs for industry to 

determine whether a fee qualified as 

worthless or excessive under the rule. In 

addition, some of the benefits of an 

alternative rule prohibiting worthless or 

excessive fees may already be 

accomplished by the proposed rule. For 

example, in connection with worthless 

fees, the proposed rule would require all 

mandatory fees to be included in the 

Total Price whether those fees arguably 

add value to consumers or not. 

Transparency and competition on price 

could then disincentivize businesses 

from incorporating such fees into their 

pricing schemes altogether. In addition, 

consumer confusion related to the 

purpose of worthless fees would be 

addressed by the provisions in the 

proposed rule that prohibit 

misrepresenting fees and require the 

disclosure of the nature and purpose of 

optional fees. Section X requests 

comment on potential alternatives 

prohibiting fees that provide little or no 

value to consumers and fees that are 

excessive, including how to define such 

fees. 

In sum, the alternative of terminating 

the rulemaking would not sufficiently 

accomplish the Commission’s 

objectives. Other alternatives discussed 

here would accomplish some, but not 

all, of the Commission’s objectives. The 

Commission seeks comment on these 

alternatives and any other potentially 

reasonable alternatives. While there may 

be other alternatives that could 

potentially accomplish the stated 

objectives, the Commission would 

benefit from additional data to conduct 

preliminary analyses of projected 

benefits and adverse economic 

effects.249 Therefore, the Commission 

seeks comment on whether there are 

other potentially reasonable 

alternatives, including any relevant 

sources of data that reflect the costs and 

benefits of such alternatives. 

C. Economic Analysis of Costs and 

Benefits of the Proposed Rule 

The following analysis describes the 

anticipated impacts of the proposed 

rule. Our analysis concludes that on an 

economy-wide basis, there are positive 

benefits to the proposed rule if the 

benefit per consumer is at least $6.65 

per consumer per year over a 10-year 

period.250 This NPRM discusses the 

proposed regulatory requirements in the 

following areas: 

1. Prohibits offering, displaying, or 

advertising an amount a consumer may 

pay without adequate disclosure of the 

Total Price, as defined in the proposed 

rule. 

2. Prohibits misrepresentations 

regarding the nature and purpose of any 

amount a consumer may pay, and 

requires disclosures of the nature and 

purpose of any amount a consumer may 

pay that is excluded from the Total 

Price. This includes disclosing the 

refundability of such fees, and the 

identity of any good or service for which 

fees are charged. 

Where possible, the Commission 

quantifies the benefits and costs and 

notes that some potential benefits and 

costs are unquantified. If a benefit or 

cost is quantified, the sources of the 

data relied upon are indicated. If an 

assumption is needed, the text makes 

clear which quantities are being 

assumed. Because there is data available 

to quantify some of the potential 

benefits and costs in the live-event 

ticketing and short-term lodging 

industries and mandatory fees are 

commonplace in these industries, this 

preliminary analysis provides 

quantified benefits and costs for these 

specific industries separately. 

Mandatory fees are also common in the 

restaurant industry. Some of the costs 

for this industry are quantified, but 

there is insufficient data to quantify 

benefits for this industry. 

The Commission uses 10 years for the 

time period of analysis because FTC 

rules are subject to review every 10 

years. Tables 1.A and 1.B summarize the 

main findings of the regulatory impact 

analysis. Table 1.A presents the 

potential benefits and costs of the 

proposed rulemaking. Panel A 

summarizes the costs, benefits, and 

resulting net benefits for the live-event 

ticketing and short-term lodging 

industries—the two industries for which 

data are available to estimate both costs 

and benefits of the proposed rule. 

Quantified benefits in these industries 

derive from time savings consumers 

would experience due to greater price 

transparency, leading to more efficient 

shopping processes. Quantified costs 

derive from the costs to firms of 

complying with the proposed rule. 

The quantified net benefits for both 

the live-event ticketing and short-term 

lodging industries are positive. There 

are also unquantified benefits and costs. 

Unquantified benefits may arise from a 

reduction in deadweight loss as 

consumers experience greater price 

transparency and make fewer mistake 

purchases. Unquantified costs may stem 

from unintended consequences of the 

rule, such as any adjustment costs or 


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Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77443 

251We use 3% and 7% for the discount rate 

consistent with Office of Management and Budget’s 

guidance. OMB, Circular A–4 (Sep. 17, 2023), 

https://obamawhitehouse.archives.gov/omb/ 

circulars_a004_a-4/. 

consumer confusion as expectations 

adjust. 

Panel B summarizes the costs and 

benefits for the restaurant industry and 

all other remaining industries. 

Quantified costs derive from 

compliance. Due to a lack of data, all 

benefits, including both the increase in 

time savings and reduction in 

deadweight loss, of the proposed rule 

for these industries are unquantified. 

The inability to quantify such benefits 

does not indicate that such benefits are 

trivial; indeed, such unquantified 

benefits may be substantial. 

For both quantified benefits and costs, 

we provide a range representing the set 

of assumptions that result in a ‘‘lowend’’ or ‘‘high-end’’ estimate. These 

estimates are calculated as present 

values over the 10-year time frame. 

Benefits and costs are more valuable to 

society the sooner they occur. A 

discount rate (3% or 7%) is used to 

adjust estimated benefits and costs for 

differences in timing; a higher discount 

rate is associated with a greater value for 

benefits and costs in the present.251

Table 1.B presents low-end and highend estimates of the total quantified 

economy-wide costs and the necessary 

‘‘break-even benefit’’ per consumer. 

Since the Commission is unable to 

quantify the benefits of the proposed 

rule at the economy level, we instead 

calculate the minimum value the 

proposed rule would need to generate 

for the average consumer in order for 

the total benefits of the proposed rule to 

outweigh its quantified costs. Under the 

high-end cost assumptions with a 7% 

discount rate, we find that each 

consumer would need to experience a 

benefit of $6.65 per year over 10 years 

for the proposed rule’s benefits to 

exceed its quantified economy-wide 

compliance costs. 


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77444 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 


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Table 1.A - Summary of Potential Benefits and Costs of Proposed Rule 

Ticketing 

Quantified Benefits (Time Savings) 

Quantified Costs (Compliance) 

Unquantified Benefits 

Unquantified Costs 

Net Benefits (10 Years) 

Net Benefits (10 Years) 

Short-Term Lodging 

Quantified Benefits (Time Savings) 

Quantified Costs (Compliance) 

Unquantified Benefits 

Unquantified Costs 

Net Benefits (10 Years) 

Net Benefits (10 Years) 

Quantified Costs (Compliance) 

Unquantified Benefits 

Unquantified Costs 

7% discount rate 

3% discount rate 

7% discount rate 

3% discount rate 

7% discount rate 

3% discount rate 

7% discount rate 

3% discount rate 

7% discount rate 

3% discount rate 

7% discount rate 

3% discount rate 

7% discount rate 

3% discount rate 

Present Value Over a 10-Year Period 

Low-end 

Estimate 

$149,918,030 

$182,076,794 

$14,282,177 

$14,282,177 

High-end 

Estimate 

$1,776,806,284 

$2,157,947,183 

$129,453,151 

$140,330,460 

Reduced Deadweight Loss (e.g. efficient quality/quantity 

purchased, fewer mistake purchases) 

Unintended Consequences (e.g. adjustment costs, 

consumer confusion as expectations adjust) 

(Low Benefits - High Cost) 

$20,464,879 

$41,746,333 

$4,661,731,460 

$5,661,714,710 

$136,472,889 

$136,472,889 

(High Benefits - Low Cost) 

$1,762,524,107 

$2,143,665,007 

$6,889,087,761 

$8,366,858,934 

$413,783,170 

$441,071,919 

Reduced Deadweight Loss (e.g. efficient quality/quantity 

purchased, fewer mistake purchases) 

Unintended Consequences (e.g. adjustment costs, 

consumer confusion as expectations adjust) 

(Low Benefits - High Cost) 

$4,247,948,290 

$5,220,642,791 

$4,264,844,809 

$4,264,844,809 

(High Benefits - Low Cost) 

$6,752,614,872 

$8,230,386,045 

$11,525,776,514 

$12,526,501,293 

Increased Time Savings and Reduced Deadweight Loss 

Unintended Consequences (e.g. adjustment costs, 

consumer confusion as expectations adjust) 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77445 

252See Section VII.A., ‘‘Concise Statement of the 

Need for the Rule and Its Objectives’’ for a 

discussion of the legal rationale for the proposed 

rule. 

253Howard A. Shelanski et al., Economics at the 

FTC: Drug and PBM Mergers and Drip Pricing, 41 

Rev. Indus. Org., 303–19 (2012), https://doi.org/ 

10.1007/s11151-012-9360-x. 

254The White House, How Junk Fees Distort 

Competition (Mar. 21, 2023), https://

www.whitehouse.gov/cea/written-materials/2023/ 

03/21/how-junk-fees-distort-competition/; The 

White House, The President’s Initiative on Junk 

Fees and Related Pricing Practices (Oct. 26, 2022), 

https://www.whitehouse.gov/briefing-room/blog/ 

2022/10/26/the-presidents-initiative-on-junk-feesand-related-pricing-practices/; Glenn Ellison, A 

Model of Add-On Pricing, 120 Q.J. Econ. 2, 585–637 

(2005), https://www.jstor.org/stable/25098747. 

255 Vicki G. Morwitz et al., Divide and Prosper: 

Consumers’ Reactions to Partitioned Prices, 35 J. 

Mktg. Rsch. 4, 453–63 (1998), https://doi.org/ 

10.1177/002224379803500404. 

256Michael R. Baye et al., Search Costs, Hassle 

Costs, and Drip Pricing: Equilibria with Rational 

Consumers and Firms, (Nash-Equilibrium.com, 

Working Paper, 2019), http://nash-equilibrium.com/ 

PDFs/Drip.pdf. 

1. Economic Rationale for Proposed 

Rule 

Insufficient information about or 

salience of mandatory fees when 

consumers start the purchasing process 

for a product may result in a market 

failure.252 This incomplete information 

and lack of transparency leads to a 

market failure because the true price is 

shrouded for the consumer. Firms may 

shroud total prices through the practice 

of ‘‘drip pricing,’’ which is ‘‘a pricing 

technique in which firms advertise only 

part of a product’s price and reveal 

other charges later as the customer goes 

through the buying process.’’ 253 While 

consumers may be able to comparison 

shop and discover the total price prior 

to final purchase by going through the 

checkout process across multiple 

sellers, this strategy involves additional 

search costs for the consumer. In some 

cases, taking the time to search for the 

total price at a different seller may result 

in the consumer losing the product at 

the original seller. Drip pricing and the 

resulting imposition of additional 

search costs may make it more difficult 

for consumers to compare prices across 

platforms, which may soften price 

competition in the market.254

A market failure may also occur when 

firms shroud total prices through nonaggregated partitioned pricing, in which 

all of the components of the total price 

(base price, fees, etc.) are presented to 

consumers up front but without the total 

price itself.255 Non-aggregated 

partitioned pricing, like drip pricing, 

imposes costs on consumers by 

requiring them to spend additional time 

to calculate total prices for themselves 

and by increasing the likelihood of 

suboptimal choices through erroneous 

total price calculations. 

a. Incomplete Pricing Information and 

Search Costs 

A well-functioning market for a good 

(or service) depends, in part, on its 

consumers having accurate information 

regarding the price of the good. By 

revealing hidden mandatory fees later in 

the purchasing process through drip 

pricing, a firm imposes additional costs 

on consumers of acquiring this 

information. By employing partitioned 

pricing but failing to provide an upfront 

total price, a firm imposes similar added 

costs. In either case, several harms may 

arise. First, keeping consumer choices 

fixed, the added search cost to acquire 

price information reduces consumer 

surplus with no countervailing increase 

of producer surplus. Second, shrouded 

prices make comparison shopping more 

difficult, leading consumers to make 

suboptimal consumption decisions. 

Overall, consumers may find it too 

costly to search for total price 

information for some or all goods under 

consideration. This leads consumer 

demand to become less elastic, and 

consumers will accept higher prices 

relative to an efficient equilibrium. 

Additionally, as shrouded prices make 

it harder for consumers to comparison 

shop, firms may gain more market 

power that allows them to raise 

prices.256

Figure 1 illustrates this effect of 

shrouded prices on consumer demand. 

In this model, the demand curve 

Dupfront-total represents consumers’ true 

preferences when presented with an 

upfront total price. When a shrouded 

price hinders consumers’ ability to learn 


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Note: "Low-End Estimate" reflects all scenarios that jointly result in lower estimates of benefits 

or costs and "High-End Estimate" reflects all scenarios that jointly result in higher estimates of 

benefits or costs. 

Table lB - Summary of Quantified Costs and Break-Even Benefits of Proposed 

Rule 

Present Value Over a 10-Year Period 

Total Quantified Costs 

Total Quantified Costs 

Break-even Benefit Per Consumer 

PerYear 

Break-even Benefit Per Consumer 

PerYear 

7% discount rate 

3% discount rate 

7% discount rate 

3% discount rate 

Low-end 

Estimate 

$4,415,599,874 

$4,415,599,874 

$2.43 

$2.00 

High-end 

Estimate 

$12,069,012,836 

$13,107,903,673 

$6.65 

$5.95 

Note: "Low-End Estimate" reflects all scenarios that jointly result in lower estimates of benefits 

or costs and "High-End Estimate" reflects all scenarios that jointly result in higher estimates of 

benefits or costs. 
77446 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

257Although consumers in this model would 

prefer upfront pricing, it is unlikely that any 

individual firm in a market with shrouded prices 

could increase its market share by providing 

upfront total prices. Under the expectation of 

shrouded prices, consumers may inadvertently 

interpret such a firm’s upfront prices as higher base 

prices, leading the firm to lose rather than gain 

business. In this way, shrouded prices create a 

prisoners’ dilemma in the market that cannot be 

undone through competition. 

258For expositional simplicity, Figure 1 does not 

include the shift to the supply curve resulting from 

firms’ increased market power. This shift in supply 

would likely lead to similar shifts in the market 

equilibrium: higher prices, a transfer of surplus 

from consumers to producers, and a deadweight 

loss to society. 259This phenomenon has been observed, for 

example, in the live-event ticketing industry. See 

Blake et al., supra n. 153. 260 David Laibson, Harvard U., Drip pricing: A 

Behavioral Economics Perspective, Address at the 

F.T.C. (May 21, 2012), https://www.ftc.gov/sites/ 

default/files/documents/publiclevents/economicsdrip-pricing/dlaibson.pdf. 

261Shelle Santana et al., Consumer Reactions to 

Drip Pricing, 39 Mktg. Sci. 1, 188–210 (2020), 

https://doi.org/10.1287/mksc.2019.1207. 

262Alexander Rasch et al., Drip Pricing and its 

Regulation: Experimental Evidence, 176 J. Econ. 

Behav. & Org., 353–70 (2020), https://doi.org/ 

10.1016/j.jebo.2020.04.007. 

total prices and efficiently compare 

competing goods, consumer demand 

will swing out, as a result of decreased 

elasticity, as represented by Dshrouded. 

Consequently, incomplete price 

information may lead consumers to 

purchase more of the good or service at 

a higher price than they would if they 

had complete price information. 

As a consequence of the higher price 

paid by consumers, there is a transfer of 

surplus from consumers to sellers. This 

transfer correlates with additional profit 

for producers, who thus have an 

incentive to increase consumer costs in 

this manner.257 Whereas such transfers 

are neither benefits nor costs in this 

analysis, the overconsumption also 

leads to a societal cost in the form of 

deadweight loss because the resources 

used to produce the good would have 

been put to a better use if consumer 

demand had not been distorted in this 

manner. This inefficient consumption 

level and the accompanying increase in 

consumer search costs represent a 

market failure.258

Additionally, products are vertically 

differentiated in many markets, with 

higher quality items selling at higher 

prices. In such markets, drip pricing 

may lead to equilibria characterized by 

inefficiently high qualities in addition 

to inefficiently high quantities.259

Consumers may respond to fully 

disclosed prices in these markets by 

purchasing lower quality products in 

addition to purchasing fewer products. 

b. Shrouded Pricing as a Source of 

Biased Expectations 

As explained in Section VII.C.1.a, 

sellers have incentives to distort 

consumer demand toward an inefficient 

equilibrium. This inefficiency may also 

arise in a behavioral context.260 By 

shrouding total prices through drip or 

partitioned pricing, a firm may bias its 

consumers’ price expectations. For 

example, consumers may respond to 

driped prices by anchoring their beliefs 

on the base price and, thus, 

systematically underestimate the price 

of the good. This underestimation, 

whether by all consumers or merely by 

a suset of consumers, would lead to an 

outward shift in consumer demand. 

While this outward shift would look 

different than the demand distortion in 

Figure 1, it would lead to a similiarly 

inefficient equilibrium in which the 

good is overconsumed and society 

suffers a deadweight loss. 

There are several studies that show 

how consumer behavior changes as a 

result of drip pricing. One study found 

that when optional surcharges are 

dripped, individuals are more likely to 

select a more expensive option (after 

including surcharges) than what they 

would have chosen under upfront 

pricing.261 Even when the participants 

became aware of the additional fees, 

they were reluctant to restart the 

purchase process because they 

perceived high search costs and 

inaccurately assumed that all companies 

charge the same fees. A different 

economics paper conducted an 

experiment and found that consumers 

encountering drip pricing are more 

likely to make purchasing mistakes if 

they are uncertain about the extent of 

the drip pricing.262


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Price 

Figure 1: Effects of price shrouding on consumer demand 

Transfer from 

consumer to seller 

I 

I 

I 

I 

I 

' I 

I 

I 

"---------~--"-' ----------Quantity 

Qs 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77447 

263Raj Chetty et al., Salience and Taxation: 

Theory and Evidence, 99 Am. Econ. Rev. 4, 1145– 

77 (2009). 

264See Blake et al., supra n. 153. 

265See, e.g., enforcement by the State of 

Pennsylvania against Marriott International, 

discussed in Section VII.C.3.b(2). 

Another prominent study looked at 

how consumers respond to the salience 

of sales tax on goods, which affects the 

full price of a product.263 In this study, 

when the grocery store displayed the 

full price of each item on shelves as part 

of a field experiment, people purchased 

fewer products, relative to the control 

scenario in which sales tax was added 

at checkout, despite knowing that the 

final price being charged had not 

changed. In 2014, StubHub conducted 

an experiment in which some 

consumers were presented total prices 

inclusive of fees up front while other 

consumers were presented a base price 

up front with fees revealed at checkout. 

An analysis of this experiment revealed 

that presenting consumers with total 

prices up front reduced both the 

quantity and quality of tickets 

purchased relative to presenting 

consumers with dripped prices.264

2. Economic Effects of the Proposed 

Rule 

The model of incomplete price 

information, described in Section 

VII.C.1.a, provides a framework for 

assessing the potential costs, benefits, 

and transfers associated with the 

proposed rule. The proposed rule would 

result in positive net benefits if it 

increases the ease with which 

consumers can learn total prices and if 

the proposed rule improves consumer 

comprehension of fees as they relate to 

total price, facilitates comparison 

shopping, reduces search costs, or 

otherwise allows consumers to make 

choices that increase net welfare. 

Under the current regime, if a seller 

in a given industry utilizes hidden fees, 

that seller may acquire a larger market 

share by advertising lower initial prices 

than other sellers not using hidden fees. 

Absent a Federal rule, competitive 

forces will drive other firms within an 

industry to also use hidden fees. These 

firms may have to accept a lower market 

share if they don’t use hidden fees, even 

though their total prices are similar to 

their competitors. Thus, one potential 

outcome of the proposed rule is that 

firms that currently do not use drip 

pricing (in an industry where drip 

pricing is common) will no longer face 

the competitive pressure to employ 

hidden fees and may experience higher 

revenue if consumers can more easily 

compare prices across firms. 

The proposed rule would also 

generate societal costs as firms would 

have to adjust how they convey prices 

to consumers. The proposed rule could 

increase economic efficiency if it 

improves consumers’ price calculations 

and the resulting reduction in 

deadweight loss exceeds the cost to 

firms of providing more transparent 

pricing. It may also facilitate price 

comparisons by consumers, increase 

competition among sellers, and put 

downward pressure on prices. Due to a 

lack of data, it is difficult to fully 

quantify all the potential effects of the 

proposed rule on the full economy. 

Where there may be impacts that we are 

unable to quantify, we provide a 

qualitative description. 

c. General Benefits of Proposed Rule 

Consumers would benefit from the 

proposed rule in several ways. In 

addition to reductions in search costs 

and deadweight loss, which are 

described in greater detail in Section 

VII.C.1, there may be unquantified 

benefits from § 464.3 of the proposed 

rule, which in part prohibits 

misrepresentation regarding the nature 

and purpose of any amount a consumer 

may pay that is excluded from the Total 

Price. Another potential unquantified 

benefit to consumers from the proposed 

rule is reduced frustration and 

consumer stress that is often associated 

with surprise fees that distort the 

purchasing process. 

The proposed rule may also provide 

a benefit to firms in the form of 

harmonized, nation-wide compliance 

requirements. In the absence of the 

proposed rule, individual States may 

pursue enforcement actions against 

firms using drip pricing or enact their 

own drip pricing prohibitions.265 Such 

regulations could vary from State to 

State, and firm would incur greater costs 

to ensure simultaneous compliance with 

this patchwork of regulations. A single 

rule at the Federal level would reduce 

the need for regulations at the State 

level and provide a simpler regulatory 

framework for firms. The Commission 

solicits comments on whether there are 

any additional benefits of the proposed 

rule that are not currently explored in 

this analysis and any data that may 

support estimating those benefits. 

(1) Reductions in Search Costs 

Consumers may save time searching 

for total price on goods and services as 

a result of the proposed rule. In a wellfunctioning market, consumers find it 

beneficial to spend time comparison 

shopping for low prices. When 

mandatory fees are obscured, however, 

consumers incur longer search times to 

discover full prices and make informed 

purchasing decisions. The purchase 

process for a given transaction takes 

longer than it would otherwise, as a 

consumer learns the full price at the end 

of the process and may need to re-assess 

whether they wish to purchase at a 

higher price than originally expected or 

look for other options. The proposed 

rule would eliminate the need for 

additional, inefficient amounts of time 

to determine the total price from sellers 

who do not provide the total price up 

front. At this time, we quantify the 

reduction in search costs in the liveevent ticketing and short-term lodging 

industries. We do not quantify the 

benefits of the reductions in search costs 

in other industries because we lack the 

data to quantify such benefits, but we 

acknowledge that it is a positive benefit 

to the proposed rule. 

(2) Reductions in Deadweight Loss 

As discussed in Section VII.C.1.a, 

consumers’ incomplete price 

information may distort consumer 

demand. This distortion may shift a 

market to an inefficient equilibrium and 

generate deadweight loss, which results 

from consumers purchasing higher 

quantities of the good than they would 

if fully informed. Under the proposed 

rule, consumers would learn the total 

price up front. Thus, consumers’ 

demand distortion would likely be 

mitigated, and some fraction of the 

welfare-reducing transactions would be 

prevented. In other words, resources 

supporting overconsumption become 

available for better societal use, and the 

deadweight loss is reduced or 

eliminated. The provision of full pricing 

information may also reduce consumers’ 

mistake purchases with respect to 

product quality. Drip pricing might lead 

consumers to purchase goods of 

inefficiently high quality; the proposed 

rule may allow consumers to choose 

efficient levels of quality. In addition, 

the requirement to disclose the 

refundability of any fees not included in 

the total price may also reduce the 

quantity of consumers’ mistake 

purchases. Absent the proposed rule, if 

businesses do not disclose that certain 

charges are not refundable, consumers 

might make purchases assuming that 

they are refundable. Thus, the proposed 

rule may result in consumers 

purchasing closer to the efficient 

quantity of goods. We do not quantify 

the reduction in deadweight loss, but 

we acknowledge that it is a positive 

benefit to the proposed rule. 


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77448 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

266See Off. Mgmt. & Budget, supra n. 251 (‘‘A 

regulation that restricts the supply of a good, 

causing its price to rise, produces a transfer from 

buyers to sellers. The net reduction in the total 

surplus (consumer plus producer) is a real cost to 

society, but the transfer from buyers to sellers 

resulting from a higher price is not a real cost since 

the net reduction automatically accounts for the 

transfer from buyers to sellers.’’). 

267Note that one hour of lawyer time is a proxy 

for the average amount of time firms will need to 

check whether the proposed rule applies to them. 

For example, some small businesses may not 

employ an attorney, but may instead have a staff 

member review the rule. 

d. Welfare Transfers 

The Commission expects that prices 

are likely to adjust in response to the 

transparency facilitated by the proposed 

rule. These price adjustments serve to 

transfer welfare from one side of the 

market to the other; consumer welfare 

would increase, and producer profits 

would decrease by the same amount. 

Typically, transfers of welfare from one 

set of people in the economy to another 

are documented in a regulatory analysis, 

but do not change net social welfare.266

While it is likely that the proposed rule 

may result in transfers of welfare, we do 

not attempt to estimate these transfers. 

e. General Costs of Proposed Rule 

Because the proposed rule is sectorneutral and economy-wide, all firms 

will be affected to some degree. Firms 

operating in the United States will 

likely do a basic regulatory review to 

determine how the proposed rule 

applies to them. Firms that are not 

already in compliance with the 

proposed rule may incur additional 

costs to re-optimize prices of goods and 

services. These firms may also incur 

costs to adjust how they display price 

information in order to disclose the full 

price whenever a price is quoted, and 

add required disclosures regarding 

refundability of fees not included in 

Total Price (e.g., fees for optional goods 

and services). For example, firms may 

need to reprogram websites, reprint 

advertisements, or redesign menus to 

comply with the proposed rule. 

In addition, there may be some costs 

related to unintended consequences of 

the proposed rule. For instance, 

consumers who are used to an existing 

pricing structure that separately 

discloses mandatory fees at the end of 

the purchase process may mistakenly 

make inefficient purchases while 

adjusting to the new regime of all-in 

total pricing. For example, consumers 

accustomed to dripped ticketing fees 

may initially under-consume when 

shopping for tickets with upfront all-in 

pricing. The societal cost of such 

inefficiencies would be temporary and 

decrease as consumers adjust to the allin pricing required by the proposed 

rule. 

As another example, while the 

proposed rule excludes government 

charges and shipping from the required 

disclosure of total price, the proposed 

rule requires any internal handling costs 

associated with packaging a good that 

were previously presented as fees at the 

end of the purchase process to be 

incorporated in the total price. Internal 

handling costs include costs not 

attributable to the amount sellers are 

charged by third party shipping services 

like UPS or USPS. Since shipping and 

handling charges are currently often 

combined into one fee, businesses may 

have to change how they account for 

handling costs and how they advertise 

shipping and handling costs in order to 

comply with this provision. 

f. Comparison of Benefits and Costs 

The total costs of the proposed rule 

are uncertain because it is unclear how, 

across a variety of industries, firms 

would adjust prices, change their price 

displays and disclosures, and upgrade 

their systems in response to the 

proposed rule. This section quantifies 

economy-wide compliance costs to the 

extent possible, while recognizing that 

we cannot quantify all costs. The degree 

to which the proposed rule generates 

benefits for all industries in the 

economy is unclear, due to a lack of 

reliable information on how these fees 

affect search and decision-making at the 

economy level and the way in which 

pricing and search costs vary across 

industries. As such, we are unable to 

quantify economy-wide benefits. 

Instead, we determine the break-even 

level of benefits the proposed rule must 

generate in order to outweigh the 

quantified costs we estimate and, thus, 

generate a net positive benefit to society. 

As a preview, we conclude in Section 

VII.C.2.d.(2) that if the proposed rule 

results in a benefit of at least $6.65 per 

consumer per year over 10 years, then 

the benefits from reduced search time 

will exceed quantified compliance 

costs. It seems likely that consumers 

would experience search time savings of 

this amount. 

(1) Quantified Costs 

Section VII.C.3 provides more 

detailed quantitative analyses of costs 

for three specific industries about which 

we have more information regarding 

mandatory fees: live-event ticketing, 

short-term lodging, and restaurants. 

However, there are likely other 

industries that may need to change their 

current practices to comply with the 

proposed rule, if finalized. To determine 

compliance costs for the remainder of 

the economy, we assume that 90% of 

these firms already comply with the 

proposed rule and that the other 10% of 

these firms do not currently comply 

with the proposed rule. 

The Commission quantifies the 

compliance costs utilizing assumptions 

on the number of hours required to 

check compliance with and, if 

necessary, come into compliance with 

the proposed rule. We expect that in 

response to the proposed rule, firms will 

initially determine whether and how the 

proposed rule applies to them given 

their current pricing and fee disclosure 

strategies. We assume firms whose 

current practices align with the 

proposed rule will incur one hour of 

lawyer time to confirm their 

compliance.267

We do not have data on the exact 

costs firms not presently compliant will 

incur to comply with the proposed rule. 

We acknowledge that some firms in 

some industries may have already 

developed the tools required to comply 

with the proposed rule because they 

operate in jurisdictions with similar 

rules, such as all-in pricing 

requirements. 

Transitioning to compliance for these 

types of firms should be relatively 

straightforward. For other firms and in 

other industries, transitioning to 

compliance may require additional time 

and costs. To capture both the variation 

and uncertainty of costs across 

industries, we make a series of low-end 

and high-end assumptions on the 

number of hours required to comply 

with the proposed rule. For example, we 

assume that firms not presently 

compliant will employ a low end of 5 

hours and a high end of 10 hours of 

lawyer time to determine what is 

necessary to comply with the proposed 

rule. While some firms may forgo formal 

legal advice, this range of lawyer time 

serves as a proxy for any costs 

associated with understanding the 

proposed rule and preparing to comply 

with it. 

The proposed rule’s prohibition on 

drip pricing may lead to shifts in 

consumer demand, and consequently, 

shifts in market equilibria. In response, 

firms transitioning away from drip 

pricing may need to determine new 

optimal prices and contracts. In 

addition, the proposed rule’s 

requirement that internal handling fees 

must be separated from shipping fees 

and included in the total price may 

require firms to invest more resources to 

better monitor, measure, and adjust both 

the shipping cost and the total price to 

comply with this provision. We assume 

these price re-optimizations require 


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268While there may be some firms that have 

already established the systems necessary to 

comply with the proposed rule, there may be other 

firms that will require a large number of hours to 

re-optimize prices. The assumed 40 and 80 hours 

represent averages over all firms affected by the 

proposed rule. 

269Some industries may comprise a mix of firms 

that are presently compliant and not presently 

compliant with the proposed rule. It is possible 

that, within these mixed industries, presently 

compliant firms would also need to reoptimize 

prices in response to shifts in market equilibria. 

That is, the shift in an industry’s equilibrium 

resulting from the proposed rule could be 

significant enough that all firms in the industry, 

compliant or not, would need to adjust prices. 

Firms regularly reoptimize prices in response to 

market shifts, but it is possible that this price 

adjustment would require already compliant firms 

to incur additional costs. We lack data to quantify 

this potential cost to firms. The Commission solicits 

comments and data to better understand this 

potential source of costs. 

270Note that Consumer Rule II also uses an 

assumption of 80 hours of time to reprogram flight 

quotation websites. U.S. Dep’t Transp., Preliminary 

Regulatory Analysis: Enhancing Airline Passenger 

Protections II (May 24, 2010), https://

www.regulations.gov/document/DOT-OST-2010- 

0140-0003 (‘‘Consumer Rule II’’). 

271The number of firms is provided by the United 

States Census Bureau’s Statistics of United States 

Businesses. U.S. Census Bureau, 2020 SUSB 

Annual Datasets by Establishment Industry (Mar. 

2023), https://www.census.gov/data/datasets/2020/ 

econ/susb/2020-susb.html. The estimate of 

6,140,612 covered firms may be overinclusive as it 

includes firms that would be exempted from the 

definition of Business as described in 464.1(b) of 

the proposed rule if the proposed Motor Vehicle 

Dealers Rule is finalized. When subtracting the 

number of firms in the specific industries, we use 

the low-end estimate of the number of firms in the 

live-event ticketing and short-term lodging 

industries, which results in a higher number of 

firms for the rest of the economy that may incur 

costs associated with the proposed rule. 

272U.S. Bureau Lab. Stat., Occupational 

Employment and Wage Statistics, May 2022 

National Occupational Employment and Wage 

Estimates United States (May 2022) (‘‘OEWS 

National’’), https://www.bls.gov/oes/current/ 

oeslnat.htm. U.S. Bureau Lab. Stat., Occupational 

Employment and Wage Statistics, Occupational 

Employment and Wages, May 2022: 15–2051 Data 

Scientists (May 2022) (‘‘OEWS Data Scientists’’), 

https://www.bls.gov/oes/current/oes152051.htm 

(providing the hourly wages for data scientists); 

U.S. Bureau Lab. Stat., Occupational Employment 

and Wage Statistics, Occupational Employment and 

Wages, May 2022: 15–1254 Web Developers (May 

2022) (‘‘OEWS Web Developers’’), https://

www.bls.gov/oes/current/oes151254.htm (providing 

the hourly wages for web developers); U.S. Bureau 

Lab. Stat., Occupational Employment and Wage 

Statistics, Occupational Employment and Wages, 

May 2022: 23–1011 Lawyers (May 2022) (‘‘OEWS 

Lawyers’’), https://www.bls.gov/oes/current/ 

oes231011.htm (providing the hourly wages for 

lawyers). 

273This assumption would hold, for example, if 

both the product and labor markets in this industry 

were competitive. 

firms to incur a one-time, upfront cost 

of data scientist time to perform this 

work. We assume firms not presently 

compliant will employ a low end of 40 

hours and a high end of 80 hours of data 

scientist time.268 Similar to the use of 

lawyer hours in estimating compliance 

costs, this range of data scientist time 

serves as a proxy for any costs 

associated with adjusting pricing 

strategies in response to the proposed 

rule.269

The Commission expects that the drip 

pricing employed by firms not presently 

compliant with the proposed rule is, in 

many cases, manifested in online sales. 

In such cases, firms will also need to 

adjust both advertised prices as well as 

purchase processes for online sales, and 

we assume these adjustments require 

firms to incur a one-time, upfront cost 

of web developer time. Firms may also 

need to add required disclosures 

regarding the refundability of any fees 

not included in the Total Price. We 

assume firms not presently compliant 

will employ a low end of 40 hours and 

a high end of 80 hours of web developer 

time to become compliant with the 

proposed rule.270 Once firms become 

compliant with the proposed rule, any 

future changes to pricing displays or 

purchasing systems are not a direct 

consequence of the proposed rule. For 

brick-andmortar firms the conduct inperson sales of goods and services and 

do not currently comply with the 

propsed rule, updating the price 

presentation and purchase process may 

include printing new price displays, 

revising advertising campaigns, adding 

required disclosures, as well as 

updating websites. For such firms, this 

range of web developer times serves as 

a proxy for any costs associated with 

ensuring the firm is compliant with the 

proposed rule. 

It may be the case that once the firm 

incurs the one-time transition costs, 

there are no additional costs. For a lowend estimate of costs, we assume annual 

costs are $0 because there are zero 

additional hours of labor. However, it 

may be the case that as firms transition 

into compliance with the proposed rule, 

firms need to reevaluate their pricing 

policies to ensure continued compliance 

by employing additional lawyer time on 

an annual basis. Because the proposed 

rule applies to the entire economy, it is 

difficult to know the exact annual 

compliance costs that firms may incur 

as the various industries adapt to the 

proposed rule. For the high-end cost 

estimate, we assume firms require an 

average of 10 hours of lawyer time for 

annual compliance checks. These 

potential annual compliance costs are 

proxied with lawyer time but may take 

other forms that are unknown at this 

time. 

Table 2 presents the economy-wide 

compliance costs, as well as the sum of 

the industry-specific compliance costs 

described in more detail in Section 

VII.C.3. Since the proposed rule is 

sector-neutral and economy-wide, we 

begin with the total number of firms in 

the U.S. (6,140,612), subtract the 

number of firms in the live-event 

ticketing, short-term lodging, and 

restaurant industries, and then assume 

that 90% of the remaining firms are 

already in compliance with the 

proposed rule.271 This assumption 

implies that while 5.1 million U.S. firms 

will only incur one hour of lawyer time 

to review and confirm compliance, over 

500 thousand firms outside of the 

specific industries analyzed in Section 

VII.C.3 will incur additional expenses to 

comply with the proposed rule. 

For firms not presently in compliance 

with the proposed rule, we express 

compliance costs as present values, and 

we estimate them by adding one-time 

costs with recurring annual costs, 

discounted at either 3% or 7%. We add 

to these costs the regulatory 

familiarization costs for firms in the 

remainder of the economy already 

compliant with the proposed rule as 

well as the present value of compliance 

costs for the three industries discussed 

in Section VII.C.3 to arrive at the total 

present value of compliance costs for 

the economy as a whole. Table 3 

presents the per-firm annualized 

compliance costs for the economy as a 

whole, separated by firms already in 

compliance, which incur a one-time 

compliance check, and firms not 

presently in compliance, which incur 

both one-time and recurring costs. 

The cost of employee time is 

monetized using wages obtained from 

the Bureau of Labor Statistics May 2022 

National Occupational Employment and 

Wage Estimates.272 This assumption is 

valid if hours spent in compliance 

activities would otherwise be spent in 

other productive work-related activities, 

the social value of which is summarized 

by the employee’s wage.273 To the 

extent that these activities can be 

accomplished using time during which 

employees would otherwise be idle in 

the absense of a rule, our estimates will 

overstate the welfare costs of the 

propsed rule. For the short-term lodging 

and restaurant industries, we use the 

industry specific wages associated with 

the North American Industry 

Classification System (‘‘NAICS’’) codes 

for those industries: 

BILLING CODE 6750–01–P 


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Table 2-Economy-Wide Compliance Costs 

Assumed Fraction of Firms in Compliance 

(Exclusive of Live-Event Ticketing, Short-Term 

Lodging, Restaurants) 

Number of Firms Exclusive of Live-Event 

Ticketing, Short-Term Lodging, and 

Restaurants 

Number of Firms Inclusive of Live-Event 

Ticketing, Short-Term Lodging, and 

Restaurants 

Hourly Wage Rate Data Scientist 

Hourly Wage Rate Web Developer 

Hourly Wage Lawyer to Review Compliance 

Lawyer Hours 

Purchase Process Adjustment Hours 

Data Analyst Hours 

Lawyer Hours 

One-Time Costs 

Recurring (Annual) Costs 

Total Present Value Costs (Annual + OneTime) 

Total @ 7% Discount Rate 

Total@ 3% Discount Rate 

Total Present Value Costs (Annual + One 

Time) for Live-Event Ticketing, Short-Term 

Lodging, and Restaurants 

Total @ 7% Discount Rate 

Total@ 3% Discount Rate 

Total @ 7% Discount Rate 

Total@ 3% Discount Rate 

Firms that Already Comply 

with Proposed Rule 

90% 

5,060,244 

5,322,434 

$55.40 

$42.11 

$78.74 

1 

0 

0 

0 

$398,443,589 

$0 

$398,443,589 

$398,443,589 

$47,785,835 

$47,785,835 

Firms that Do Not Already 

Comply with Proposed Rule 

5 

40 

40 

0 

$2,414,354,719 

$0 

$2,414,354,719 

$2,414,354,719 

$1,555,015,731 

$1,555,015,731 

$4,415,599,874 

$4,415,599,874 

10% 

562,249 

818,178 

$55.40 

$42.11 

$78.74 

10 

80 

80 

10 

$4,823,690,494 

$442,254,942 

$7,929,904,143 

$8,596,214,857 

$3,692,879,269 

$4,065,459,392 

$12,069,012,836 

$13,107,903,673 
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Assumed Fraction of Firms in Compliance 

(Exclusive of Live-Event Ticketing, ShortTerm Lodging, Restaurants) 

Number of Firms Exclusive of Live-Event 

Ticketing, Short-Term Lodging, and 

Restaurants 

Number of Firms Inclusive of Live-Event 

Ticketing, Short-Term Lodging, and 

Restaurants 

Hourly Wage Rate Data Scientist 

Hourly Wage Rate Web Developer 

Hourly Wage Lawyer to Review 

Compliance 

Lawyer Hours 

Purchase Process Adjustment Hours 

Data 

Lawyer Hours 

One-Time Costs 

Recurring (Annual) Costs 

Total Present Value Costs (Annual + OneTime) 

Total @ 7% Discount Rate 

Total @ 3% Discount Rate 

Total Present Value Costs (Annual + One 

Time) for Live-Event Ticketing, Short-Term 

Lodging, and Restaurants 

Total @ 7% Discount Rate 

Total @ 3% Discount Rate 

Total @ 7% Discount Rate 

Total @ 3% Discount Rate 

Firms that Already 

Comply with Proposed 

Rule 

90% 

5,060,244 

5,322,434 

$55.40 

$42.11 

$78.74 

1 

0 

0 

$398,443,589 

$0 

$398,443,589 

$398,443,589 

$47,785,835 

$47,785,835 

Firms that Do Not Already 

Comply with Proposed Rule 

5 

40 

0 

$2,414,354,719 

$0 

$2,414,354,719 

$2,414,354,719 

$1,547,358,869 

$1,547,358,869 

$4,407,943,013 

$4,407,943,013 

10% 

562,249 

818,178 

$55.40 

$42.11 

$78.74 

10 

80 

10 

$4,823,690,494 

$442,254,942 

$7,929,904,143 

$8,596,214,857 

$3,685,664,727 

$4,058,244,850 

$12,061,798,294 

$13,100,689,131 
77452 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

274See U.S. Census Bureau, supra n. 271. 

275U.S. Bureau Lab. Stat., Occupational 

Employment and Wage Statistics, Occupational 

Employment and Wages, May 2022: 15–2051 Data 

Scientists (May 2022) (‘‘OEWS Data Scientists’’), 

https://www.bls.gov/oes/current/oes152051.htm 

(providing the hourly wages for data scientists); 

U.S. Bureau Lab. Stat., Occupational Employment 

and Wage Statistics, Occupational Employment and 

Wages, May 2022: 15–1254 Web Developers (May 

2022) (‘‘OEWS Web Developers’’), https://

www.bls.gov/oes/current/oes151254.htm (providing 

the hourly wages for web developers); U.S. Bureau 

Lab. Stat., Occupational Employment and Wage 

Statistics, Occupational Employment and Wages, 

May 2022: 23–1011 Lawyers (May 2022) (‘‘OEWS 

Lawyers’’), https://www.bls.gov/oes/current/ 

oes231011.htm (providing the hourly wages for 

lawyers). 

276For the purposes of discounting and 

annualizing costs, we assume that firms incur their 

one-time costs immediately, at the beginning of year 

1, while they incur the potential costs of annual 

compliance checks at the end of each year. 

277Benefits to consumers, such as reductions in 

search costs, will accrue continuously over time. 

For simplicity, we assume for the break-even 

analysis that annualized benefits accrue all at once 

at the end of each year. As such, the break-even 

analysis may overestimate the level of benefits 

required to outweigh costs. 

278Note that while total costs are higher with a 

smaller discount rate, annualized costs are higher 

with a larger discount rate due to the high upfront 

costs and relatively low recurring costs. 

279See OEWS National, supra n. 272 (providing 

the mean hourly wage); Daniel S. Hamermesh, 

What’s to Know About Time Use?, 30 J. Econ. Surv. 

1, 198–203 (2015) (providing the value of consumer 

time). 

BILLING CODE 6750–01–C 

(2) Break-Even Analysis of EconomyWide Costs and Benefits 

In order for the proposed rule to have 

a positive net benefit, its benefits must 

outweigh its costs. It is difficult to 

quantify the net social benefits of the 

proposed rule at the economy level 

because it depends on the extent to 

which drip pricing exists and the degree 

to which the rule would result in more 

informed decisions for consumers, 

which vary by industry. Since the 

Commission is unable to quantify the 

benefits of the proposed rule at the 

economy level, we instead calculate the 

break-even benefit per consumer based 

on the quantified costs presented in 

Section VII.C.2.d.(1). That is, we 

determine the minimum value the 

proposed rule would need to generate 

for the average consumer in order for 

the total benefit of the proposed rule to 

outweigh its quantified costs. This 

benefit may include reduced search 

costs (as described in the live-event 

ticketing and short-term lodging 

industry analysis), reduced deadweight 

loss, and reduced psychological distress 

from surprise fees. For this analysis, we 

consider costs in annualized terms—the 

average discounted cost of compliance 

per year over 10 years.276 As such, we 

express the break-even benefit as an 

average benefit per consumer per year 

over 10 years.277

From Table 2, under the assumption 

that firms and consumers discount 

future years at 3%, we estimate that the 

proposed rule may result in costs as 

high as $13.1 billion over 10 years. 

Assuming a discount rate of 7% for 

future years, we estimate that the 

proposed rule may result in costs as 

high as $12.1 billion over 10 years. To 

determine the break-even benefit, we 

begin with the total present value of 

total costs and calculate the annualized 

total costs across all industries.278 Next, 

we calculate what the break-even 

benefit would be per consumer, 

according to this forumla: 

Per Consumer Annualized Benefits >= 

Annualized Quantified Compliance 

Costs/Population 

Table 4 presents the results of this 

break-even analysis. According to the 

2020 Census, there are 258,343,281 

adults living in the United States. Thus, 

we divide the estimates of annualized 

costs by the number of U.S. adults to 

find the average consumer benefit per 

year for 10 years required to exceed 

quantified compliance costs. For 

example, if the proposed rule results in 

an average benefit to consumers that 

exceeds $6.65 per year over 10 years, 

then the proposed rule’s benefits exceed 

its quantified economy-wide 

compliance costs under the high-end 

assumption and an assumed 7% 

discount rate. 

Table 4 also provides the break-even 

benefit per consumer in terms of 

minutes saved as a result of the 

proposed rule. Given that the mean 

wage is $29.76 and consumers 

reportedly value time at 82% of their 

mean wage, an hour of saved search 

time is worth $24.40/hour.279 If we 

divide the break-even dollar benefit per 


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Note: The number of firms comes from the U.S. Census Bureau. 274 Hourly wages are from the 

U.S. Bureau of Labor Statistics. 275 All Firms includes the live-event ticketing, short-term lodging, 

and restaurant industries. For the independent values of these costs, please see the respective 

sections. This grand total also includes the one-time costs to firms that already comply with the 

proposed rule. We relied upon publicly available sources of data in our calculations. We 

recognize that there may be additional sources of data and we encourage comments that provide 

alternative sources of data where they are available. 

Table 3 - Per Firm Annualized Costs 

Firms that Already Comply 

with Proposed Rule 

Firms that Do Not Already 

Comply with Proposed Rule 

Annualized Compliance Cost Per 

Firm @ 7% Discount Rate 

Annualized Compliance Cost Per 

Firm @ 3% Discount Rate 

One-Time Cost (Firms Already in 

Compliance) $78.74 

$691 $2,010 

$569 $1,803 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77453 

280Under the assumption of a 3% discount rate, 

the break-even time saved per consumer per year 

would be 14.62 minutes. 

consumer using the high-end 

assumptions and a discount rate of 7% 

($6.65) by the value of saved search time 

($24.40/hour) and convert to minutes, 

the break-even saved search time per 

consumer is 16.35 minutes. That is, if 

the proposed rule results in savings 

from reduced search time that exceed 

16.35 minutes per consumer per year 

over 10 years, then the benefits from 

reduced search time will exceed 

quantified compliance costs.280 It seems 

likely that consumers would experience 

search time savings of this amount. 

There are a few important caveats to 

this break-even analysis. It is possible 

that some industries may have more 

firms that are already in compliance 

with the rule than others. In the absence 

of data on compliance across industries, 

the analysis relies on the assumption 

that 10% of the firms in the remainder 

of the economy (excluding live-event 

ticketing, short-term lodging, and 

restaurants) are not already in 

compliance with the proposed rule. 

This assumption may overestimate the 

number of non-compliant firms in the 

remainder of the economy. In this case, 

this assumption leads to an overestimate 

of both costs and break-even benefits. 

On the other hand, there may be many 

more firms not already in compliance 

with the proposed rule, in which case 

this assumption results in an 

underestimate of both costs and breakeven benefits. Using the same breakeven benefits approach with high-end 

cost assumptions but assuming that 

50% of firms in the remainder of the 

economy are not already in compliance, 

the proposed rule would need to result 

in an annual benefit of $24.04, or 59.09 

minutes saved, per consumer per year 

over 10 years in order to exceed 

quantified compliance costs. 

This break-even analysis does not 

account for any unquantified costs. For 

instance, some potential unintended 

consequences are discussed in the 

restaurant industry section. The 

proposed rule applies to the entire 

economy, and we acknowledge that we 

cannot forecast all potential 

consequences and costs. On the other 

hand, there are additional unquantified 

benefits from the proposed rule beyond 

reducing search time such as the 

reduction in deadweight loss caused by 

consumers’ incomplete price 

information. The proposed rule may 

also affect unintended consequences 

that are beneficial. If the benefits from 

reduced deadweight loss, reduced 

search time, and beneficial unintended 

consequences outweigh the costs from 

compliance and harmful unintended 

consequences, then the proposed rule 

results in positive net social benefits. 

Finally, a break-even analysis cannot 

reveal whether the net benefits from the 

proposed rule will be positive in some 

industries and negative in others. 

1. Welfare Effects in Specific Industries 

Although the proposed rule would 

apply to nearly all industries and 

sectors under the jurisdiction of the 

Commission, it is difficult to quantify 

benefits and costs economy-wide 

beyond the break-even analysis 

presented in Section VII.C.2.d.(2). 

However, there are some industries 

where drip pricing is commonplace and 

there may be better data available for 

estimation of the benefits and costs of 

the proposed rule. 

This section describes the potential 

benefits and costs of the proposed rule 

on two specific industries that have 

been highlighted as being severely 

impacted by these undisclosed 

mandatory fees: the live-event ticketing 

industry and the short-term lodging 

industry. It also discusses the potential 

costs and benefits of the proposed rule 

in the restaurant industry, where new 

types of mandatory fees are emerging. 

The Commission provides quantitative 

estimates where possible for these 

industries and describe benefits and 

costs that we can only assess 

qualitatively. 

a. Live-Event Ticketing Industry 

This section provides analysis of the 

quantified benefits and costs of the 

proposed rule for the live-event 

ticketing industry. As discussed in 

Section VII.C.1, there are some benefits 

and costs that are unquantified, such as 

reductions in deadweight loss. Using 


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Table 4- Break-Even Analysis 

\Y;\-~i•~~~~,~i;'l~i~~~ffi1:~~~'(•~~AA:~~~il~Es;, c::1::;:.Y,:i,i1>·::'•ii:n~::viiM::,;1:,::i;:1\adij#~'~\1ittro,t,~.:1:,1,,:i ,::M:1,,~~~:~.,:21,,ttrn•i~,;i 

Full Economy 

Total @ 7% Discount Rate 

Total @ 3% Discount Rate 

Full Economy 

Total @ 7% Discount Rate 

Total @ 3% Discount Rate 

$2.43 

$2.00 

5.98 

4.93 

$6.65 

$5.95 

16.35 

14.62 

1 See OEWS National, supra n. 272 (providing the mean hourly wage); Daniel S. Hamermesh, What's to 

Know About Time Use?, 30 J. Econ. Surv. 1, 198-203 (2015) (providing the value of consumer time). 

1 Under the assumption of a 3% discount rate, the break-even time saved per consumer per year 

would be 14.62 minutes. 
77454 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

281E.g., The White House, How Junk Fees Distort 

Competition, supra n. 254. 282Michal Dalal, Online Event Ticket Sales in the 

US, IBISWorld (May 2023) (‘‘Ticket Sales Industry 

Report’’). 

283 Id. 

284U.S. Gov’t Accountability Off., Event Ticket 

Sales: Market Characteristics and Consumer 

Protection Issues, (April 12 2018), https://

www.gao.gov/products/gao-18-347. 

285The White House, President Biden Recognizes 

Actions by Private Sector Ticketing and Travel 

Companies to Eliminate Hidden Junk Fees and 

Provide Millions of Customers with Transparent 

Pricing (Jun. 15, 2023) https://www.whitehouse.gov/ 

briefing-room/statements-releases/2023/06/15/ 

president-biden-recognizes-actions-by-privatesector-ticketing-and-travel-companies-to-eliminatehidden-junk-fees-and-provide-millions-ofcustomers-with-transparent-pricing/. Some ticket 

sellers, such as TickPick.com, have never used 

hidden fees. 

286See, e.g., U.S. Senate Comm. Com. Science 

Trans., The TICKET Act, https://www.commerce.

senate.gov/services/files/071401A3-D280-414CAEDB-A9B57F276067. 

287FTC–2022–0069–6089. 

288Blake et al., supra n. 153. 

289Ticketmaster reports that the amount of time 

varies by event but references a 5-minute 

purchasing period. Ticketmaster, Why does 

Ticketmaster enforce a time limit when making 

purchases online?, https://

help.ticketmasterksa.com/hc/en-us/articles/ 

360017497557-Why-does-Ticketmaster-enforce-atime-limit-when-making-purchases-online-. Based 

on a small, non-representative sample of ticket 

purchase attempts, StubHub appears to generally 

offer 10 minutes to complete a ticket purchase. 

290See also Consumer Rule II., supra n. 270. The 

Preliminary Regulatory Impact Analysis for 

Consumer Rule II assumed consumers would save 

5 minutes of search and estimation time if all 

websites provided full-fare information up front. 

291U.S. Sec. & Exchange Comm’n, Form 10-K, 

Live Nation Entertainment, Inc. (Feb. 23, 2023) 

(‘‘Live Nation 10-K’’) https://www.sec.gov/ix?doc=/ 

Archives/edgar/data/1335258/000133525

823000014/lyv-20221231.htm. 

292U.S. GDP in 2022 was estimated to be $25.46 

trillion, GDP in Mexico was estimated to be $1.41 

trillion, and Canadian GDP was estimated to be 

$2.14 trillion in 2022. We adjust North American 

tickets by 88% to estimate the number of tickets 

sold in the United States. 

various assumptions, the quantified 

benefits and costs imply that the rule 

will have a positive net benefit. 

The live-event ticketing industry is 

often used as an example where 

consumers are surprised by mandatory 

fees at the end of the purchase 

process.281 Online event ticket sales 

were reported to be $8.1 billion in 

2022.282 Live events include music 

concerts (30.3%), sporting events (33%), 

and dance, opera, and theater 

productions (12.4%).283 For many 

consumers, there are no close 

substitutes for the specific product, a 

live-event ticket, that they wish to 

purchase. Thus, when consumers are 

presented with surprise mandatory fees, 

the consumer either pays the full price 

including the fee, spends time searching 

for a new option such as a different seat, 

or foregoes the purchase entirely. 

The live-event ticketing industry is 

unique relative to other industries 

because there is a large and robust 

secondary market. A given ticket to an 

event may be sold in the primary 

market, and then resold multiple times 

in the secondary market. It is difficult to 

fully quantify how many live-event 

ticket purchases are made in the US, 

how many involve mandatory fees, and 

what the typical size of the fee is. 

Anecdotally, it appears that most liveevent ticket sellers include some kind of 

fee, although the size of the fee varies 

across sellers. In a non-generalizable 

sample, the GAO found live-event 

ticketing fees in primary and secondary 

ticket markets averaged 27% and 31%, 

respectively, of the ticket’s price.284

In response to the White House 

calling for disclosure of hidden fees, 

some ticket sellers have voluntarily 

pledged to show ‘‘all-in prices’’ when 

the consumer begins the purchase 

process.285 However, these voluntary 

pledges were announced after the 

Advance notice of proposed rulemaking 

for the proposed rule and may be in 

response to proposed national 

legislation.286 Absent the proposed rule, 

market forces would likely return to the 

equilibrium of hidden mandatory fees. 

In fact, the National Association of 

Ticket Brokers (‘‘NATB’’) and StubHub 

submitted comments in support of the 

proposed rule requiring all-in pricing, 

but commented that the rule will only 

be effective if the rule is applied to all 

ticket sellers and rigorously enforced.287

If any seller utilizes hidden fees, they 

may get a larger market share by 

advertising lower initial prices. Absent 

a Federal rule applying to all sellers, 

competitive forces might drive ticket 

sellers to return to the use of hidden 

fees. Thus, when quantifying the 

benefits and costs, we quantify relative 

to the baseline equilibrium where 

sellers do not disclose the Total Price up 

front. 

(1) Live-Event Ticketing: Estimated 

Benefits of Proposed Rule 

(a) Consumer Time Savings When 

Shopping for Live-Event Tickets 

The proposed rule would require 

disclosures of the Total Price inclusive 

of all mandatory charges that a 

consumer must pay in order to make 

full use of the good or service. Required 

disclosure of the relevant prices and 

prohibitions on misrepresentations save 

consumers time when shopping for a 

live-event ticket by requiring the 

provision of salient, material 

information early in the process and 

eliminating time spent pursuing ticket 

offers priced above the consumer’s 

reservation price. 

The Commission assumes that, as a 

result of the proposed rulemaking 

provisions prohibiting 

misrepresentations and requiring price 

transparency, the total time spent by a 

consumer conducting the transaction 

will decrease, because some consumers 

will reduce the number of ticket listings 

they view prior to making a ticket 

purchase. For example, Blake et al. 

(2021) examine an experiment on 

StubHub where fees are presented up 

front to some consumers and at the 

backend of the purchase to others.288

They find that the fraction of consumers 

who only view one listing is 74% when 

fees are presented at the end of the 

transaction versus 83% when fees are 

presented up front. Using the 

distribution of listings viewed by 

consumers reported in Blake et al. 

(2021), we calculate that the reductio in 

the average number of listings viewed 

from showing fees up front is 0.1525 

listings. 

The amount of time the average 

consumer spends viewing a listing for a 

live event is uncertain. However, many 

ticket sellers utilize a ‘‘countdown 

clock’’ where the selected tickets in the 

consumer’s shopping cart expire and are 

returned to the marketplace. These 

countdown clocks range from 5 to 10 

minutes per ticket transaction.289

Multiplying the assumed length of a 

ticket transaction of 5 or 10 minutes by 

the estimated reduction in viewed 

listings from Blake et al. (2021) results 

in a search time savings of 0.7625 to 

1.525 minutes per consumer 

transaction.290

Next, we estimate the number of 

consumer purchases of live-event 

tickets. Live Nation (which okwns 

Ticketmaster) reported selling 281 

million fee-bearing tickets in the 

primary and secondary markets using 

the Ticketmaster system in its 2022 10– 

K SEC filing.291 However, this is the 

total for combined North America and 

International ticket sales. Live Nation 

also reports that roughly 2⁄3 of concert 

events were in North America, so we 

apply that proportion to ticket sales and 

assume that Ticketmaster sold almost 

188 million tickets in North America. 

To estimate the number of tickets sold 

in the U.S., we adjust the number of 

tickets by the share of North American 

GDP attributable to the U.S, which 

results in an estimated 165 million 

tickets sold in the primary and 

secondary market by Ticketmaster in the 

U.S.292

To find the total number of tickets 

sold in the U.S., we extrapolate from the 

Ticketmaster ticket sales using the 


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Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77455 

293See, U.S. Dep’t of Justice, The TicketMaster/ 

Live Nation Merger Review And Consent Decree In 

Perspective (Mar. 18, 2010), https://

www.justice.gov/atr/speech/ticketmasterlive-nationmerger-review-and-consent-decree-in-perspective. 

294Note that the Live Nation 10-K filing does not 

separate out tickets sold by Ticketmaster in the 

primary versus secondary market. The 80% market 

share of Ticketmaster reported by the Department 

of Justice was only in the primary market; the 

secondary market includes StubHub, VividSeats, 

TickPick.com, Ace Ticket, Alliance Tickets, Coast 

to Coast Tickets, and others. Because we do not 

have information on the proportion of Ticketmaster 

tickets sold in the secondary market and market 

share of Ticketmaster in the secondary market, the 

estimated number of tickets sold in the U.S. is 

under-estimated. This also implies that the benefits 

of the proposed rule may be under-estimated under 

this assumption, because we are under-counting the 

number of tickets sold currently with hidden fees. 

295Ticket Sales Industry Report, supra n. 282. 

296Note that assuming Ticketmaster’s market 

share is equivalent to its revenue share (of the 

primary and secondary market) assumes that the 

average price of a ticket sold by Ticketmaster is the 

same as (or lower than) the average price of a ticket 

sold by the rest of the industry. If, however, the 

average price of a ticket sold by Ticketmaster is 

higher than average prices in the rest of the ticket 

selling industry, then Ticketmaster’s revenue share 

is higher than its ticket share, and this extrapolation 

understates the total number of tickets sold in the 

U.S. 

297The Commission does not currently have 

information on the average number of tickets 

purchased in a transaction. There is reason to 

believe the average would be greater than 1, because 

most venues limit the number of tickets that can be 

purchased in a given transaction. The limit is 

dependent on the event. Ticketmaster, Why is there 

a ticket limit?, https://help.ticketmaster.com/hc/enus/articles/9781245025937-Why-is-there-a-ticketlimit-#:∼:text=Event%20organizers

%20can%20choose%20to,or%20exceed%20

published%20ticket%20limits. 

market share of Ticketmaster. Our main 

uncertainty is in Ticketmaster’s market 

share. In 2010, the DOJ approved the 

merger between Ticketmaster and Live 

Nation, and reported that Ticketmaster 

had maintained a market share of over 

80% for the previous 15 years.293 If we 

assume that Ticketmaster still has an 

80% share of the ticket market (which 

includes both the primary and 

secondary ticket markets), we can 

extrapolate an estimate of the total 

number of tickets sold in the U.S. by 

dividing Ticketmaster ticket sales in the 

U.S. by 80%.294 This provides a lowend estimate of the number of tickets 

sold in the U.S. of 206 million tickets. 

However, Ticketmaster did not begin 

selling in the secondary market until 

after the merger with Live Nation. Based 

on publicly available information, we 

are uncertain of Ticketmaster’s market 

share in the secondary market for 

tickets. If Ticketmaster does not have 

80% of the ticket market (both primary 

and secondary), the number of tickets 

sold in the U.S. exceeds the low-end 

estimate of 206 million tickets. To 

generate a high-end estimate of the total 

number of tickets sold in the U.S., we 

use the reported revenue for the full 

online ticket sales industry provided by 

the private research firm IBISWorld and 

calculate Ticketmaster’s revenue share 

of the industry.295 IBISWorld reports the 

online ticket sales industry, including 

both primary ticket sellers and ticket 

resellers, earned $8.1 billion in revenue 

in 2022. The Live Nation 10–K filing 

reports ticketing revenue of $2.2 billion 

in 2022, which suggests that 

Ticketmaster has a 27% revenue share 

of the online ticketing industry.296 We 

extrapolate a high-end estimate of the 

total number of tickets sold in the U.S. 

by dividing Ticketmaster ticket sales in 

the U.S. by 27%, which results in an 

estimate of 612 million tickets. 

Lastly, the reduction in search time of 

0.7625 to 1.525 minutes is per consumer 

purchase, not per ticket purchase. We 

assume that the average consumer 

purchase is either 1.5 or 3 tickets.297


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77456 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

298OEWS National, supra n. 272. 

299Hamermesh, supra n. 279 at 198–203. 

300Live Nation 10–K, supra n. 291. 

301OEWS National, supra n. 272; Hamermesh, 

supra n. 279. 

302Blake et al., supra n. 153. 

303OEWS National, supra n. 272. 

When multiplied by the number of 

transactions per year, the reduction in 

minutes spent viewing ticket listings 

will generate a total time savings of 875 

thousand to 10.4 million hours per year. 

According to the Bureau of Labor 

Statistics Occupational Employment 

Statistics, the average hourly wage of 

U.S. workers in 2022 was $29.76,298 and 

recent research suggests that individuals 

living in the U.S. value their non-work 

time at 82% of average hourly 

earnings.299

BILLING CODE 6750–01–P 

(b) Additional Unquantified Benefits: 

Reductions in Deadweight Loss and 

Abandoned Transactions 

Due to the incomplete price 

information problem described in 

Section VII.C.1, the proposed rule 

requiring ticket sellers to show the total 

price of tickets will likely result in a 

reduction of deadweight loss. When 

consumers are not able to observe total 

prices in the beginning of the purchase 

process, sellers are likely able to charge 

higher prices than could be supported 

under the proposed rule. Recent 

research suggests that when consumers 

are able to observe total prices for 

tickets up front—as is intended under 

the proposed rule—consumers purchase 

fewer and lower quality tickets and 

seller revenue is reduced.302

Another unquantified potential 

benefit to the proposed rule is a 

decrease in abandoned transactions. For 

example, in some cases, once the 

additional information about full price 

is revealed, consumers may fully 

abandon the transaction (i.e., not 

purchase a ticket at all). Unfortunately, 

the Commission lacks adequate 

information to determine the quantity of 

such abandoned transactions and the 

amount of time spent pursuing them. As 

a result, this benefit is unquantified in 

the current analysis. The Commission 

solicits comment on the frequency of, 

and reasons for, abandoned transactions 

in the live-event ticket market in order 

to help quantify this benefit. 

(2) Live-Event Ticketing: Estimated 

Costs of Proposed Rule 

This section describes the potential 

costs of the proposed rule provisions 

and provide quantitative estimates 

where possible. For live-event ticketing, 

the cost of employee time is again 

monetized using wages obtained from 

the Bureau of Labor Statistics May 2022 

National Occupational Employment and 

Wage Estimates.303

The costs to sellers from the proposed 

rule include a review of whether the 

rule applies, and, if the firm is not 

currently compliant with the proposed 

rule, one-time costs to comply with the 


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Table 5 - Live-Event Ticketing: Estimated Benefits of Time Savings for Completed 

Transactions 

Low-End High-End 

Benefit Estimate Benefit Estimate 

Completed Transactions 

Minutes Viewing Live-Event Ticket Listing 

Reduction in Average Number of Listings 

Viewed 

Minutes Saved per Transaction 

Number ofTickets Sold in the United States 

Average Number of Tickets in a Purchase 

Number of Consumer Purchases 

Hours Saved Per Year 

Value of 1 hour of non-work time 

Total $ Saved per year 

Abandoned Transactions 

Reductions in Deadweight Loss 

Total Quantified Benefits (10 Years) 

Total Quantified Benefits (10 Years) 

7% discount rate 

3% discount rate 

5 

0.1525 

0.7625 

206,481,486 

3 

68,827,162 

874,679 

$24.40 

$21,344,955 

Unquantified 

Unquantified 

$149,918,030 

$182,076,794 

10 

0.1525 

1.525 

611,796,995 

1.5 

407,864,663 

10,366,560 

$252,977,242 ~---•,m=~»=•~'"-"w"'-'""~~=•• 

Unquantified -'>~~ •• - .. ~·~=~-

Unquantified 

$1,776,806,284 

$2,157,947,183 

Note: Benefits have been discounted to the present value at both 3% and 7% rates. The total 

tickets sold in the U.S. market is estimated using the reported number of tickets sold in the 

primary and secondary market in the 10-K SEC filing for Live Nation.300 This number of tickets 

is then adjusted by the proportion of North American events, and then adjusted by the share of 

North American GDP attributable to the U.S. Wage rates are taken from the U.S. Bureau of Labor 

Statistics and adjusted by the consumer value of time reported in Hamermesh (2016).301 We relied 

upon publicly available sources of data in our calculations. We recognize that there may be 

additional sources of data and we encourage comments that provide alternative sources of data 

where they are available. 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77457 

304NAICS code 561599 ‘‘comprises 

establishments (except travel agencies, tour 

operators, and convention and visitors bureaus) 

primarily engaged in providing travel arrangement 

and reservation services.’’ U.S. Census Bureau, 

North American Industry Classification System, 

561599 All Other Travel Arrangement and 

Reservation Services, https://www.census.gov/ 

naics/?input=561599&year=2022&details=561599. 

305U.S. Census Bureau, supra n. 271. 

306Ticket Sales Industry Report, supra n. 282. 

rule and recurring annual costs to 

review and ensure on-going compliance. 

The Commission’s preliminary analysis 

presents two cost scenarios 

corresponding to different assumptions 

on how many hours are required to 

comply with the rule and how many 

firms would be affected by the rule. We 

present these as a low-end cost scenario 

and a high-end cost scenario. 

In order to estimate costs for the 

entire ticket-selling industry, we 

calculate the cost per seller and 

multiply by the number of sellers in the 

industry. However, there is some 

uncertainty about the number of liveevent ticket sellers that would be 

affected by the rule. The NAICS 

classification system does not define a 

classification solely for ticket sellers, 

but there are two NAICS codes that 

might include ticket sellers. The GAO 

report used the NAICS code 561599, 

which is ‘‘All Other Travel Arrangement 

and Reservation Services’’ and includes 

1,545 firms such as Tickets.com and 

VividSeats.304 However, firms such as 

Ticketmaster and StubHub are classified 

as NAICS code 7113, which is 

‘‘Promoters of Performing Arts, Sports, 

and Similar Events’’ and includes 7,624 

firms.305

We recognize this number is 

potentially over-inclusive, as many 

firms within NAICS code 561599 and 

7113 do not directly sell tickets or 

charge mandatory fees, and thus would 

not be impacted by the proposed rule. 

The private research firm IBISWorld 

estimates that the number of firms in the 

online ticket selling industry is 3,528 in 

2022.306 We use this number of firms as 

a low-end estimate of the number of 

firms. 

Next, we estimate the number of 

hours a firm would spend complying 

with the proposed rule. As with 

assumptions regarding the number of 

firms, the following estimation utilizes 

a low-end and high-end value for the 

number of hours necessary for 

compliance. Because many ticket sellers 

operate in other countries that already 

have requirements similar to the 

proposed rule (Canada, Australia, EU), 

ticket sellers may have already 

incorporated the changes contemplated 

by the proposed rule to their operating 

practices. The websites may be already 

programmed, the lawyers already 

prepped about the rule, and the data 

scientists may have already determined 

the optimal pricing strategy; thus, 

sellers would have relatively low costs 

to transition to all-in pricing in the U.S. 

In this low-end cost scenario, because 

live-event ticket sellers are already 

largely prepared to advertise total prices 

to consumers, the one-time, upfront cost 

of determining optimal prices and 

updating the purchase systems in terms 

of the number of required hours is 

negligible. We assume 5 hours of lawyer 

time to determine if the proposed rule 

applies, 40 hours of data scientist time 

to re-optimize the pricing strategy, and 

40 hours of web developer time to edit 

and reprogram the website to display 

upfront prices. For the low-end cost 

scenario, we also assume there are no 

annual costs after the firm has incurred 

the one-time transition costs. 

In the high-cost scenario, we assume 

that ticket sellers have not laid the 

groundwork for upfront pricing. We 

assume sellers require twice the number 

of hours to determine optimal prices, reprogram the website to include the total 

price, and review and confirm 

compliance. Thus, the one-time costs 

include 10 hours of lawyer time, 80 

hours of data scientist time, and 80 

hours of web developer time. For the 

high-end cost estimate, we assume there 

are recurring annual costs of 10 hours of 

lawyer time per year to review and 

confirm compliance. 

Table 6 presents the low-end and 

high-end estimates of costs for the liveevent ticketing industry. 


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77458 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

307U.S. Census Bureau, supra n. 271. Hourly 

wages are from the Bureau of Labor Statistics. 

OEWS Data Scientist, supra n. 272 (providing the 

hourly wages for data scientists); OEWS Web 

Developers, supra n. 272 (providing the hourly 

wages for web developers); and OEWS Lawyers, 

supra n. 272 (providing the hourly wages for 

lawyers). 

(3) Live-Event Ticketing: Net Benefits 

Next, in Table 7 we present the net 

benefits using the quantified benefits 

and costs discussed in Sections 

VII.C.3.a.(1) and VII.C.3.a.(2). To 

calculate the low end of the range for 

net benefits, we subtract the total 

quantified costs using the high-end cost 

assumptions from the total quantified 

benefits using the low-end benefit 

assumptions. For the high end of the 

range for net benefits, we subtract the 

low-end estimate of total quantified 

costs from the high-end estimate of total 

quantified benefits. 


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Table 6 - Live-Event Ticketing: Estimated Costs of Compliance 

Low-End Cost High-End Cost 

Estimate Estimate 

Number of Live-Event Ticket Sellers 3,326 9,169 

Hours to Determine Optimal Pricing and 40 80 Contracts (Data Scientist Hours) 

Hours to Update Purchasing Systems to 40 80 Reflect Total Price (Website Developer Hours) 

Hours to Determine how Rule Applies (Lawyer 5 10 Hours) 

Hourly Wage Rate Data Scientist $55.40 $55.40 

Hourly Wage Rate Website Developer $42.11 $42.11 

Hourly Wage Lawyer to Review Compliance $78.74 $78.74 

One-Time Fixed Cost to Include Fees Up Front $14,282,177 $78,745,206 

Hours for Reviewing Rule and Compliance 0 10 (Annual) 

Hourly Wage Lawyer to Review Compliance $78.74 $78.74 

Total Costs per year $0 $7,219,671 ,_,,.,..,..,.,,,.,.,...,,""''"""'"""""""'""''""''""''"''"'""'""'~-"'~"'-•--,-- '"""""'"'"""""""''"'"""""'"""~'"""""'"'"'"""""'"'"""""''''" __ .,_ ____ .. ·""'"~"~""'""''""'"""" ~"""""~'""'"""'"""'"'""'~''"""~"~"'"""~"'"'''~"'~'""~"'"""'"""'"'''"'''""''""'""""~~""'~--"'--'-

Tota I Quantified Costs (10 Years) Present Value at 7% 

(One-Time+ Annual) discount rate $14,282,177 $129,453,151 

Total Quantified Costs (10 Years) Present Value at 3% 

(One-Time+ Annual) discount rate $14,282,177 $140,330,460 

Annualized Compliance Cost Per Firm At 7% discount rate $611.38 $2,010.17 

Annualized Compliance Cost Per Firm At 3% discount rate $503.40 $1,794.20 

Note: Costs have been discounted to the present at both 3% and 7% rates. The per firm costs for 

the live-event ticketing industry are the same as the per firm costs for the remaining firms in the 

economy (exclusive oflive-event ticketing, short-term lodging, and restaurants) because we 

assume that 100% of firms in the live-event ticketing industry would incur additional costs to 

comply with the proposed rule and we use national wages for the live-event ticketing industry, as 

opposed to industry specific wages for short-term lodging and restaurants. The high-end estimate 

of firms is the sum of the number of firms in NAICS code 561599 and NAICS code 7113 

reported by the U.S. Census Bureau. 307 We relied upon publicly available sources of data in our 

calculations. We recognize that there may be additional sources of data and we encourage 

comments that provide alternative sources of data where they are available. 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77459 

Using various assumptions, the 

quantified benefits and costs imply that 

the rule will have a positive net benefit, 

even without accounting for the benefit 

of reducing deadweight loss. 

(4) Live-Event Ticketing: Uncertainties 

Our ability to precisely estimate 

benefits and costs is limited due to 

uncertainties in key parameters. The 

quantified benefits and costs for the 

live-event ticketing industry rely on a 

set of assumptions, based on the best 

available public information. When the 

data were unclear, we used sets of 

assumptions that would generate a 

range of low-end and high-end 

estimates. In Table 8 we summarize the 

key assumptions and how those 

assumptions may affect the resulting 

estimate of quantified benefits and 

costs. 


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Table 7 -Live-Event Ticketing: Estimated Net Benefits 

Total Quantified Benefits 

Total Quantified Benefits 

Total Quantified Costs (One-Time+ Annual) 

Total Quantified Costs (One-Time+ Annual) 

Net Benefits (10 Years) 

Net Benefits (10 Years) 

7% discount 

rate 

3% discount 

rate 

7% discount 

rate 

3% discount 

rate 

7% discount 

rate 

3% discount 

rate 

Low-end 

Estimate 

$149,918,030 

$182,076,794 

$14,282,177 

$14,282,177 

$20,464,879 

$41,746,333 

Note: Benefits have been discounted to the present at both 3% and 7% rates. 

10-Year Period 

High-end 

Estimate 

$1,776,806,284 

$2,157,947,183 

$129,453,151 

$140,330,460 

$1,762,524,107 

$2,143,665,007 
77460 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 


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Table 8-Live-Event Ticketing: Summary of Key Uncertainties 

>A$sumPt1¢n,otI1-ncertaitit~ •••• . . 

1 Jmv.act 0hBehe£it~•··•···· • /iii·'·• / • <. ·.•······..... .• ' '•>· ., •• ·.•. . .. • • • .. ' .•. • • i ., •• 

Assumptions to estimate total 

number of consumers in the 

United States purchasing liveevent tickets in a given year: 

• Ticketmaster sales of • Adjusting total Ticketmaster tickets sold 

tickets in North (North America+ International) by 

America are proportion of events in North America may 

proportional to events in overestimate or underestimate tickets sold in 

North America North America. 

• Total tickets sold in • Market share extrapolation based on revenue 

U.S. is proportional to share may underestimate or overestimate the 

Ticketmaster share of total number of tickets sold in the U.S. 

ticket market revenue 

• Number of tickets • Adjusting total tickets sold by number of 

purchased in average tickets in average transaction may 

consumer transaction overestimate or underestimate the total 

(1.5 or 3 tickets per number of consumer transactions 

consumer) 

Reduction in Listings Viewed 

• Blake et al. (2021) • Assuming upfront pricing leads to 0.16 fewer 

paper showing reduction listings viewed may underestimate total 

of 0 .16 listings viewed search time reduced, because it does not 

on StubHub with account for consumers using other 

upfront pricing purchasing systems (competitors) 

Time to conduct ticket 

transaction: 

• Shopping cart clocks • Assuming consumers use full timer clock 

from Ticketmaster and may overestimate transaction time 

StubHub sale pages (5 

or 10 minutes) 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77461 

308Sometimes these fees are not disclosed 

altogether or are not disclosed until a customer has 

arrived at the lodging to check in. 

309Howard A. Shelanski et al., Economics at the 

FTC: Drug and PBM Mergers and Drip Pricing, 41 

Rev. Indus. Org., 303 319 (2012). 310See Sullivan, supra n. 153. 

311FTC–2022–0069 6037 (AHLA); Bjorn Hanson, 

U.S. Lodging Industry Fees and Surcharges Forecast 

to Increase to a New Record Level in 2018—$2.93 

Billion, and Another Record Anticipated for 2019— 

the Newest Emerging Category is ‘‘Resort Fees’’ for 

Urban Luxury and Full Service Hotels (Aug. 27, 

2018), https://bjornhansonhospitality.com/fees- 

%26-surcharges. 

312Sally French Sam Kemmis, How to Avoid 

Hotel Resort Fees (and Which Brands Are the 

Worst), NerdWallet (Aug. 9, 2023), https://

www.nerdwallet.com/article/travel/hotel-resort-fees. 

BILLING CODE 6750–01–C 

The Commission is expressly 

soliciting comments regarding the 

uncertainties described in Table 8. 

Specifically, the Commission requests 

data that would allow for more refined 

estimation of the benefits of the 

proposed rule, including data on the 

total annual number of consumer liveevent ticket purchases and the average 

search time saved for consumers as a 

result of the proposed rule. The 

Commission also requests data to refine 

the estimated cost of the proposed rule, 

including information on the number of 

live-event ticket sellers currently 

charging hidden mandatory fees, and 

the anticipated cost to firms from 

complying with the proposed rule. 

b. Short-Term Lodging Industry 

Businesses in the short-term lodging 

industry often charge a variety of 

mandatory add-on fees. These fees are 

typically either disclosed up front in 

fine print separately from the base price 

(a practice known as partitioned 

pricing) or revealed just before payment, 

after the consumer has clicked through 

multiple pages of a listing (known as 

drip pricing).308 Hotels may impose 

these mandatory surcharges as ‘‘resort 

fees or ‘‘destination fees.’’ Hotels often 

justify charging these fees as necessary 

to cover the costs of amenities that are 

not reflected in the base rate, such as 

Wi-Fi, pool, and gym access, towels, 

parking, and shuttle service. These fees 

are not optional and do not depend on 

the use of these amenities. Home share 

websites like Airbnb and VRBO label 

these mandatory fees as ‘‘cleaning 

fees,’’, ‘‘service fees’’, or ‘‘host fees.’’ 

Consumer behavior studies have 

shown that both partitioned pricing and 

drip pricing causes consumers to 

underestimate the total price of the 

product, even when all components of 

the price are disclosed up front.309 As 

a result, disclosing mandatory 

surcharges separately from the room rate 

without first disclosing the total price is 

likely to harm consumers by increasing 

search costs and reducing consumer 

surplus.310 These fees may reduce 

consumer surplus if consumers respond 

by booking a room that is more 

expensive than the room they would 

have chosen under upfront total pricing. 

It may also increase search costs if 

consumers spend more time looking at 

additional listings in search for a 

cheaper hotel. 

AHLA states that 6% of U.S. hotels 

charge resort fees, which amounts to 

$2.93 billion dollars paid in resort fees 

annually by U.S. consumers.311 This 

number underestimates how much U.S. 

consumers pay in mandatory fees 

because it does not include fees from 

finding accommodations on the home 

share market through websites like 

Airbnb and VRBO or fees incurred from 

booking at foreign hotels with U.S. 

facing websites. Resort fees in the U.S. 

average 11% of the per night cost of a 

room, and can be as high as 35%, 

especially at lower cost hotels.312

This section includes an estimate of 

the benefits and costs associated with 

the reduced search costs as a result of 

the proposed rule. Since there is an 

additional, unquantified benefit of 

reduced deadweight loss, which is 

discussed conceptually in Section 

VII.C.2.a, the net benefit estimated in 

the following analysis is conservative. 

The Commission finds that the 

quantified benefits and costs imply that 

the rule will have a positive net benefit, 

even without accounting for the 

unquantified benefit of reducing 

deadweight loss. 

(1) Short-Term Lodging: Estimated 

Benefits of Proposed Rule 

(a) Consumer Time Savings When 

Shopping for Hotels 

As a result of the proposed rule, the 

Commission expects that the time 


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Number of firms selling tickets: 

• Sum of firms in 

potential NAICS codes 

• IBIS World report on 

Online Ticket Sellers 

Number of hours to comply 

with proposed rule: 

• Hours of lawyer time, 

data analyst time, and 

web developer time 

• May overestimate total number of firms 

affected if a large proportion of firms in 

these NAICS codes are not subject to the 

proposed rule 

• May underestimate total costs if there are a 

meaningful number of firms selling tickets 

offline 

• May overestimate costs per firm if many 

firms either already comply or have the 

systems in place to easily comply with 

proposed rule. Also may underestimate costs 

if compliance requires greater number of 

hours. 
77462 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

313The drip pricing literature suggests that 

because time to view one listing is lower under 

upfront pricing, there may also be a subset of 

consumers who view more listings because the cost 

of viewing an additional listing has decreased. 

Sullivan, supra n. 153. It is unclear how this affects 

total time spent searching. If the higher number of 

listings viewed is offset by the lower time it takes 

to view each listing, the total time spent searching 

will be lower under upfront pricing for this subset 

of consumers. If total time increases, it can be 

classified as ‘‘good’’ search time for this particular 

group of consumers because it results in consumers 

purchasing their preferred hotel room. 

Alternatively, another group of consumers could 

view fewer listings because upfront prices allow 

consumers to compare rooms more easily and select 

their preferred hotel room more quickly. Blake et 

al., supra n. 153. The total search time for these 

consumers will decrease. We focus on the latter 

group of consumers because the change in their 

search time represents a decrease in ‘‘bad’’ or 

unnecessary search caused by drip pricing. 

314Airbnb currently includes a toggle for 

consumers to click to switch to viewing all listing 

prices up front. However, the default option is to 

view listings with drip pricing, and the toggle is not 

visible if a consumer starts their search from any 

Airbnb page other than the homepage. VRBO 

includes the total price including fees on the first 

page of search results in very fine print under the 

much larger base price. Neither Airbnb nor VRBO 

are currently in compliance with the proposed rule, 

which would require the total price to be the most 

prominent default upfront price. 

315Chris Anderson et al., The Billboard Effect: 

Still Alive and Well, 17 Ctr. Hosp. Rpt. 11 (2017), 

https://hdl.handle.net/1813/70982. The 

Commission calculates the average number of 

websites visited by summing the average number of 

OTAs, Hotel Sites, TripAdvisor, and Other Meta 

websites visited 60 days prior to reserving a room. 316Andrey Fradkin, Search, Matching, and the 

Role of Digital Marketplace Design in Enabling 

Trade: Evidence from Airbnb, (MIT Initiative on the 

Digit. Econ., Working Paper, 2017). Using this 

average search cost, we estimate that consumers 

spend 14.3 minutes viewing one listing. See 

Appendix A for calculation details for both 

estimates. Using the estimates from each study as 

lower and upper-end estimates ensures that we 

capture user search behavior on both home share 

websites like Airbnb and more traditional hotel 

websites. 

317 Yuxin Chen Song Yao, Sequential Search with 

Refinement: Model and Application with ClickStream Data, 63 Mgmt. Sci. 12, 4345 4365 (2017), 

https://doi.org/10.1287/mnsc.2016.2557. 

318Blake et al., supra n. 153. 

319Although we are basing our reduction in 

listings estimates on data that comes from the 

ticketing industry, our method results in the most 

conservative reduction of viewed listings compared 

to other methods. The most relevant study from the 

hotel search cost literature estimates that 

improvements in hotel rankings (which may be 

loosely comparable to removing drip pricing) 

reduces search costs by $11.50. See Raluca M. Ursu, 

The Power of Rankings: Quantifying the Effect of 

Rankings on Online Consumer Search and 

Purchase Decisions, 37 Mktg. Sci. 4, 507–684 

(2018). Given our estimates of the time to view one 

listing (between 9.48 and 14.30 minutes), this 

suggests an average reduction of between 2.95 and 

1.95 listings viewed, which is implausible given 

that various papers find the average number of 

listings viewed at baseline to be between 2 and 3. 

Thus, while some papers find substantially higher 

search costs than our method, this provides 

assurance that, if anything, our benefits estimates 

are likely conservative. 

320See Anderson & Han, supra n. 315. It is 

unclear whether the relationship between websites 

viewed and time saved is linear, as consumers may 

save less time on the 15th website they view as they 

do on the first, so it is difficult to extrapolate from 

our estimates to the total time saved for consumers 

who view multiple websites. Therefore, to remain 

conservative in our estimate of benefits, we assume 

that consumers visit only one website. 

consumers spend searching for shortterm lodging will decrease because 

prices will be easier to compare within 

and across websites. Some consumers 

will reduce the number of short-term 

lodging listings they view prior to 

making a booking or spend less time 

understanding and assessing the full 

price.313 In our analysis we make the 

conservative and simplifying 

assumption that the time spent viewing 

a listing remains the same, and that 

consumers reduce the average number 

of listings they view. Table 9 quantifies 

the benefits of such time savings and 

provides lower and upper-end estimates 

to account for uncertainty in the 

available statistics. 

The Commission specifically focuses 

on the benefits that accrue to consumers 

who book rooms from within the United 

States on any US-facing website, which 

can include bookings at both domestic 

and foreign short-term lodgings. Shortterm lodgings include both traditional 

hotels as well as rooms booked through 

home share websites like Airbnb and 

VRBO.314 In this section, we outline 

how the benefits are calculated in Table 

9 and the assumptions we make. The 

table reports a set of basic search 

statistics used in the calculation, the 

savings per year for consumers who 

book at U.S. short-terms lodgings, the 

savings per year for consumers who 

book at foreign short-term lodgings with 

US-facing websites, and the combined 

total savings for all U.S. consumers per 

year. 

Although not all short-term lodgings 

charge resort fees, the lack of a unified 

standard of upfront pricing across 

listings makes comparing prices 

difficult and time consuming for 

consumers. Even within a single shortterm lodging website, there is variation 

in whether listings have hidden fees. 

For example, Marriott’s 32 hotel brands 

impose hidden fees for listings in some 

cities but not in others. Some listings, in 

very fine print under the listed price, 

note whether resort fees are included or 

excluded in the base price. Some 

listings do not say anything, requiring 

consumers to click through the listing to 

learn whether there are hidden fees at 

the end. Given that 6% of hotels impose 

drip pricing, and the average hotel 

shopper visits 17 travel websites before 

booking, consumers are likely to 

encounter at least one website that 

imposes drip pricing in their search for 

a hotel.315 Even for consumers who 

complete their whole search and 

booking process without visiting any 

websites that impose hidden resort fees, 

the fact that there could be hidden fees 

creates uncertainty and my cause 

consumers to click through more 

listings than they otherwise would have 

to learn if the initial price is truly the 

final price. Therefore, we quantify the 

benefits for all U.S. consumers who 

book a room in a given year, regardless 

of whether they interacted with a 

website that imposed drip pricing. 

(i) Search Statistics 

The Commission uses two different 

studies to calculate lower and upperend estimates for the average number of 

minutes it takes to view one listing. On 

the lower end, we use statistics on 

Airbnb user search behavior collected 

by Fradkin (2017) to calculate that 

consumers spend 9.48 minutes to view 

one listing.316 On the upper end, we use 

a hotel search cost model developed by 

Chen and Yao (2016) to calculate the 

average search cost per listing.317 Using 

this average search cost, we estimate 

that consumers spend 14.3 minutes 

viewing one listing. See Appendix A for 

calculation details for both estimates. 

Using the estimates from each study as 

lower and upper-end estimates ensures 

that we capture user search behavior on 

both home share websites like Airbnb 

and more traditional hotel websites. 

To estimate the reduction in average 

listings viewed due to drip pricing, we 

use results on the average reduction in 

listings viewed under upfront pricing 

from an experiment in the ticketing 

industry.318 The study finds that the 

average reduction in listings viewed 

under upfront pricing is 10.6% of the 

mean listings viewed under drip 

pricing. For the low-end estimate, we 

apply the same proportion to the mean 

listings viewed by Airbnb users in 

Fradkin (2017) (2.367 listings, proxied 

by number of contacts) and find a 

reduction of 0.25listings. On the upper 

end, we apply this to the mean listings 

viewed by hotel searchers in Chen and 

Yao (2016), 2.3 listings, and find a 

reduction of 0.24 listings.319

Multiplying this number by the 

minutes to view one listing results in 

2.39 to 3.53 minutes saved per 

transaction. These estimates are likely 

conservative, given that they assume 

consumers only view one website before 

booking a room. One study suggests that 

consumers in fact visit an average of 17 

websites before booking.320 In addition, 

the average reduction in listings viewed 

may also underestimate benefits from 

eliminating drip pricing because it is 


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Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77463 

321OEWS National, supra n. 272. 

322Hamermesh, supra n. 279 at 198–203. 

323Revenue equals about 192.23 billion. Alexia 

Moreno Zambrano, Hotels & Motels in the US, 

IBISWorld (Jan. 2023) (‘‘Hotels & Motels Industry 

Report’’); Thi Le, Bed & Breakfast & Hostel 

Accommodations in the US, IBISWorld (Jan. 2023) 

(‘‘Bed & Breakfast Industry Report’’). The ADR is 

about $149. STR: U.S. hotel ADR and RevPAR 

reached record highs in 2022, STR (Jan. 20, 2023), 

https://str.com/press-release/str-us-hotel-adr-andrevpar-reached-record-highs-2022. 

324Consumers book on average 1.8 nights per 

booking. Jordan Hollander, 75+ Hospitality 

Statistics You Should Know (2023), Hotel tech 

Report (Aug. 9, 2023). 

325How much do U.S. hotels depend on 

international guest stays?, CRBE Econometric 

Advisors’ Blog (Oct. 10, 2017), https://www.cbreea.com/public-home/deconstructing-cre/2017/10/ 

10/how-much-do-u.s.-hotels-depend-oninternational-guest-stays#:∼:text=

We%20estimate%20

that%208.2%25%20of%20all%20

hotel%20guests,Miami%20

at%2057.5%25%E2%80%94are%20

highly%20dependent%20on%20international

%20guests. 

326Adrian, U.S. Travel & Tourism Statistics 2020– 

2021, Tourism Academy Blog (Sep. 15, 2021), 

https://blog.tourismacademy.org/us-tourism-travelstatistics-2020-2021. 

more difficult to adapt to the wide 

variability of fees in the short-term 

lodging industry than it is in the 

ticketing industry, where listings have 

the same percentage fee. Short-term 

lodgings have different fees, and the 

number of lodgings with such fees will 

vary across markets. 

According to the Bureau of Labor 

Statistics Occupational Employment 

Statistics,321 the average hourly wage of 

U.S. workers in 2022 was $29.76, and 

recent research suggests that individuals 

living in the U.S. value their non-work 

time at 82% of average hourly 

earnings.322 Thus, the value of nonwork time for the average U.S. worker 

is estimated to be $24.40 per hour. 

(ii) US Hotels and Home Share 

Next, the Commission calculates the 

total savings per year for U.S. 

consumers who book at U.S. short-term 

lodgings, which includes both U.S. 

hotels and home shares. We find the 

total number of nights booked in the 

U.S.in 2022 by dividing the total 

revenue the U.S. short-term lodgings 

industry earned from rooms by the 

average daily rate (ADR).323 The ADR is 

the average revenue per room-night 

booked in the U.S. The total number of 

nights booked in the U.S. in 2022 that 

would potentially be affected by this 

rule is about 1.29 billion. 

Dividing the total number of nights 

booked by the average number of nights 

per booking gives 715 million total 

bookings.324 About 91.8%, or 657 

million, of these bookings are made by 

U.S. consumers.325 Finally, we calculate 

the total savings for U.S. consumers per 

year by multiplying the number of 

bookings made by U.S. consumers by 

the minutes saved per transaction and 

the value of time for consumers. This 

results in total savings of about 

$637.2$941.6 million dollars. 

(iii) Foreign Hotels and Home Share 

With US-Facing Websites 

To estimate the number of foreign 

short-term lodging bookings made by 

U.S. consumers, the Commission uses 

the fact that 96% of all trips taken by 

U.S. consumers are domestic.326

Multiplying the number of bookings 

made by U.S. consumers by ((1¥.96)/ 

.96)) gives the number of foreign 

bookings, which is between 26.8 and 

27.4 million. The total savings for this 

category amounts to about $26.5–$39.2 

million dollars. 

(iv) All Hotels and Home Share 

Together, U.S. and foreign bookings 

amount to about 683.9 million bookings 

per year. This corresponds to between 

27.2 and 40.2 million hours saved by 

U.S. consumers per year, and between 

$663.7 million and $980.9 million total 

savings per year. Table 9 presents the 

expected benefits of time savings over 

the next 10 years in present value. 

BILLING CODE 6750–01–P 


ddrumheller on DSK120RN23PROD with PROPOSALS2
77464 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

327OEWS National, supra n. 272; Hamermesh, 

supra n. 279. 

328Hotel Tech Report, supra n. 324. 

BILLING CODE 6750–01–C 

(b) Additional Unquantified Benefits: 

Reductions in Deadweight Loss and 

Abandoned Transactions 

Due to the incomplete price 

information problem described in 

Section VII.C.1.a, the proposed rule 

requiring short-term lodgings to show 

the total price of rooms will likely result 

in a reduction of deadweight loss. When 

consumers are not able to observe total 

prices in the beginning of the booking 

process, sellers are likely able to charge 

higher prices than could be supported 

under the proposed rule. In addition, 

the requirement to disclose the 

refundability of any fees not included in 

the total price may also result in fewer 

mistake purchases stemming from 

incomplete information. Both the total 

price provision and the refundability 

disclosure provision may provide 

consumers with more complete pricing 

information necessary when making 

decisions about purchasing hotel rooms, 

thus reducing deadweight loss. At this 

time, we do not quantify the reduction 

in deadweight loss, but acknowledge 

that it is a positive benefit to the 

proposed rule. 

In some cases, once the additional 

information about full price is revealed, 

consumers may fully abandon the 

transaction (i.e., not book a room at all). 

Since the lodging cost is only a part of 

the overall cost of a trip, abandoning a 

transaction may be less likely for shortterm lodging than other industries. In 


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Table 9 - Short-Term Lodging: Estimated Benefits of Time Savings for Completed 

Transactions 

10-Year Period 

Low-end High-end 

Benefit Estimate Benefit Estimate 

Search Statistics 

Minutes to View Listing 

Reduction in Average Number of Listings Viewed 

Minutes Saved Per Transaction 

Value of 1 hour of non-work time 

US Hotels and Home Share 

Total Number of Nights Booked 

Average Nights Per Booking 

Number of Bookings 

Number of Bookings Made by US Consumers 

Total Savings Per Year 

Foreign Hotels and Home Share 

Number of Foreign Bookings Made by US 

Consumers 

Total Savings Per Year 

All Hotels and Home Share 

Total Bookings 

Hours Saved by US Consumers Per Year 

Total $ Saved Per Year 

9.48 14.41 

0.25 0.24 

2.39 3.53 

$24.40 $24.40 

1,287,361,938 1,287,361,938 

2 2 

715,201,077 715,201,077 

656,554,589 656,554,589 

$637,176,656 $941,617,067 

27,356,441 27,356,441 

$26,549,027 $39,234,044 

683,911,030 683,911,030 

27,198,305 40,193,545 

$663,725,684 $980,851,112 

bandoned Transactions Unquantified Unquantified 

Reductions in Deadweight Loss Unquantified Unquantified 

Total Quantified Benefits 7% discount rate $4,661,731,460 $6,889,087,761 

Total Quantified Benefits 3% discount rate $5,661,714,710 $8,366,858,934 

Note: Benefits over 10 years have been discounted to the present at both 3% and 7% rates. The 

value of time for hotel consumers is the mean hourly wage and adjusted by the consumer value of 

time reported in Hamermesh (2016). 327 Average nights per booking is from Hotel Tech Report. 328 

We relied upon publicly available sources of data in our calculations. We recognize that there 

may be additional sources of data and we encourage comments that provide alternative sources of 

data where they are available. 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77465 

329U.S. Bureau Lab. Stat., Occupational 

Employment and Wage Statistics. May 2022 

National Industry-Specific Occupational 

Employment and Wage Estimates: NAICS 721100— 

Traveler Accommodation (May 2022) (‘‘OEWS 

Traveler Accommodation’’), https://www.bls.gov/ 

oes/current/naics4_721100.htm. 

330We include costs to foreign hotels with U.S.- 

facing websites because complying with the 

proposed rule may cause them to pass through 

some costs to U.S. hotel shoppers. We are unable 

to quantify what percentage of costs will be passed 

through, so to be conservative we include all costs 

to foreign hotels and home share hosts. 

331 In 2021, Marriott agreed to a settlement with 

the Pennsylvania Attorney General in which they 

are required to include mandatory resort fees in the 

base rate on the first page of the booking process. 

So far, Marriott has missed multiple deadlines to 

make this change and today has only partially 

complied with this settlement, incorporating resort 

fees in the base price for some of its hotel brands, 

but not for others. 

332See Clark Shultz, Airbnb increases market 

share in latest read from M Science, Seeking Alpha 

(June 6, 2022), https://seekingalpha.com/news/ 

3846023-airbnb-increases-market-share-in-latestread-from-m-science (providing Airbnb’s market 

share). This results in 504,000 Airbnb home share 

hosts/.746 = 675,603 home share hosts in the US. 

333The average number of listings per host is 

calculated from the total number of U.S. listings 

and the total number of U.S. hosts. Steve Deane, 

2022 Airbnb Statistics: Usage, Demographics, and 

Revenue Growth, the Stratos Blog (Jan. 4, 2022), 

https://www.stratosjets.com/blog/airbnb-statistics/ 

#:∼:text=People%20stay%20an%20average%20

of%202.4%20times%20longer,highest%20

number%20of%20any%20country%20in%20the

%20world. (providing the U.S. listings); Thibault 

Masson, Airbnb host data: Who are Airbnb hosts? 

Why are individual hosts more important than 

professional ones?, Rental Scale-Up (Dec. 6, 2020), 

https://www.rentalscaleup.com/airbnb-host-datawho-are-airbnb-hosts-why-are-individual-hostsmore-important-than-professional-ones/#:∼:

text=About%2086%25%20of%20the%204%20

million%20Airbnb%20hosts,roughly%20560%

2C000%20operate%20in%20the%20

United%20States%20%2814%25%29 (providing 

the number of U.S. hosts). 

334Since home share hosts are not operating 

large, sophisticated firms and will likely not spend 

additional time ensuring compliance beyond year 

one, we assume home share hosts do not incur 

annual costs due to the rule. 

that case, the unquantified benefit is 

likely to be small. The Commission 

lacks adequate information to determine 

the quantity of such abandoned 

transactions and the amount of time 

spent pursuing them. As a result, this 

benefit is unquantified in the current 

analysis. The Commission solicits 

comment on the frequency of and 

reasons for abandoned transactions in 

the short-term lodging industry in order 

to help quantify this benefit. 

(2) Short-Term Lodging: Estimated Costs 

of Proposed Rule 

This section describes the potential 

costs of the proposed rule provisions to 

the short-term lodging industry and 

provide quantitative estimates where 

possible. The costs to hotels from the 

proposed rule include a review of 

whether the rule applies, and, if the firm 

is not currently compliant with the 

proposed rule, one-time costs to comply 

with the rule and recurring annual costs 

to review and ensure on-going 

compliance. The cost of employee time 

is monetized using wages obtained from 

the Bureau of Labor Statistics National 

Industry-Specific Occupational 

Employment and Wage Estimates.329 We 

use wages specific to the Traveler 

Accommodation industry (associated 

with NAICS code 721100). This 

industry includes traditional hotels and 

motels, casino hotels, bed and breakfast 

inns, and hostels. The Commission also 

quantifies the cost to individual home 

share hosts in the form of a one-time 

cost to adjust prices on home share 

listings. 

Table 10 outlines the estimated costs 

of the proposed rule. Panel A shows the 

costs for U.S. hotels and home share 

hosts, Panel B shows costs for foreign 

hotels and home share hosts who post 

listings on U.S.-facing websites,330 and 

Panel C shows the total combined costs 

for both groups. 

(i) Panel A: U.S. Hotels and Home Share 

Hosts 

There are 47,817 U.S. hotels 

associated with the ‘‘Traveler 

Accommodation’’ NAICS code. Of these 

firms, 6% impose resort fees, bringing 

the number of U.S. firms affected to 

2,869 firms. We assume that this is 

inclusive of hotels that do not disclose 

the refundability of any optional add-on 

charges for additional goods and 

services. We remove one firm from the 

low-end estimate to account for the 

possibility that Marriott fully complies 

with its settlement with Pennsylvania 

and removes drip pricing absent the 

rule.331

Next, we estimate the number of 

hours a U.S. hotel would spend 

complying with the proposed rule. We 

assume all hotels that do not impose 

drip pricing and already disclose 

refundability of optional charges will 

spend one hour of lawyer time 

determining if the proposed rule applies 

to them. Hotels that are not presently 

compliant with the rule will incur 

additional costs to comply with the 

proposed rule. In the low-end estimate, 

we assume that because many hotels 

have websites facing other countries 

that already have similar requirements 

to the proposed rule (e.g., Canada, 

Australia, EU), hotels may already have 

experience incorporating the necessary 

changes to their operating practices. In 

this scenario, hotels have relatively low 

costs to transition to all-in pricing for 

their US-facing websites. We assume 5 

hours of lawyer time to determine how 

the proposed rule applies to the firm, 40 

hours of data scientist time to reoptimize the pricing strategy, and 40 

hours of web developer time to edit and 

reprogram the website to display 

upfront prices and make refundability 

disclosures. 

In addition to hotels, the proposed 

rule would also affect individuals who 

participate in the home share market by 

listing their property for short term 

rentals on websites like Airbnb and 

VRBO. We estimate the total number of 

home share hosts in the U.S. by starting 

with the number of Airbnb hosts in the 

U.S. who post home share listings (not 

including larger bed and breakfast or 

hostel establishments) and extrapolating 

to the full U.S. market using Airbnb’s 

market share in the U.S. 332 On the lowend, we assume that each host will take 

1 hour to reprice each listing. Hosts 

have on average 1.18 listings, resulting 

in 1.18 hours of time per host.333 The 

value of time comes from the same 

source as in Table 9. 

In the high-cost scenario, we assume 

that hotels have not laid the 

groundwork for upfront pricing. We 

assume hotels require twice the number 

of hours to determine optimal prices, reprogram the website to include the total 

price, and review and confirm 

compliance. Thus, the one-time costs for 

hotels include 10 hours of lawyer time, 

80 hours of data scientist time, and 80 

hours of web developer time. We 

assume home share hosts spend 3 hours 

repricing each listing, resulting in 3.5 

hours per host. 

In addition to the one-time costs, we 

also assume hotels incur annual costs of 

between 0 to 10 hours of lawyer time 

per year to review and confirm 

compliance with the proposed rule.334

The total costs, which include both the 

one-time fixed cost and the annual costs 

for the next ten years in present value, 

range from $331 million and $1,001 

million using a 7% discount rate, and 

between $331 million and $1,040 

million using a 3% discount rate. 

Note that all ranges of lawyer, data 

scientist, web developer, and home 

share host time serve as proxies for any 

costs associated with reviewing and 

ensuring compliance, adjusting pricing 

strategies, ensuring consumers are 

presented with total price, and reevaluating home share listings 

respectively in response to the proposed 

rule. 

(ii) Panel B: Foreign Hotels and Home 

Share Hosts 

It is difficult to estimate costs for 

foreign hotels and home share hosts 

using the same method in Panel A 


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77466 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

335The U.S. hotel industry’s global market share 

in 2022 is calculated by adding the revenues 

reported in the IBISWorld Reports for ‘‘Hotels and 

Motels in the US’’, ‘‘Casino Hotels in the US’’, and 

‘‘Bed and Breakfast and Hostel Accommodations in 

the US’’ and dividing it by the global revenue found 

in IBISWorld Global Hotels & Resorts Industry 

Report. Hotels & Motels Industry Report, supra n. 

323; Bed & Breakfast Industry Report, supra n. 323; 

Demetrios Berdousis, Casino Hotels in the US, 

IBISWorld (Jan. 2023). 

336U.S. Sec. & Exchange Comm’n, Form 10–K, 

Airbnb, Inc. (Feb. 17, 2023) https://www.sec.gov/ 

ix?doc=/Archives/edgar/data/1559720/000155

972023000003/abnb-20221231.htm. 

because there are no reliable estimates 

for the number of foreign hotels and 

home share hosts, as well as the relevant 

international wage rate for lawyers, data 

scientists, and web developers. We 

instead estimate foreign costs by 

extrapolating from the U.S. costs 

estimated in Panel A. Since the U.S. 

hotel industry’s global market share is 

about 14.5%,335 the one-time and 

annual costs for foreign hotels can each 

be calculated by multiplying the onetime and annual costs for U.S. hotels by 

(1¥.145)/.145. U.S. facing website and 

thus will not be subject to the proposed 

rule. Therefore, the costs to foreign 

hotels may be an overestimate. 

We use the percentage of Airbnb’s 

U.S. revenue (46%) 336 to proxy for the 

U.S. home share market’s global market 

share. Using this, we estimate the onetime cost for foreign home share hosts 

to be equal to the total one-time cost for 

U.S. home share hosts multiplied by 

(1¥0.46)/0.46. The total one-time and 

annual foreign hotel and home-share 

costs for the next ten years in present 

value range from $103.3–$313.7 million 

using a 7% discount rate, and $103.3– 

$337.1 million using a 3% discount rate. 

(iii) Panel C: All Hotels and Home Share 

Hosts (US + Foreign) 

The total cost for all affected hotels 

and home share hosts over 10 years in 

present value is estimated to be between 

$136.5 and $413.8 million using a 7% 

discount rate and $136.5–$441.1 million 

using a 3% discount rate. This amounts 

to approximately between $406 to 

$1,232 annually per firm using a 7% 

discount rate and between $335 to 

$1,081 using a 3% discount rate. 

BILLING CODE 6750–01–P 


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Table 10 - Short-Term Lodging: Estimated Costs of Compliance 

Panel A: US Hotels and Home Share Hosts 

A.1. US Hotels and Home Share Hosts: One Time Costs 

Number of US Hotels 

Hotels That Impose Drip Pricing (6% of total) 

Hours to Determine Whether Rule Applies (Non-drip 

Price Firms) (Lawyer Hours) 

Hours to Determine Whether Rule Applies (Drip price 

firms) (Lawyer Hours) 

Hours to Determine Optimal Pricing and Contracts 

(Data Scientist Hours) 

Hours to Update Purchasing Systems to Reflect Total 

Price (Website Developer Hours) 

Hourly Wage Rate - Lawyer 

Low-Cost 

Estimate 

47,817 

2,868 

1 

5 

40 

40 

$91.57 

$39.07 

$33.11 

Hourly Wage Rate - Data Scientist 

Hourly Wage Rate - Website Developer 

Total One-Time Fixed Cost for Hotels ........................... J!~!?C>!:1!~48 

Home Share Hosts in the US 

Hours to Determine Optimal Pricing for Home Share 

Listing 

Value ofTime 

Total One-Time Fixed Cost for Home Share Hosts 

Total One-time fixed cost for Hotels+ Home Share 

Hosts 

A.2. US Hotels and Home Share Hosts: Annual Costs 

Hours for Reviewing Rule and Compliance (Annual) 

Hourly Wage - Lawyer 

Total annual costs 

A.3. US Hotels and Home Share Hosts: Total Costs 

Total Costs (One-Time+ Annual) 

Total Costs (One-Time+ Annual) 

7% discount rate 

3% discount rate 

Panel B: Foreign Hotels and Home Share Hosts 

B.1. Foreign Hotels and Home Share Hosts: One-Time Costs 

Total Cost for Foreign Hotels 

Total Cost for Foreign Home Share Hosts 

Total One-Time Fixed Costs 

B.2. Foreign Hotels and Home Share Hosts: Annual costs 

Total Annual Costs 

B.3. Foreign Hotels and Home Share Hosts: Total Costs 

Total Costs (One-Time+ Annual) 7% discount rate 

Total Costs (One-Time+ Annual) 3% discount rate 

675,603 

1.18 

$24.40 

$19,430,966 

$33,140,615 

0 

$91.57 

$0 

$33,140,615 

$33,140,615 

$80,809,337 

$22,522,937 

$103,332,275 

$0 

$103,332,275 

$103,332,275 

Total One-Time Fixed Costs 

Total Annual Costs 

Panel C: All Hotels and Home Share Hosts (US + Foreign) 

$136,472,889 

$0 

High-Cost 

Estimate 

47,817 

2,869 

1 

10 

80 

80 

$91.57 

$39.07 

$33.11 

$23,309,917 

675,603 

3.54 

$24.40 

$58,292,899 

$81,602,816 

10 

$91.57 

$2,627,162 

$100,054,900 

$104,013,037 

$137,396,592 

$67,568,812 

$204,965,404 

$15,485,385 

$313,728,271 

$337,058,882 

$286,568,220 

$18,112,547 
77468 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

337U.S. Census Bureau, supra n. 271. 

338FTC–2022–0069–6037 (AHLA). 

339OEWS Traveler Accommodation, supra n. 329. 

340See OEWS National, supra n. 272 (providing 

the mean hourly wage); Hamermesh, supra n. 279 

(providing the value of time). 

341See supra n. 335 (describing the calculations). 

342U.S. Sec. & Exchange Comm’n, Form 10–K, 

Airbnb, Inc. (Feb. 17, 2023). 

(3) Short-Term Lodging: Net Benefits 

Table 11 presents the net benefits of 

the proposed rule in the short-term 

lodging industry using the quantified 

benefits and costs discussed in Sections 

VII.C.3.b.(1) and VII.C.3.b.(2). To 

calculate the low end of the range for 

net benefits, we subtract the total costs 

using the high-end cost assumptions 

from the total benefits using the low-end 

benefit assumptions. For the high end of 

the range for net benefits, we subtract 

the total costs using the low-end cost 

assumptions from the total benefits 

using the high-end benefit assumptions. 

The quantified benefits and costs 

imply that the proposed rule will have 

a positive net benefit, even without 

accounting for the unquantified benefit 

of reducing deadweight loss. 


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Grand Total Costs (One-Time+ Annual) 7% discount rate $136,472,889 $413,783,170 

Grand Total Costs (One-Time+ Annual) 3% discount rate $136,472,889 $441,071,919 

Annualized Cost Per firm 7% discount rate $406.35 

Annualized Cost Per firm 3% discount rate $334.58 

Note: Costs over 10 years have been discounted to the present at both 3% and 7% rates. The 

number of U.S. hotels is from the U.S. Census Bureau. 337 The statistic that 6% of U.S. hotels 

impose drip pricing comes from an AHLA comment to the ANPR. 338 All hourly wages come 

from the U.S. Bureau of Labor Statistics. 339 The value of time for hotel consumers is the hourly 

wage rate adjusted by the consumer value oftime. 340 The total cost for foreign hotels is calculated 

by extrapolating from the total cost for U.S. hotels using the U.S.'s global market share of the 

short-term lodging industry from IBISWorld Industry Reports. 341 The total cost for foreign home 

share hosts is calculated by extrapolating from the total cost for U.S. home share costs using 

Airbnb's U.S. revenue as a percentage of its total revenue, as reported in Airbnb's 2022 10-K 

Filing. 342 We relied upon publicly available sources of data in our calculations. We recognize that 

there may be additional sources of data and we encourage comments that provide alternative 

sources of data where they are available. 

Table 11 - Short-Term Lodging: Estimated Net Benefits 

$1,232.06 

$1,081.35 

Low-end High-end 

Total Benefits 7% discount 

rate 

Total Benefits 3% discount 

rate 

7% discount Total Costs (One-Time+ Annual) rate 

3% discount Total Costs (One-Time+ Annual) rate 

Net Benefits 

Net Benefits 

7% discount 

rate 

3% discount 

rate 

Estimate Estimate 

$4,661,731,460 $6,889,087,761 

$5,661,714,710 $8,366,858,934 

$136,472,889 $413,783,170 

$136,472,889 $441,071,919 

-<~<>-,,~~etft$.7 ;· ••· (ijJJh8-~net1t, ... • • •• ·•· .tiighCJ;isU '.. ... •• • • LowC<>stl 

$4,247,948,290 

$5,220,642,791 

$6,752,614,872 

$8,230,386,045 

Note: Benefits have been discounted to the present at both 3% and 7%. 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77469 

(4) Short-Term Lodging: Uncertainties 

The Commission’s ability to precisely 

estimate benefits and costs is limited 

due to uncertainties in key parameters. 

The quantified benefits and costs for the 

short-term lodging industry rely on a set 

of assumptions based on the best 

available public information. When the 

data were unclear, we used sets of 

assumptions that would generate a 

range of low-end and high-end 

estimates. Table 12 summarizes the key 

assumptions and how they may affect 

the resulting estimate of quantified 

benefits and costs. When possible, we 

attempted to underestimate benefits and 

overestimate costs in order to estimate 

conservative net benefits. 


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77470 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 


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Table 12- Short-Term Lodging: Summary of Key Uncertainties 

Assumption or Uncertainty Impact on Benefits 

in Benefits Calculation 

We assume that reduction in This likely underestimates benefits because shortaverage listings viewed is term lodgings vary substantially both within and 

proportional (as a percentage across locations in the magnitude of the resort fees 

of the baseline mean) to the they charge, unlike tickets on a ticketing platform. In 

reduction in average tickets addition, the hotel search cost literature finds search 

viewed in the Blake et al. cost savings from improved hotel ranking (which 

(2021) StubHub study. may be comparable to removing drip pricing) that are 

very large and imply bigger reductions in average 

listings viewed. 

We assume that because 96% Trips taken does not necessarily equal rooms booked, 

of all trips taken by U.S. and it is likely that only some subset of trips taken by 

consumers are domestic, 96% U.S. consumers also correspond to a room booking. If 

of all rooms booked by U.S. the true percentage of domestic bookings is greater 

consumers are located in the than 96%, our estimate of the number of foreign hotel 

U.S. bookings will be too small. If it is less than 96%, our 

estimate of foreign hotel bookings will be too large. 

We assume consumers only If consumers visit more than one website before 

visit one travel website before booking, the average reductions in listings viewed in 

booking a room. response to this rule may be larger than our estimates, 

causing us to underestimate benefits. 

Assumption or Uncertainty Impact on Costs 

in Costs Calculation 

6% of all firms impose drip The AHLA stated in a comment that "only 6% of .. 

pncmg. hotels nationwide charge a mandatory 

resort/destination/amenity fee." We assume that this 

means that 6% of firms impose drip pricing, and not 

6% of all establishments (physical hotel buildings). If 

it is actually 6% of all establishments that impose 

drip pricing, then our estimate likely overestimates 

the number of firms that impose drip pricing, leading 

to inflated costs. For example, if all chain hotels 

impose drip pricing for at least one of their 

establishments and none or very few independent 

hotels do, the number of firms would be much 

smaller than 6% of all firms. 

Number of hours to comply May overestimate costs per firm if many firms either 

with proposed rule: Hours of already comply or have the systems in place to easily 

lawyer time, data analyst time, comply with proposed rule. May underestimate costs 

and web developer time if compliance requires greater number of hours. 

Airbnb' s market share in the If Airbnb's share of hosts is smaller than its market 

U.S. home share industry is share, then the extrapolation to give the number of 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77471 

343State of the Restaurant Industry 2023, 

National Restaurant Association (2023). 

344Seven States (Alaska, California, Minnesota, 

Montana, Nevada, Oregon, and Washington) and 

Continued 

BILLING CODE 6750–01–C 

The Commission is expressly 

soliciting comments regarding the 

uncertainties described in Table 12. 

Specifically, the Commission requests 

data that would allow for more refined 

estimation of benefits of the proposed 

rule, including statistics on domestic 

versus foreign bookings by U.S. 

consumers, data on the reduction of 

average listings viewed as a result of the 

proposed rule, and data on the average 

search time saved for consumers as a 

result of the proposed rule. The 

Commission also requests data to refine 

the estimated cost of the proposed rule, 

including whether the 6% resort fee 

statistic from the AHLA applies to firms 

or establishments, the anticipated cost 

to firms and home share hosts from 

complying with the proposed rule, and 

data on the number of home share hosts 

in the US. 

c. Restaurant Industry 

This section considers the impact of 

the proposed rule on restaurants and 

drinking establishments, collectively 

referred to as ‘‘restaurants,’’ and discuss 

the potential benefits and costs of the 

proposed rule within this industry. 

While we focus here on the restaurant 

industry, many of the benefit and cost 

considerations presented here likely 

apply in similar fashion to other service 

industries in which either tipping is 

common or service fees are being 

employed. Examples of businesses in 

these industries include nail salons and 

massage studios. We lack data to 

quantify several of these benefits and 

costs, but we estimate compliance costs 

and determine a break-even level of 

benefit. 

The restaurant industry has seen a 

recent spike in the use of hidden fees. 

In its 2023 State of the Industry Report, 

the National Restaurant Association 

notes that 15% of restaurants (13% of 

limited-service restaurants and 17% of 

full-service restaurants) are adding fees 

to bills.343 These fees are typically a 

percentage of the subtotal before sales 

tax. Futhermore, 81% of the restaurants 

adding these fees plan to continue 

adding these charges for more than a 

year. 

Fees in the restaurant industry take 

several forms. First, it has been a longstanding practice for most, if not all, 

full-service restaurants to charge 

mandatory service fees for large parties 

(typically a minimum of 6 or 8 

consumers). We assume in our cost 

calculations that all full-service 

restaurants employ large-party 

mandatory charges. 

Second, some restaurants have added 

mandatory service fees for parties of any 

size. These fees equal a percentage of 

the bill, typically 18%, 20%, or 22%, in 

line with customary percentages 

consumers use to calculate gratuities. 

Third, some restaurants are charging 5– 

10% fees they describe as supporting 

higher wages or enhanced benefits for 

workers. In State or local jurisdictions 

that are eliminating the distinction 

between tipped and standard minimum 

wages by raising the tipped minimum 

wage to equal the corresponding 

standard minimum wage, some 

restaurants are including specific fees as 

part of the transition.344 Finally, some 


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the same as its share of total home share hosts in the U.S. (and therefore their total 

hosts in the US costs) will be underestimated. It will be 

overestimated if the share of hosts is larger than the 

market share. 

Hours each Airbnb host spends May overestimate costs if hosts spend less time 

repricing listings due to repricing, or do not reprice at all. May underestimate 

proposed rule costs if hosts spend more time. 

We assume that the U.S. hotel May underestimate costs for foreign hotels if true 

industry's global market share global cost share is smaller. May overestimate costs if 

by revenue is the same as its true global cost share is bigger. 

global market share by cost. 

We assume that the percentage May underestimate costs for hosts located outside of 

of revenue Airbnb made in the the U.S. if the true market share is smaller. May 

U.S. is the same as the U.S. overestimate costs if true global cost share is bigger. 

home share market's global 

market share. 

We assume that 100% of all We include costs to foreign hotels with US-facing 

costs to foreign hotels with websites because complying with the proposed rule 

U.S.-facing websites will be may cause them to pass through some costs to U.S. 

passed on to U.S. consumers. hotel shoppers. We are unable to quantify what 

percentage of costs will be passed through, though we 

believe it will be trivial. Nevertheless, to be 

conservative we include all costs to foreign hotels 

and home share hosts. This inflates our cost 

estimates, resulting in a smaller, more conservative 

net benefit. 
77472 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

one territory (Guam) have a uniform minimum 

wage, regardless of tips. U.S. Dep’t of Lab., 

Minimum Wages for Tipped Employees (July 1, 

2023), https://www.dol.gov/agencies/whd/state/ 

minimum-wage/tipped. Several States and the 

District of Columbia are currently considering a 

transition or are in the process of transitioning to 

a uniform minimum wage. Talmon Joseph Smith, 

Battle Over Wage Rules for Tipped Workers Is 

Heating Up, N.Y. Times (Oct. 14, 2022), https://

www.nytimes.com/2022/10/13/business/economy/ 

tipped-wage-subminimum.html. 

345See, e.g., I.R.S., Internal Revenue Bulletin: 

2012–26 (June 25, 2012), https://www.irs.gov/irb/ 

2012-26_IRB; U.S. Dep’t of Lab., Tip Regulations 

under the Fair Labor Standards Act (FLSA), https:// 

www.dol.gov/agencies/whd/flsa/tips. 

346 In some cases, consumers may ‘‘overtip’’ if 

they are unaware of mandatory service fees. We do 

not consider this issue or other similar issues 

related to tip adjustments because they involve 

transfers and, thus, have a net neutral impact on 

social welfare. 

347Restaurants could continue to include tip lines 

in bills; the proposed rule does not proscribe 

tipping in any way. Consumers who wish to leave 

additional gratuities would still be able to do so. 

restaurants have added inflation-related 

charges and others are charging 

consumers a fee for paying with credit 

cards instead of cash. 

The expectations that consumers have 

regarding fees will depend upon the 

type of fees. For example, consumers 

likely expect mandatory service charges 

for large parties given that they are a 

common industry practice. On the other 

hand, recently introduced fees may be a 

surprise to consumers. Consumers’ 

expectations will depend on how such 

fees are disclosed. In addition, 

restaurants rely on local demand and so 

repeat customers may come to learn 

about the fees that restaurants charge— 

such as whether they have substituted 

mandatory service charges for tips— 

over time. In line with observations in 

the drip pricing literature, consumers 

are more likely to choose restaurants 

based on their expectations on cost, 

which may not incorporate the added 

costs of fees. 

In the absence of a rule, restaurants 

have discretion as to how they disclose 

these fees to consumers. Some 

restaurants may make prominent 

statements that they have moved to 

mandatory service charges or instruct 

consumers not to provide tips. Others 

may disclose such fees on their menus, 

which some consumers may not read 

and so only learn of the fees after 

receiving the bill at the end of the meal. 

At this point, consumers have no choice 

but to accept the fees. Restaurants may 

characterize some fees as optional and, 

thus, avoidable in principle, but these 

fees are mandatory in effect because 

consumers may not have a way to 

practicably avoid them if they do not 

learn of them until receiving the bill. 

For example, a consumer can avoid a 

credit card usage fee by paying with 

cash. If, however, the consumer does 

not know about this fee in advance and 

does not have sufficient cash on hand, 

it is unlikely that the consumer can 

obtain cash on the spot to cover the bill. 

As with mandatory fees, the consumer 

has no reasonable choice but to accept 

and pay the unexpected credit card 

usage fee. 

Mandatory service charges, the largest 

fees being added to bills, are 

commensurate with customary levels of 

tipping, but they are not necessarily 

used as a substitute for tipping; in fact, 

tips and mandatory service fees are 

distinct under tax and labor laws.345 All 

fees imposed by a restaurant, including 

mandatory service charges, accrue to the 

restaurant’s owner, and the owner has 

full descretion regarding the use of these 

fees, including whether fees are passed 

on to waitstaff. For example, a 

restaurant may choose to pay a higher 

wage (‘‘fair wage’’) out of all the income 

it receives. In addition, a restaurant may 

choose to disclose how these mandatory 

services fees will be used. Some 

restaurants, for example, have waitstaff 

explicitly inform consumers that their 

bills include a mandatory service charge 

and, thus, no tip is necessary. 

The variation across restaurants in 

types of fees and use of those fees is 

likely to affect how consumers tip. It is 

reasonable to assume that most 

consumers will not tip when explicitly 

informed that a tip is not necessary. In 

the absence of such instruction, fees 

will still likely have a crowding out 

effect on consumer tipping.346

Regardless of how restaurants 

emplooying mandatory service fees are 

using or distributing these fees, 

consumers likely view these larger fees 

as tip replacements; consequently, 

consumers will leave little or not tip 

when make aware of restaurants’ service 

fees. Changes in tipping will 

subsequently impace the labor market 

for waitstaff. 

(1) Restaurants: Benefits of Proposed 

Rule 

As applied to restaurants, the 

proposed rule would require the prices 

of menu items to be inclusive of any 

mandatory fees. Restaurants that have 

implemented mandatory service fees 

intended as substitutes for tipping could 

satisfy the proposed rule in one of two 

ways. First, restaurants could maintain 

menu prices and eliminate mandatory 

service fees with the expectation that 

consumers will resume tipping as is 

customary. This would represent a 

return to the traditional tipping model, 

the typical pricing structure of most 

restaurants. Alternatively, restaurants 

could increase menu prices to 

incorporate the mandatory service 

charge and continue to operate on a notipping-expected model.347 Since most 

restaurants use the traditional tipping 

model, a restaurant including manatory 

service charges in its prices would look 

more expensive than most of its 

competitors that have optional tips and 

so lose out on customers to its 

competitors. We thus assume these 

restaurants will choose a return to the 

traditional tipping model in response to 

the proposed rule. 

Given the long-standing usage of large 

party fees, we assume restaurants 

currently imposing these fees would 

respond to the proposed rule by printing 

separate small party and large party 

menus, the latter of which would 

incorporate the large party fees into 

menu prices. Finally, since non-servicerelated fees, such as credit card usage 

fees, are generally not as well 

established, we assume restaurants 

would eliminate these fees and adjust 

menu prices in response to the proposed 

rule. 

The primary benefit in the restaurant 

industry from the proposed rule would 

be the reduction or elimination of 

deadweight loss in the current, 

inefficient market equilibrium. An 

additional, unquantifiable benefit would 

be the reduction or elimination of 

psychological costs to consumers 

caused by the frustration of surprise 

fees. Furthermore, much confusion and 

frustration exists among consumers 

regarding the use of newer restaurant 

fees. For example, many consumers are 

confused by ‘‘service’’ charges or fees 

where those fees do not go to service 

workers. The proposed rule’s 

prohibition on misrepresenting the 

nature and purpose of such fees would 

provide the additional unquantified 

benefit of lessening consumer confusion 

around such service charges. This 

benefit serves both consumers as well as 

service workers as it increases 

transparency. 

Due to the incomplete price 

information problem described in 

Section VII.C.1, the proposed rule 

requiring restaurants to show the total 

price of menu items will likely result in 

a reduction of deadweight loss. 

Consumers, initially unaware of 

restaurant fees, are likely spending more 

on menu items than they would if they 

knew the full prices. This market 

inefficiency may be exacerbated in the 

restaurant industry since consumers 

often learn of fees when receiving bills 

and, thus, are unable to adjust their 

choices in response to the fees. 


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Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77473 

348U.S. Bureau Lab. Stat., Occupational 

Employment and Wage Statistics, May 2022 

National Industry-Specific Occupational 

Employment and Wage Estimates: Sector 72— 

Accommodation and Food Services (May 2022) 

(‘‘OEWS Accommodation and Food Services’’), 

https://www.bls.gov/oes/current/naics2_72.htm. 

349These calculations will underestimate the 

costs of firms that operate a portfolio of 

heterogeneous restaurants. We do not expect the 

additional cost to such firms to significantly impact 

the industry-wide cost estimates. 

350Food & Drug Admin., Final Rule, Food 

Labeling; Nutrition Labeling of Standard Menu 

Items in Restaurants and Similar Retail Food 

Establishments, 79 Fed. Reg. 71155 (Dec. 1, 2014). 

351U.S. Bureau Lab. Stat., CPI Inflation 

Calculator, https://www.bls.gov/data/

inflation_calculator.htm. Costs inflated from 

November 2014 to June 2023. 

352Since large party service fees are widespread 

and well-established, it may be the case that fullservice restaurants respond to the rule by setting 

two sets of prices, one for large parties and one for 

small parties. We assume that this choice would not 

affect menu printing costs since restaurants could 

select the number of each type of menu according 

to their established seating arrangements. 

Restaurants have flexibility in accommodating large 

parties by combining tables, but we assume that 

maintaining this flexibility would have little effect 

on menu printing costs as our estimate already 

accounts for extra menus. 

However, widespread practices 

understood by consumers like 

mandatory service charges for large 

parties are less likely to create such 

inefficiencies. The proposed rule would 

allow consumers to make fully informed 

decisions that would lead to a more 

efficient market equilibrium and reduce 

or eliminate the deadweight loss in the 

prevailing equilibrium. We lack data to 

quantify this reduction in deadweight 

loss. 

(2) Restaurants: Costs of Proposed Rule 

This section describes the potential 

costs of the proposed rule’s provisions 

and provide quantitative estimates 

where possible. We obtain the number 

of firms and establishments in the 

restaurant industry from the 2020 SUSB 

Annual Dataset. For restaurants, the cost 

of worker time is monetized using 

wages obtained from the Bureau of 

Labor Statistics May 2022 National 

Occupational Employment and Wage 

Estimates.348 Restaurants and drinking 

establishments fall under the two-digit 

NAICS code of 72 for accommodation 

and food services, and we use industryspecific average wages for this sector to 

estimate costs. 

(a) Compliance Costs 

The costs to firms from the proposed 

rule include a review of how the 

proposed rule applies to the firm, onetime costs to comply with the proposed 

rule, and annual costs to review and 

ensure on-going compliance. Our 

preliminary analysis presents two cost 

scenarios corresponding to different 

assumptions on how many hours are 

required to comply with the proposed 

rule and how many firms would be 

impacted by the proposed rule. We 

present these as a low-end cost scenario 

and a high-end cost scenario. Table 13 

summarizes compliance costs under 

both of these scenarios. 

As in the general discussion of 

compliance costs in Section VII.C.2.c, 

we assume that restaurants already in 

compliance with the proposed rule 

would incur one hour of lawyer time to 

confirm this compliance. Similarly, we 

assume that restaurants not currently in 

compliance would incur five to ten 

hours of legal advice to understand the 

impact of the proposed rule and five to 

ten hours of legal advice to come into 

compliance with the proposed rule. 

Pricing in the restaurant industry is less 

complex than in the previously 

discussed industries. We assume that 

restaurant owners themselves spend five 

to ten hours reoptimizing prices, and we 

use the wage of food service managers 

as a proxy for the cost of this time. 

These costs would be incurred at the 

firm level; that is, a firm operating 

multiple identically branded restaurants 

would incur these costs once.349

Restaurants not currently in 

compliance with the proposed rule 

would need to update and possibly 

redesign menus or menu boards. To 

estimate menu-related costs, a cost 

specific to this industry, we use the 

assumptions and prices of the FDA’s 

Regulatory Impact Analysis for its 2014 

Menu Labeling Rule 350 (‘‘Menu 

Labeling RIA’’), with prices inflated to 

2023 levels according to the BLS CPI 

Inflation Calculator.351 Thus, we assume 

that the average cost for a restaurant 

firm to redesign its menu is $4,818. One 

potential source of uncertainty in this 

estimate is the adoption of QR codes 

and online menus, which may reduce 

physical menu costs. However, we are 

unaware of evidence on the adoption of 

these new technologies. 

After the relevant firms redesign their 

menus, menu replacement would need 

to occur at each establishment. 

Following the Menu Labeling RIA, we 

assume between 0% and 50% of fullservice restaurants and bars would have 

to replace printed menus, at an average 

cost of $2.60 per menu, at their 

establishments in response to the 

proposed rule. Since printed menus are 

regularly replaced, many establishments 

would already be in the process of 

reprinting menus that could be 

coordinated with any changes needed to 

be made at the time the rule goes into 

effect; the proposed rule would not 

impact printing costs for these 

establishments.352 For other 

establishments (limited-service 

restaurants, cafeterias, coffee shops, 

etc.), we assume that menu boards have 

an average replacement cost of $715. For 

all establisments replacing menus or 

menu boards, we assume replacement 

requires one hour of managerial time at 

a wage of $31.47 and one hour of 

waitstaff time at a wage of $15.89. We 

acknowledge that it is uncertain how 

appropriately the menu redesign costs 

from the Menu Labeling Regulatory 

Impact Analysis would represent the 

menu redesign costs in this context. The 

costs used in this analysis may also 

serve as a proxy for any additional costs 

restaurants may incur that are not 

captured in this analysis. 

As in the general discussion of 

compliance costs, we assume that 

restaurant firms not currently in 

compliance would incur zero to ten 

hours of attorney time to ensure 

continued compliance in future years. 

Table 13 provides the total quantified 

costs (one-time upfront costs plus 

annual costs) for both the low-end and 

high-end cost scenarios, and these costs 

are calculated as present values using 

discount rates of 7% and 3%. 

Annualized per firm costs are also 

provided; for parsimony, these 

annualized costs are presented for two 

consolidated categories of restaurant 

types: (1) full-service restaurants and 

bars and (2) limited-service restaurants 

and cafeterias, buffets, snack/coffee 

shops, etc. 


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77474 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 


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Table 13 - Restaurants: Estimated Costs of Compliance 

Present Value of Costs Over a 10-Year Period 

Number of restaurants by type 

All restaurant types 

Full-service restaurants 

Bars 

Limited-service restaurants 

Cafeterias, buffets, snacks, coffee shops, etc. 

Percentage of full-service firms charging fees 

Percentage of other firms charging fees 

Hourly Wages 

Lawyers 

Managers 

Staff 

Upfront Costs 

Per firm labor hours required for compliance 

Hours to determine how rule applies, presently 

compliant firms (lawyer hours) 

Hours to determine how rule applies, presently 

noncom pliant firms (lawyer hours) 

Hours to reoptimize prices (manager time) 

Per establishment hours required for compliance 

Hours to swap out menus/menu boards (manager time) 

Hours to swap out menus/menu boards (staff time) 

Per firm menu costs 

100% 

13% 

Rate 

$88.88 

$31.47 

$15.89 

Firms 

466,976 

217,103 

38,253 

156,138 

56,611 

Low-Cost 

Estimate 

1 

5 

5 

1 

1 

Establishments 

615,135 

249,975 

39,129 

251,533 

74,498 

High-Cost 

Estimate 

1 

10 

10 

1 

1 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77475 

353OEWS Accommodation and Food Services, 

supra n. 348. 

354See, e.g., Michael Lynn et al., Consumer 

Racial Discrimination in Tipping: A Replication 

and Extension, 38 J. Applied Soc. Psych. 4, 1045– 

60 (2008), https://doi.org/10.1111/j.1559-1816.2008.

00338.x; Zachary W. Brewster et al., Black-White 

Earnings Gap among Restaurant Servers: A 

Replication, Extension, and Exploration of 

Consumer Racial Discrimination in Tipping, 84 

Socio. Inquiry 4 (2013), https://doi.org/10.1111/ 

soin.12056. 

355See Matthew Parrett, Customer Discrimination 

in Restaurants: Dining Frequency Matters, 32 J. Lab. 

Rsch. 2, 87–112 (2011), https://doi.org/10.1007/ 

s12122-011-9107-8. 

(b) Labor Market Effects 

We have assumed that the proposed 

rule would lead any restaurants that 

have adopted mandatory service charges 

in lieu of tipping to return to the 

traditional tipping model. Adjustments 

in tipping and restaurant worker 

compensation will likely lead to a shift 

in the labor market equilibrium for 

restaurant workers. This shift could 

generate a net benefit or a net cost to 

society, as well as transfers to or from 

restaurant workers, but we lack the data 

to quantitatively or qualitatively 

determine the welfare effect of the 

equilibrium shift. 

In addition, this shift would generate 

differing welfare impacts across the 

waitstaff labor market. For example, 

moving away from the traditional 

tipping model and toward standardized 

wages, would mitigate discrimination 

that occurs through tipping. The 

literature has found that Black 

employees tend to receive lower tips 

than White employees, and that the 

black-white gap in tipping cannot be 

explained by differences in service 

quality.354 There is also evidence that, 

after controlling for other factors, 

women earn less in tips than men.355

Thus, by causing restaurants to revert to 

the traditional tipping model as we have 

assumed, the proposed rule may have 

the unintended consequence of 

increasing racial gender disparities in 

the waitstaff labor market. 

(3) Restaurants: Break-Even Analysis 

As discussed in Section VII.C.1, we 

lack data to quantify the benefits of the 

proposed rule within the restaurant 


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Cost to redesign menus 

Per establishment menu costs 

Number of printed menus to be replaced 

Full-service restaurants 

Bars 

Cost per printed menu 

Percentage of menus to be replaced 

Number of menu boards to be replaced 

Limited-service restaurants 

Cafeterias, buffets, snacks, coffee shops, etc. 

Cost per menu board 

$4,818.27 

91 

78 

$2.60 

3 

1 

$715.07 

0% 50% 

One-Time Fixed Cost to Include Fees Up Front $1,452,046,501 $1,638,454,104 

Annual Costs 

Hours for Reviewing Rule and Compliance (Annual) 

Total Annual Costs 

0 

$0 

10 

$221,962,921 

Total Costs 

Total Quantified Costs (One-Time+ Annual) 

Total Quantified Costs (One-Time+ Annual) 

7% discount rate 

3% discount rate 

$1,452,046,501 

$1,452,046,501 

$3,197,428,782 

$3,531,842,847 

Annualized Per Firm Costs (Noncompliant Firms) 

Full-Service/Bars 7% discount rate $772 

Full-Service/Bars 3% discount rate $1,179 

Limited-service/cafeterias/coffee shops 7% discount rate $635 

Limited-service/cafeterias/coffee shops 3% discount rate $971 

Note: Costs have been discounted to the present at both 3% and 7% rates. Numbers of firms and 

establishments from NAICS codes 7224 (Drinking Places (Alcoholic Beverages)) and 7225 

(Restaurants and Other Eating Places). Hourly wages are from the Bureau of Labor Statistics. 353 

Annualized per firms costs for firms that are not presently compliant represent a weighted 

average of the indicated restaurant types. We relied upon publicly available sources of data in our 

calculations. We recognize that there may be additional sources of data and we encourage 

comments that provide alternative sources of data where they are available. 

$1,769 

$2,153 

$1,614 

$1,930 
77476 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

industry. Instead, we calculate what the 

benefits would need to be in order for 

the proposed rule to have a positive net 

benefit. We calculate that if the 

proposed rule results in a benefit of at 

least $1.76 per consumer per year over 

10 years, then the benefits to the 

restaurant industry of the proposed rule 

will exceed the industry’s compliance 

costs under the high-end cost 

assumptions with a 7% discount rate. 

(4) Restaurants: Uncertainties 

Our ability to precisely estimate 

benefits and costs is limited due to 

uncertainties in key parameters. The 

quantified benefits and costs for the 

restaurant industry rely on a set of 

assumptions, based on the best available 

public information. When the data were 

unclear, we used sets of assumptions 

that would generate a range of low-end 

and high-end estimates. Table 14 

summarizes the key assumptions and 

how those assumptions may affect the 

resulting estimate of quantified benefits 

and costs. 


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Table 14- Restaurants: Summary of Key Uncertainties 

Assumption or Uncertainty Impact on Costs 

Types of firm cost: 

• Using NAICS codes to • May underestimate or overestimate 

determine which percentage of firms estimated to be out of 

restaurant firms count as compliance ifNAICS and NRA 

full-service versus non- classifications do not line up 

full-service 

• May overestimate or underestimate 

• Full-service restaurants aggregate menu costs 

and bars use printed 

menus while other 

restaurant types use 

menu boards 

Number of hours necessary to 

comply with proposed rule: 

• Hours of lawyer time, • May overestimate costs per firm if many 

restaurant manager firms either already comply or have the 

time, and restaurant systems in place to easily comply with 

employee time proposed rule. Also may underestimate costs 

if compliance requires greater number of 

hours 

Menu costs: 

• Using Menu Labeling May underestimate costs if menu costs have 

Regulatory Impact outpaced inflation. May underestimate or 

Analysis assumptions overestimate costs since menu redesign costs may 
Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 77477 

356 44 U.S.C. 3502(3); 5 CFR 1320.3(c). 

The Commission is expressly 

soliciting comments regarding the 

uncertainties described in Table 14. 

Specifically, the Commission requests 

data that would allow for more refined 

estimation of benefits of the proposed 

rule. The Commission also requests data 

to refine the estimated cost of the 

proposed rule, including information on 

the number of restaurants currently 

charging hidden or misleading 

mandatory fees, and the anticipated cost 

to firms from complying with the 

proposed rule. 

4. Economic Evaluation of Alternatives 

As an alternative to the proposed rule, 

the Commission has considered not 

pursuing rulemaking and to rely on its 

existing tools through enforcement 

actions and consumer education 

instead. Relative to a no-action baseline, 

by definition, there would be no 

incremental benefits or costs. The 

prevalence of drip pricing and hidden 

mandatory fees would continue to 

persist. 

Another potential alternative as 

discussed in Section VII.B. is whether 

the rule should be limited to businesses 

in the live-event ticketing and/or shortterm lodging industries. For these 

specific industries where we are able to 

quantify both benefits and costs, we 

have the following evaluation of costs 

and benefits of such an alternative. In 

the live-event ticketing industry, the 

estimated present value of net benefits 

due to the proposed rule over a 10-year 

period with a 7% discount rate is 

between $20,464,879 and 

$1,762,524,107. Using a 3% rate, the 

present value of net benefits in the liveevent ticketing industry is estimated to 

be between $41,746,333 and 

$2,143,665,007. The present value of net 

benefits from the proposed rule’s 

requirements over a 10-year period 

using a 7% discount rate in the shortterm lodging industry is estimated to be 

between $4,247,948,290– 

$6,752,614,872. Using a 3% rate, the 

present value of net benefits in the 

short-term lodging industry is estimated 

to be between $5,220,642,791 and 

$8,230,386,045. 

The Commission does not have the 

data to prepare a quantitative analysis of 

the other alternatives discussed in 

Section VII.B. The final regulatory 

analysis may include additional 

quantification of alternative proposals if 

the Commission receives data and 

relevant information in response to the 

questions for public comment in Section 

X. 

5. Summary of Results 

The preceding regulatory analysis has 

attempted to catalog and, where 

possible, quantify the potential costs for 

the economy as a whole, as well as the 

incremental benefits and costs of the 

proposed rule for specific industries. At 

the economy level, we estimate that, for 

most firms in the economy, the per firm 

cost will be a one-time cost of $78.74. 

For firms and industries that currently 

rely on hidden mandatory fees and 

require more time to comply, we 

estimate the annualized per firm cost 

might be as high as $2,010. 

Because the Commission is unable to 

quantify economy-wide benefits to the 

proposed rule, at the economy level we 

provide a break-even analysis using 

quantified compliance costs. The breakeven analysis implies there are positive 

net benefits to the proposed rule if the 

benefit per consumer is at least $6.65 

per consumer per year over a 10-year 

period. Note that this analysis does not 

account for costs from unintended 

consequences of the proposed rule or 

the potential benefits from reducing 

deadweight loss by providing 

consumers with full information. 

VIII. Paperwork Reduction Act 

The Paperwork Reduction Act 

(‘‘PRA’’), 44 U.S.C. 3501 et seq., requires 

Federal agencies to seek and obtain 

Office of Management and Budget 

(‘‘OMB’’) approval before undertaking a 

collection of information directed to ten 

or more persons. The term ‘‘collection of 

information’’ includes any requirement 

or request for persons to obtain, 

maintain, retain, report, or publicly 

disclose information.356 The 

Commission believes the proposed rule 

contains a disclosure requirement that 

would constitute a collection of 

information requiring OMB approval 

under the PRA. The Commission has 

submitted the proposed rule to OMB for 

review and approval of any collection of 

information requirements. 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP09NO23.023</GPH>

on costs of menu not be comparable between this context and Menu 

design, menu printing, Labeling Rule context 

and menu board • May underestimate costs if restaurants have 

replacement increased capacity since 2014 

• Number of seats per 

establishment 

Assumption or Uncertainty Impact on Break-Even Benefits Amount 

Number of affected consumers: 

• Assuming all adults are • Underestimates required break-even benefit 

affected amount per consumer if some adults are not 

impacted by the rule because they are not 

restaurant consumers or they only consume 

from establishments unaffected by the rule 
77478 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

357This number may be overinclusive as it as it 

includes firms that would be exempted from the 

definition of Business as described in 464.1(b) of 

the proposed rule if the proposed Motor Vehicle 

Dealers Rule is finalized. 

358Web developer time is a proxy for any costs 

associated with changing the firm’s disclosures to 

comply with the proposed rule, such as the time 

spent adjusting websites or adjusting any physical 

price displays to include the disclosure. The 

estimated mean hourly wages for a web developer 

is $42.11. OEWS Web Developers, supra n. 272. 

A. Hidden Fees Prohibited 

Section 464.2(a) of the proposed rule 

defines it as an unfair and deceptive 

practice for businesses to offer, display, 

or advertise amounts consumers may 

pay without clearly and conspicuously 

disclosing the Total Price, as defined in 

the proposed rule. § 464.2(b) specifies 

that, as a preventative measure, 

businesses that offer, display, or 

advertise an amount a consumer may 

pay must display the Total Price more 

prominently than any other pricing 

information. While these provisions 

may alter when and how, in the course 

of transactions, businesses disclose 

Total Price, the disclosure itself 

provides consumers with information 

readily available to businesses and is 

something businesses must do in the 

course of their regular business 

activities. Thus, the Commission 

concludes that the Total Price 

disclosure does not constitute a 

collection of information for PRA 

purposes and estimates that any 

additional attendant costs are de 

minimis. 

B. Misleading Fees Prohibited 

Section 464.3(a) of the proposed rule 

prohibits businesses from 

misrepresenting the nature and purpose 

of any amount a consumer may pay, 

including the refundability of such fees 

and the identity of any good or service 

for which fees are charged. This Section 

does not require any additional 

disclosures or information collection, 

and only requires businesses to refrain 

from making misrepresentations. The 

Commission concludes that any 

additional costs that might be associated 

with the prohibitions in § 464.3(a) 

against making misrepresentations are 

de minimis. 

Section 464.3(b) of the proposed rule 

requires businesses to disclose clearly 

and conspicuously before consumers 

consent to pay the nature and purpose 

of any amount a consumer may pay that 

is excluded from the Total Price, 

including the refundability of such fees 

and the identity of any good or service 

for which fees are charged. The 

information required by § 464.3(b) is 

necessary as a preventative measure to 

address the unfair and deceptive 

conduct of misrepresenting the nature 

and purpose of fees. Disclosing the 

amount of fees and the identity of goods 

or services for which the fees are 

charged provides consumers with 

information readily available to 

businesses and is something businesses 

do in the course of their regular 

business activities. The Commission 

concludes that disclosing the amount of 

fees and the identity of goods or services 

does not constitute a collection of 

information for PRA purposes, and that 

any costs associated with making these 

disclosures are de minimis. In 

connection with the requirement in 

§ 464.3(b) that businesses disclose the 

refundability of fees and charges, 

businesses may not routinely disclose 

this information as part of business 

transactions, and there may be costs 

associated with developing procedures 

to provide this disclosure. The 

Commission estimates such costs as 

follows: 

1. Estimated One-Time Hours Burden: 

245,454 Hours 

The estimated hours of one-time 

burden for the required disclosures is 

245,454 hours. This estimate is 

explained in this section. 

2. Number of Respondents 

The proposed rule applies to all firms 

in the economy and may result in all 

firms conducting a compliance review, 

which we proxy with one hour of 

attorney time. FTC staff estimates there 

are 818,178 entities that will incur 

additional costs beyond the initial onehour compliance review to comply fully 

with the proposed rule, including firms 

in the live-event ticketing industry, the 

hospitality industry, and restaurants. 

This estimate is based on the total 

number of firms in the United States 

according to data from the U.S. Census 

North American Industry Classification 

System (NAICS). This estimate relies on 

the assumption that 10% of all firms in 

the U.S. (outside of the three specific 

industries) will incur additional 

compliance costs. 

Of the 818,178 total entities incurring 

additional costs, only some firms will 

incur costs directly related to the 

disclosure requirement. The remaining 

firms may incur compliance costs due to 

other provisions of the rule. For 

example, some firms may only need to 

re-optimize price and adjust price 

displays (because they previously 

charged hidden mandatory fees), but 

these firms do not need to add 

disclosures. Lastly, many firms that 

charge fees for optional goods and 

services may already disclose whether 

those optional fees are refundable. 

Accordingly, we assume that 20% of the 

818,178 total firms that incur additional 

compliance costs would be required to 

add disclosures regarding the 

refundability of fees not included in 

Total Price, resulting in an estimated 

163,636 number of respondents.357

3. Disclosure Hours 

The proposed rule would require 

firms to disclose the nature and purpose 

of any amount a consumer may pay that 

is excluded from the Total Price, 

including the refundability of such fees 

and the identity of any good or service 

for which fees are charged. We 

anticipate that the substantial majority 

of sellers routinely provide these 

disclosures in the ordinary course of 

business as a matter of good business 

practice. For these sellers, the time and 

financial resources associated with 

making these disclosures do not 

constitute a ‘‘burden’’ under the PRA 

because they are a usual and customary 

part of regular business practice. 5 CFR 

1320.3(b)(2). Moreover, some State laws 

require the same or similar disclosures 

as the proposed rule mandates. In 

addition, some firms may be covered by 

disclosure requirements of other rules. 

Accordingly, to reflect these various 

considerations, we estimate the 

disclosure burden required by the 

proposed rule will be, on average, 90 

minutes (or 1.5 hours) for each entity 

estimated to not be currently compliant 

with the disclosure requirement of the 

proposed rule. Of this 90-minute total, 

we estimate that 30 minutes will be time 

spent by attorneys reviewing the 

disclosure and 60 minutes will be time 

spent to update the website or physical 

price display. The total estimated onetime burden is 245,454 hours (163,636 

firms × 1.5 hours). 

4. Estimated One-Time Labor Cost 

The estimated one-time labor cost for 

disclosures is $13,305,243. This total is 

the sum of the total cost of attorney time 

calculated by applying the hourly wage 

for attorney time of $78.40 to the 

estimate of 30 minutes of attorney time 

and applying the hourly wage for web 

developer time of $42.11 to the estimate 

of 60 minutes (1 hour) of web developer 

time ($81.31 per entity × 163,636 

entities).358

5. Estimated Non-Labor Cost 

The capital and start-up costs 

associated with the proposed rule’s 

disclosure are de minimis. Any 

disclosure capital costs involved with 

the proposed rule, such as equipment 

and office supplies, would be costs 


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359See Sections III and VII A–B. of this preamble. 

360U.S. Census Bureau, supra n. 271. 

Employment of fewer than 500 employees is a 

commonly used metric for classifying a firm as a 

‘‘small business.’’ 

361The proposed rule is intended to supplement 

or complement these existing laws and rules. 

362For example, Regulation M, which 

implements the Consumer Leasing Act (‘‘CLA’’), 

requires that an advertisement for a consumer lease, 

among other things, ‘‘may state that a specific lease 

of property at specific amounts or terms is available 

only if the lessor usually and customarily leases or 

will lease the property at those amounts or terms,’’ 

and the Regulation also requires a series of written 

disclosures with pricing information, prior to 

consummation of a consumer lease. See 12 CFR 

1013.7 and 213.7; 12 CFR 1013.4 and 213.4. Model 

forms for written disclosures are in Regulation M, 

Appendix A, 12 CFR 1013 and 213. The CLA is at 

15 U.S.C. 1667–1667f. 

363For example, Regulation E, which implements 

the Electronic Fund Transfer Act (‘‘EFTA’’), 

requires financial institutions to disclose fees, 

among other things, at the time a consumer 

contracts for the service or before the first electronic 

fund transfer is made. See 12 CFR 1005.7 and 205.7. 

In some instances, Regulation E applies to other 

entities, including persons and remittance transfer 

providers, and requires written disclosures or 

authorizations as to certain costs or payments and 

pricing terms for gift cards, prepaid accounts, 

certain remittance transfers and preauthorized 

transfers. Model forms for written disclosures are 

found in Regulation E, Appendix A, 12 CFR 1005 

and 205. The EFTA is at 15 U.S.C. 1693–1693r. 

364The Franchise Rule requires sellers of 

franchises to make specific disclosures in a 

prescribed form regarding the total investment 

necessary to begin operation of a franchise, as well 

as other costs. The Franchise Rule also requires the 

disclosure of any initial fees and their refundability. 

16 CFR 436. 

365The Funeral Rule requires specific pricing 

disclosures and itemizations for funeral goods and 

services. 16 CFR 453. 

366For example, Regulation Z, which implements 

the Truth in Lending Act (‘‘TILA’’), requires that an 

advertisement for credit, among other things, that 

states specific credit terms ‘‘shall state only those 

terms that actually are or will be arranged or offered 

by the creditor,’’ and the Regulation also requires 

written disclosures of costs and terms for many 

consumer credit products including mortgage loans, 

personal loans, credit cards, open-end credit, 

automobile financing, and student loans. See e.g., 

12 CFR 1026.24 and 226.24, 1026.16 and 226.16, 

1026.6 and 226.6, 1026.18–.19, 1026.37–.38, 

Continued 

borne by sellers in the normal course of 

business. 

Under Section 3506(c)(2)(A) of the 

Paperwork Reduction Act, the 

Commission invites comments on: (1) 

whether the disclosure requirements are 

necessary, including whether the 

resulting information will be practically 

useful; (2) the accuracy of our burden 

estimates, including whether the 

methodology and assumptions used are 

valid; (3) how to improve the quality, 

utility, and clarity of the disclosure 

requirements; and (4) how to minimize 

the burden of providing the required 

information to consumers. 

Comments on the proposed disclosure 

requirement subject to Paperwork 

Reduction Act review by OMB should 

additionally be submitted to 

www.reginfo.gov/public/do/PRAMain. 

Find this particular information 

collection by selecting ‘‘Currently under 

30-day Review—Open for Public 

Comments’’ or by using the search 

function. The reginfo.gov web link is a 

United States Government website 

operated by OMB and the General 

Services Administration (GSA). Under 

PRA requirements, OMB’s Office of 

Information and Regulatory Affairs 

(OIRA) reviews Federal information 

collections. 

IX. Regulatory Flexibility Act—Initial 

Regulatory Flexibility Analysis 

The Regulatory Flexibility Act, 5 

U.S.C. 601–612, requires the 

Commission to prepare and make 

available for public comment an ‘‘initial 

regulatory flexibility analysis’’ (‘‘IRFA’’) 

in connection with any NPRM. 5 U.S.C. 

603. An IRFA requires many of the same 

components as Section 22 of the FTC 

Act and the Paperwork Reduction Act, 

including (1) a description of the 

reasons that agency action is being 

considered, (2) a statement of the 

objectives of, and legal basis for, the 

proposed rule, and (3) a description of 

any significant alternatives to the 

proposed rule which accomplish the 

stated objectives and minimize any 

significant economic impact of the 

proposed rule on small entities. Where 

the Commission has already addressed 

these components, it incorporates that 

analysis into its IRFA.359 The remaining 

requirements are addressed in this 

section. 

The Commission invites comment on 

the burden on any small entities that 

would be covered and has prepared the 

following analysis. 

A. Description and Estimate of the 

Number of Small Entities to Which the 

Proposed Rule Will Apply 

Most firms in the U.S. economy 

would be subject to this proposed rule, 

but only firms that do not currently 

disclose total price will need to adjust 

their pricing strategy. According to the 

Statistics of U.S. Businesses, there were 

6,119,657 firms in the United States 

with fewer than 500 employees, 

representing 99.7% of all U.S. firms.360

Small businesses that currently comply 

with the proposed rule will have a 

relatively trivial cost of assessing 

whether they are currently in 

compliance, and we assume at most 

these firms will use one hour of lawyer 

time to confirm compliance. Small 

businesses that currently do not disclose 

total price (such as restaurants charging 

mandatory service fees), will incur 

additional costs to re-optimize prices 

and adjust the marketing campaigns and 

the consumer purchase process to 

include full total cost. The Commission 

seeks comment and information 

regarding the estimated number and the 

nature of small business entities for 

which the proposed rule would have a 

significant economic impact. 

B. Description of the Projected 

Reporting, Recordkeeping and Other 

Compliance Requirements of the 

Proposed Rule 

The proposed rule contains no 

reporting or recordkeeping 

requirements. To comply with the 

proposed rule, small entities are 

required to disclose total price 

prominently and not misrepresent the 

nature and purpose of any amount a 

consumer may pay. Almost all firms, 

including small entities, are subject to 

the requirements of the proposed rule. 

For firms that already comply with the 

proposed rule, the one-time cost per 

firm is assumed to be one hour of 

lawyer time at $78.74. 

For small businesses that are not 

currently in compliance, firms will need 

to re-optimize prices, adjust marketing 

campaigns, and adapt the purchase 

process to include full total cost. These 

firms may also incur recurring annual 

costs of additional lawyer time to assess 

and confirm annual compliance. The 

annualized costs of the one-time cost 

and the annual costs for the next 10 

years is estimated to be as much as 

$2,010 per firm averaged over all 

industries. Industry-specific per firm 

costs, however, may be smaller or larger 

than this estimate. 

C. Identification, to the Extent 

Practicable, of All Relevant Federal 

Rules That May Duplicate, Overlap or 

Conflict With the Proposed Rule 

The FTC has not identified any other 

Federal statutes, rules, or policies 

currently in effect that may directly 

duplicate or conflict with the proposed 

rule. The Commission has identified a 

number of other rules or laws that 

contain provisions that potentially 

overlap with certain provisions of the 

proposed rule.361 First, several other 

rules or laws contain requirements 

regarding the disclosure of pricing 

information in specific industries or in 

connection with specific transactions, 

including: the Consumer Leasing Act,362

the Electronic Fund Transfer Act,363 the 

Franchise Rule,364 the Funeral Rule,365

the Truth in Lending Act,366 the 


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77480 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

1026.46, and 1026.60–61. Model forms for written 

disclosures are in Regulation Z, Appendices G–H, 

12 CFR 1026 and 226. The TILA is at 15 U.S.C. 

1601–1666j. 

367The proposed amendments to the Negative 

Option Rule require, for all transactions involving 

a negative option feature, the disclosure of the 

amount or range of costs a consumer will be 

charged, the frequency of the charges and the date 

each charge will be submitted for payment. These 

disclosures must be clear and conspicuous and 

occur before a consumer enters their billing 

information. Negative Option Rule, 88 FR 24716 

(amendments proposed Apr. 24, 2023). 

368For example, Regulation X, which implements 

certain aspects of the Real Estate Settlement 

Procedures Act (‘‘RESPA’’), among other things, 

requires disclosure of settlement service costs and 

other information and sets other requirements for 

certain mortgages. See generally 12 CFR 1024. 

Various forms and statements are in Regulation X, 

including but not limited to Appendices A–D. The 

RESPA is at 12 U.S.C. 2601 et seq. 

369The Telemarketing Sales Rule (‘‘TSR’’) 

requires telemarketing sellers to clearly and 

conspicuously disclose, before a consumer consents 

to pay, the total costs to purchase, receive, or use, 

and the quantity of, any goods or services. 16 CFR 

310. 

370For example, Regulation DD, which 

implements the Truth in Savings Act (‘‘TISA’’), and 

which applies to deposit brokers, among others, for 

certain advertisements, includes various 

disclosures, including for certain overdraft charges. 

See generally 12 CFR 1030. Additionally, for credit 

unions insured by or eligible for insurance by 

NCUSIF (including state-chartered credit unions), a 

separate regulation generally applies; the 

advertising provisions of that credit union 

regulation also apply to persons who advertise such 

credit union accounts. These credit union-related 

requirements include, in some instances, 

disclosures, including for certain overdraft charges. 

See generally 12 CFR 707. The TISA is at 12 U.S.C. 

4301–4313. 

371The recently adopted Empowering Broadband 

Consumers through Transparency Rule requires 

internet service providers (ISPs) to display at the 

point of sale labels that disclose certain information 

about broadband prices, introductory rates, data 

allowances, and broadband speeds. The broadband 

label requires prominent disclosure of monthly 

price and itemization of monthly provider fees, one 

time fees, early termination fees and government 

taxes. The total monthly price does not include the 

itemized fees. Empowering Broadband Consumers 

Through Transparency, 87 FR 76959 (Dec. 16, 2022) 

(to be codified at 47 CFR 8). 

372The Full Fare Advertising Rule covers 

advertising or solicitation by a direct air carrier, 

indirect air carrier, an agent of either, or a ticket 

agent, for passenger air transportation or tour 

requiring a component of air transportation. The 

Rule prohibits stating a price that is not the ‘‘entire 

price to be paid by the customer to the carrier, or 

agent, for such air transportation, tour, or tour 

component.’’ 14 CFR 399.84. 

373The Business Opportunity Rule prohibits 

certain misrepresentations as to cost. In addition, 

the Business Opportunity Rule requires an 

affirmative disclosure of refundability for covered 

transactions that is broader than the provisions of 

the proposed rule. 16 CFR 437. 374The Mortgage Acts and Practices Advertising 

Rule, Regulation N (MAPS) prohibits 

misrepresentations regarding mortgage credit 

products including ‘‘the existence, nature, or 

amount of fees or costs to the consumer’’ associated 

with the credit product. The MAPS rule also 

prohibits misrepresentations regarding ‘‘existence, 

cost, payment terms, or other terms’’ associated 

with any addition product or feature sold in 

connection with a mortgage credit product. 12 CFR 

1014. 

375The Mortgage Assistance Relief Services Rule 

(Regulation O) prohibits misrepresentations 

regarding total costs and refunds related to 

mortgage assistance services. 12 CFR 1015. 

376The proposed amendments to the Negative 

Option Rule prohibits misrepresentations of 

material facts related to any negative option 

transaction. Negative Option Rule, 88 FR 24716 

(amendments proposed Apr. 24, 2023). 

377 In connection with telemarketing, the TSR 

prohibits the misrepresentation of material 

information, including the total costs to purchase, 

receive, or use, and the quantity of any goods or 

services that are the subject of a sales offer. 16 CFR 

310. 

378 15 U.S.C. 1601–1666j. Regulation Z 

implements the TILA. 12 CFR 1026. Among other 

things, Regulation Z prohibits misleading 

advertising of ‘‘fixed’’ rates and payments, and 

misleading comparisons in advertisements, in 

advertisements for credit secured by a dwelling. See 

12 CFR 1026.24(i). 

379Among other things, the TISA (Regulation DD 

and NCUA’s separate implementing regulation) 

prohibits misleading or inaccurate advertisements. 

See, generally, 12 CFR 1030.8 and 707.8. 

proposed amendments to the Negative 

Option Rule,367 the Real Estate 

Settlement Procedures Act,368 the 

Telemarketing Sales Rule,369 the Truth 

in Savings Act,370 the Empowering 

Broadband Consumers through 

Transparency Rule,371 and the Full Fare 

Advertising Rule.372 These provisions 

appear generally compatible with the 

proposed rule’s requirements regarding 

the disclosure of pricing information. In 

areas of shared jurisdiction, the 

Commission seeks comment and 

information to determine if compliance 

with the proposed rule along with the 

specific disclosure provisions for certain 

types of sectors or transactions would be 

impossible, overly burdensome, or 

beneficial. 

The Commission has also identified 

several rules and laws that prohibit 

misrepresentations potentially related to 

charges and fees in connection with 

specific industries or transactions. 

Specifically, several rules and statutes 

prohibit misrepresentations that overlap 

with the proposed rule’s prohibition 

against misrepresenting the nature and 

purpose of any amount a consumer may 

pay, including: the Business 

Opportunity Rule,373 the Mortgage Acts 

and Practices Advertising Rule 

(Regulation N),374 the Mortgage 

Assistance Relief Services Rule 

(Regulation O),375 the proposed 

amendments to the Negative Option 

Rule,376 the Telemarketing Sales 

Rule,377 the TILA,378 and the TISA.379

The Commission has not identified any 

conflict arising from complying with 

these sector or transaction-specific rules 

and statutes and the proposed rule’s 

prohibition against misrepresenting the 

nature and purpose of any amount a 

consumer may pay. The Commission 

invites comment and information 

regarding any potentially duplicative, 

overlapping, or conflicting Federal 

statutes, rules, or policies. 

X. Request for Comments 

Members of the public are invited to 

comment on any issues or concerns they 

believe are relevant or appropriate to the 

Commission’s consideration of the 

proposed rule. The Commission 

requests that factual data on which the 

comments are based be submitted with 

the comments. In addition to the issues 

raised in this preamble, the Commission 

solicits public comment on the specific 

questions identified in this section. 

These questions are designed to assist 

the public and should not be construed 

as a limitation on the issues on which 

public comment may be submitted. 

A. General Questions for Comment 

(1) Should the Commission finalize 

the proposed rule as a final rule? Why 

or why not? How, if at all, should the 

Commission change the proposed rule 

in promulgating a final rule? 

(2) Please provide comment, 

including relevant data, statistics, 

consumer complaint information, or any 

other evidence, on each different 

provision of the proposed rule. 

Regarding each provision, please 

include answers to the following 

questions: 

(a) What is the provision’s impact 

(including any benefits and costs), if 

any, on consumers, governments, and 

businesses, both those existing and 

those yet to be started? 

(b) What alternative provision(s) 

should the Commission consider? 

(3) Would the proposed rule, if 

promulgated, benefit consumers and 

competition? Provide all available data 

and evidence that supports your answer, 

such as empirical data, statistics, 

consumer-perception studies, and 

consumer complaints. 

(4) What are the relevant sources of 

data that reflect the benefits to 

consumers and competition from the 

proposed rule, if promulgated? Provide 

all available data, statistics, and 

evidence. 

(5) What are the relevant sources of 

data that reflect the average search time 

saved for consumers as a result of the 

proposed rule? Provide all available 

data, statistics, and evidence. 

(6) What are the relevant sources of 

data that reflect the compliance costs 

that may apply to businesses from the 

proposed rule, if promulgated? Provide 

all available data, statistics, and 

evidence. 

(a) What are the relevant sources of 

data that reflect the number of firms that 

will be affected by the proposed rule? 


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Provide all available data, statistics, and 

evidence. 

(b) What are the relevant sources of 

data that reflect the number of lawyer 

hours a firm in each industry would 

need to review compliance with the 

rule? Provide all available data, 

statistics, and evidence. 

(c) What are the relevant sources of 

data that reflect the number of data 

scientist hours a firm in each industry 

would need to comply with the 

proposed rule? Provide all available 

data, statistics, and evidence. 

(d) What are the relevant sources of 

data that reflect the number of web 

developer hours a firm in each industry 

would need to comply with the 

proposed rule? Provide all available 

data, statistics, and evidence. 

(e) What are the relevant sources of 

data that reflect other possible costs that 

have not already been considered that 

may apply to businesses, consumers, or 

workers from the proposed rule, if 

promulgated? Provide all available data, 

statistics, and evidence. 

(f) What are the relevant sources of 

data that reflect the number of firms in 

each industry that use third-party 

services to display pricing information 

that would reduce the costs of 

compliance? What are the relevant 

sources of data that reflect how much 

such services would cost in order to 

comply with the proposed rule? Provide 

all available data, statistics, and 

evidence. 

(7) Would the proposed rule, if 

promulgated, have a significant 

economic impact on a substantial 

number of small entities? If so, how 

could it be modified to avoid a 

significant economic impact on a 

substantial number of small entities? 

(8) How would the proposed rule, if 

promulgated, intersect with existing 

industry practices, norms, rules, laws, 

or regulations? Are there any existing 

laws or regulations that would affect or 

interfere with the implementation of the 

proposed rule? 

(9) Is the proposed rule adequate to 

address the two practices identified as 

prevalent, misrepresenting the total 

costs of goods and services by omitting 

mandatory fees from advertised prices 

and misrepresenting the nature and 

purpose of fees? Are there additional 

provisions necessary to prevent these 

practices in specific industries? 

B. § 464.1: Definitions 

(10) Are the proposed definitions 

clear? Should any changes be made to 

any definitions? Are additional 

definitions needed? 

(11) Should the scope of any of the 

proposed definitions be expanded or 

narrowed, and if so, how and why? 

(12) Should the proposed definition 

for ‘‘Business’’ exclude certain 

businesses, and if so, why? 

(13) The proposed definition for 

‘‘Business’’ contains an exclusion for 

‘‘motor vehicle dealers that must 

comply with 16 CFR 463, requiring 

motor vehicle dealers to disclose the full 

cash price for which a dealer will sell 

or finance the motor vehicle to any 

consumer, and prohibiting motor 

vehicle dealers from making 

misrepresentations.’’ Is this definition 

clear and understandable? Is this 

definition ambiguous in any way? How, 

if at all, should this definition be 

improved? This exception would only 

apply if the proposed Motor Vehicle 

Dealers Rule is finalized and in effect 

and not subsequently narrowed, altered, 

or otherwise not in effect. Is having such 

an exclusion appropriate? 

(14) Should a new definition of 

‘‘Covered Business’’ be added to narrow 

the Businesses covered by specific 

requirements of the rule, in particular 

the preventative requirements in 

§ 464.2(b)? If so, how should ‘‘Covered 

Businesses’’ be defined? 

(a) Should the definition of ‘‘Covered 

Business’’ be limited to businesses in 

the live-event ticketing and/or shortterm lodging industries? 

i. If so, how should Businesses in the 

live-event ticketing industry be defined? 

If they are defined as ‘‘any Business that 

makes live-event tickets available, 

directly or indirectly, to the general 

public,’’ is that definition clear and 

understandable? Is it ambiguous in any 

way? How, if at all, should that 

definition be improved? 

ii. If so, how should Businesses in the 

short-term lodging industry be defined? 

If they are defined as ‘‘any Business that 

makes temporary sleeping 

accommodations available, directly or 

indirectly, to the general public,’’ is that 

definition clear and understandable? Is 

it ambiguous in any way? How, if at all, 

should that definition be improved? 

(b) Should the definition of ‘‘Covered 

Business’’ exclude small businesses? If 

so, how should ‘‘small businesses’’ be 

defined? 

i. If ‘‘Covered Business’’ is defined to 

‘‘include all of the following: (1) any 

Business that does not satisfy both the 

Small Business Administration’s 

definition of a small business concern 

(13 CFR 121.105) and the Small 

Business Administration’s Table of Size 

Standards (13 CFR 121.201); (2) any 

Business, regardless of size, that offers 

goods or services in the live-event 

ticketing industry; and (3) any Business, 

regardless of size, that offers goods or 

services in the short-term 

accommodations industry,’’ is that 

definition clear and understandable? Is 

it ambiguous in any way? How, if at all, 

should that definition be improved? Are 

there industries other than live-event 

ticketing and short-term 

accommodations that should be subject 

to all the proposed requirements of the 

rule, regardless of size? 

ii. What are the relevant sources of 

data that reflect the costs and benefits 

that the proposed rule would have on 

Covered Businesses if this definition is 

added to the proposed rule? 

(c) Should a definition of ‘‘Covered 

Business’’ exclude businesses to the 

extent that they offer or advertise credit, 

lease, or savings products, or to the 

extent that they extend credit or leases 

or provide savings products to 

consumers? In the alternative, should 

the definition exclude certain of these 

businesses or products from only certain 

provisions? If so, specifically, which 

businesses and products, which 

provisions of the proposed rule, and 

why and how, or why not? 

(d) Should a definition for ‘‘Covered 

Business’’ be limited to businesses that 

offer goods or services online and in 

mobile applications? Why or why not? 

i. If so, how should such businesses 

be defined? 

ii. What are the relevant sources of 

data that reflect the costs and benefits 

that the proposed rule would have on 

Covered Businesses if they are defined 

in this way? 

iii. What are the relevant sources of 

data that reflect differences in costs for 

online versus brick-and-mortar stores? 

Provide all available data, statistics, and 

evidence. 

(15) Should a definition for ‘‘Covered 

Business’’ exclude limited-service and 

full-service restaurants that satisfy both 

the Small Business Administration’s 

definition of a small business concern 

(13 CFR 121.105) and the Small 

Business Administration’s Table of Size 

Standards (13 CFR 121.201)? 

(16) Should the proposed definition 

for ‘‘Total Price’’ contain an exception 

for ‘‘mandatory charges by restaurants 

for service performed for the customer 

in lieu of tips, as defined by the 

Department of Labor (29 CFR 531.52)’’? 

(17) Does the proposed definition for 

‘‘Total Price’’ provide sufficient clarity 

for industries that calculate charges 

based on increments of time? Why or 

why not? 

(18) The proposed definition of Total 

Price allows Shipping Charges to be 

excluded. Shipping Charges are defined 

as ‘‘the fees or charges that reasonably 

reflect the amount a Business incurs to 


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77482 Federal Register / Vol. 88, No. 216 / Thursday, November 9, 2023 / Proposed Rules 

send physical goods to a consumer 

through the mail, including private mail 

services’’ § 464.1(f). Is this provision 

clear and understandable? Is this 

provision ambiguous in any way? How, 

if at all, should this provision be 

improved? 

(a) Does the proposed definition of 

‘‘Shipping Charges’’ effectively allow 

Businesses to pass along reasonable 

costs of shipping to consumers without 

permitting artificial inflation of such 

costs? 

(b) How would this provision impact 

the assessment and calculation of 

shipping costs across industries, and in 

particular industries? 

(c) What are the relevant sources of 

data that reflect the manner in which 

firms calculate shipping costs? Provide 

all available data, statistics, and 

evidence. 

(19) Does the proposed definition of 

Total Price provide sufficient clarity for 

industries that ‘‘all fees or charges a 

consumer must pay for a good or service 

and any mandatory Ancillary Good or 

Service’’ includes (1) all fees or charges 

that are not reasonably avoidable and (2) 

all fees or charges for goods or services 

that a reasonable consumer would 

expect to be included with the 

purchase? 

C. § 464.2: Hidden Fees Prohibited 

(20) Section 464.2(a) of the proposed 

rule states, ‘‘[i]t is an unfair and 

deceptive practice and a violation of 

this part for any Business to offer, 

display, or advertise an amount a 

consumer may pay without Clearly and 

Conspicuously disclosing the Total 

Price.’’ Is this prohibition clear and 

understandable? Is this prohibition 

ambiguous in any way? How, if at all, 

should this prohibition be improved? 

(21) Section 464.2(b) of the proposed 

rule states, ‘‘[i]n any offer, display, or 

advertisement that contains an amount 

a consumer may pay, a Business must 

display the Total Price more 

prominently than any other Pricing 

Information.’’ Is this prohibition clear 

and understandable? Is this prohibition 

ambiguous in any way? How, if at all, 

should this prohibition be improved? 

(22) Should the proposed rule address 

the itemization of fees and charges that 

make up the ‘‘Total Price?’’ If so, how 

should the proposed rule address 

itemization and why? 

(23) By requiring mandatory fees to be 

included in the Total Price, does the 

requirement in 464.2(a) effectively 

eliminate fees that provide little or no 

value to the consumer in exchange for 

the charge? Why or why not? Are there 

any such fees that would not be 

eliminated by the proposed rule? 

(24) Should the proposed rule 

explicitly prohibit fees that provide 

little or no value to the consumer in 

exchange for the charge? Why or why 

not? Should such a rule apply to 

optional fees? Why or why not? What 

should the Commission consider in 

determining if a fee provides little or no 

value to the consumer? 

(25) Should the proposed rule 

prohibit fees that are excessive? Why or 

why not? How would such a rule define 

excessive fees? 

D. § 464.3: Misleading Fees Prohibited 

(26) Section 464.3(a) of the proposed 

rule states, ‘‘[i]t is an unfair and 

deceptive practice and a violation of 

this part for any Business to 

misrepresent the nature and purpose of 

any amount a consumer may pay, 

including the refundability of such fees 

and the identity of any good or service 

for which fees are charged.’’ Is this 

prohibition clear and understandable? Is 

this prohibition ambiguous in any way? 

How, if at all, should this prohibition be 

improved? 

(a) Does § 464.3(a)’s provision 

prohibiting misrepresentations 

regarding ‘‘the nature and purpose of 

any amount a consumer may pay’’ 

provide sufficient clarity that it includes 

any amount included in the Total Price 

if that amount is also itemized 

separately from the Total Price? 

(b) Does § 464.3(a)’s provision 

prohibiting misrepresentations 

regarding ‘‘the nature and purpose of 

any amount a consumer may pay’’ 

provide sufficient clarity that it includes 

any amount excluded from the Total 

Price such as Shipping Charges, 

Government Charges, optional charges, 

voluntary gratuities, and invitations to 

tip? 

(27) Section 464.3(b) of the proposed 

rule states, ‘‘[a] Business must disclose 

Clearly and Conspicuously before the 

consumer consents to pay the nature 

and purpose of any amount a consumer 

may pay that is excluded from the Total 

Price, including the refundability of 

such fees and the identity of any good 

or service for which fees are charged.’’ 

Is this prohibition clear and 

understandable? Is this prohibition 

ambiguous in any way? How, if at all, 

should this prohibition be improved? 

(a) Section 464.3(b) of the proposed 

rule requires certain disclosures ‘‘before 

the consumer consents to pay.’’ Should 

the proposed rule instead require 

Businesses to disclose Clearly and 

Conspicuously the nature and purpose 

of any amount a consumer may pay that 

is excluded from the Total Price ‘‘before 

the consumer consents to pay and 

before obtaining a consumer’s billing 

information’’? 

(b) Section 464.3(b) of the proposed 

rule requires disclosures regarding ‘‘the 

nature and purpose of any amount a 

consumer may pay that is excluded 

from the Total Price.’’ Does this 

provision provide sufficient clarity that 

it includes Shipping Charges, 

Government Charges, optional charges, 

voluntary gratuities, and invitations to 

tip? 

E. Industry-Specific Practices 

(28) What are the relevant sources of 

data that reflect the frequency of, and 

reasons for, abandoned transactions in 

the live-event ticket market? Provide all 

available data, statistics, and evidence. 

(29) What are the relevant sources of 

data that reflect the total annual number 

of live-event ticket purchases? What are 

the relevant sources of information that 

separate total annual ticket purchases 

into primary and secondary ticket sales? 

Provide all available data, statistics, and 

evidence. 

(30) What are the relevant sources of 

data that reflect the number of liveevent ticket sellers currently charging 

hidden mandatory fees? Provide all 

available data, statistics, and evidence. 

(31) The comments identified 

additional problematic practices 

regarding live events, including unfair 

dynamic pricing, transferability 

restrictions, lack of transparency 

regarding ticket holdbacks, lack of 

transparency regarding speculative 

tickets, and the use of bots. How 

prevalent are these acts and practices 

and should the proposed rule be 

modified to address any of these 

practices? Provide all available data and 

evidence that supports your answer, 

such as empirical data, statistics, 

consumer-perception studies, and 

consumer complaints. 

(32) What are the relevant sources of 

data that reflect the frequency of, and 

reasons for, abandoned transactions in 

the short-term lodging industry? Provide 

all available data, statistics, and 

evidence. 

(33) What are the relevant sources of 

data that reflect the number of hotel 

firms that impose resort fees or other 

similar mandatory fees? Provide all 

available data, statistics, and evidence. 

(34) What are the relevant sources of 

data that reflect the number of 

individual home share hosts in the US? 

Provide all available data, statistics, and 

evidence. 

(35) What are the relevant sources of 

data that reflect the number of 

restaurants currently charging 

mandatory fees? 


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(36) What are the relevant sources of 

data that reflect the number of 

restaurants that charge each type of fee 

(such as credit card surcharge fees, 

kitchen fees, economic impact or 

inflation fees, mandatory service fees in 

lieu of tips, or mandatory service fees 

that do not replace tips) being used by 

restaurants? 

(37) What are the relevant sources of 

data that reflect the number of 

restaurants that have moved away from 

the traditional tipping model? Provide 

all available data, statistics, and 

evidence. 

(a) What are the relevant sources of 

data that reflect the number of such 

restaurants that do not request tips? 

(b) What are the relevant sources of 

data that reflect the number of such 

restaurants that impose on customers, 

regardless of the size of the party, 

mandatory charges for service 

performed for the customer in lieu of 

tips? 

XI. Comment Submissions 

You can file a comment online or on 

paper. For the Commission to consider 

your comment, we must receive it on or 

before January 8, 2024. Write ‘‘Unfair or 

Deceptive Fees, R207011’’ on your 

comment. Your comment—including 

your name and your State—will be 

placed on the public record of this 

proceeding, including, to the extent 

practicable, on the website https://

www.regulations.gov. 

Because of the agency’s heightened 

security screening, postal mail 

addressed to the Commission will be 

subject to delay. We strongly encourage 

you to submit your comments online 

through the https://www.regulations.gov 

website. To ensure that the Commission 

considers your online comment, please 

follow the instructions on the webbased form. 

If you file your comment on paper, 

write ‘‘Unfair or Deceptive Fees NPRM, 

R207011’’ on your comment and on the 

envelope, and mail your comment to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

600 Pennsylvania Avenue NW, Mail 

Stop H–144 (Annex J), Washington, DC 

20580. If possible, please submit your 

paper comment to the Commission by 

overnight service. 

Because your comment will be placed 

on the public record, you are solely 

responsible for making sure that your 

comment does not include any sensitive 

or confidential information. In 

particular, your comment should not 

contain sensitive personal information, 

such as your or anyone else’s Social 

Security number; date of birth; driver’s 

license number or other State 

identification number or foreign country 

equivalent; passport number; financial 

account number; or credit or debit card 

number. You are also solely responsible 

for making sure your comment does not 

include any sensitive health 

information, such as medical records or 

other individually identifiable health 

information. In addition, your comment 

should not include any ‘‘[t]rade secret or 

any commercial or financial information 

which . . . is privileged or 

confidential’’—as provided in Section 

6(f) of the FTC Act, 15 U.S.C. 46(f), and 

FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)— 

including, in particular, competitively 

sensitive information such as costs, 

sales statistics, inventories, formulas, 

patterns, devices, manufacturing 

processes, or customer names. 

Comments containing material for 

which confidential treatment is 

requested must be filed in paper form, 

must be clearly labeled ‘‘Confidential,’’ 

and must comply with FTC Rule 4.9(c), 

16 CFR 4.9(c). In particular, the written 

request for confidential treatment that 

accompanies the comment must include 

the factual and legal basis for the 

request and must identify the specific 

portions of the comment to be withheld 

from the public record. See FTC Rule 

4.9(c). Your comment will be kept 

confidential only if the General Counsel 

grants your request in accordance with 

the law and the public interest. Once 

your comment has been posted publicly 

at https://www.regulations.gov—as 

legally required by FTC Rule 4.9(b), 16 

CFR 4.9(b)—we cannot redact or remove 

your comment, unless you submit a 

confidentiality request that meets the 

requirements for such treatment under 

FTC Rule 4.9(c), and the General 

Counsel grants that request. 

Visit the FTC website to read this 

document and the news release 

describing it, and visit https://

www.regulations.gov/docket/FTC-2023- 

0064 to read a plain-language summary 

of the proposed rule. The FTC Act and 

other laws the Commission administers 

permit the collection of public 

comments to consider and use in this 

proceeding as appropriate. The 

Commission will consider all timely 

and responsive public comments it 

receives on or before January 8, 2024. 

For information on the Commission’s 

privacy policy, including routine uses 

permitted by the Privacy Act, see 

https://www.ftc.gov/siteinformation/

privacypolicy. 

XII. Communications by Outside 

Parties to the Commissioners or Their 

Advisors 

Under Commission Rule 1.18(c)(1), 16 

CFR 1.18(c)(1), the Commission has 

determined that communications with 

respect to the merits of this proceeding 

from any outside party to any 

Commissioner or Commissioner advisor 

will be subject to the following 

treatment: written communications and 

summaries or transcripts of all oral 

communications must be placed on the 

rulemaking record. Unless the outside 

party making an oral communication is 

a member of Congress, communications 

received after the close of the publiccomment period are permitted only if 

advance notice is published in the 

Weekly Calendar and Notice of 

‘‘Sunshine’’ Meetings. 

List of Subjects in 16 CFR Part 464 

Consumer protection, Trade practices, 

Advertising. 

■ For the reasons set forth in the 

preamble, the Federal Trade 

Commission proposes to amend 16 CFR 

Chapter I by adding part 464 to read as 

follows: 

PART 464—RULE ON UNFAIR OR 

DECEPTIVE FEES 

Sec. 

464.1 Definitions 

464.2 Hidden Fees Prohibited 

464.3 Misleading Fees Prohibited 

464.4 Relation to State Laws 

Appendix A to Part 464: Short-Term 

Lodging Industry Minutes Per 

Listing Calculations 

Authority: 15 U.S.C. 41–58. 

§ 464.1 Definitions 

(a) Ancillary Good or Service means 

any additional good(s) or service(s) 

offered to a consumer as part of the 

same transaction. 

(b) Business means an individual, 

corporation, partnership, association, or 

any other entity that offers goods or 

services, including, but not limited to, 

online, in mobile applications, and in 

physical locations. Motor vehicle 

dealers that must comply with 16 CFR 

part 463, requiring motor vehicle 

dealers to disclose the full cash price for 

which a dealer will sell or finance the 

motor vehicle to any consumer, and 

prohibiting motor vehicle dealers from 

making misrepresentations, are 

exempted from the definition of 

‘‘Business’’ for all purposes under this 

part. 

(c) Clear(ly) and Conspicuous(ly) 

means a required disclosure that is 

difficult to miss (i.e., easily noticeable) 

and easily understandable, including in 

all of the following ways: 

(1) In any communication that is 

solely visual or solely audible, the 

disclosure must be made through the 

same means through which the 


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communication is presented. In any 

communication made through both 

visual and audible means, such as a 

television advertisement, the disclosure 

must be presented simultaneously in 

both the visual and audible portions of 

the communication even if the 

representation requiring the disclosure 

is made in only one means. 

(2) A visual disclosure, by its size, 

contrast, location, the length of time it 

appears, and other characteristics, must 

stand out from any accompanying text 

or other visual elements so that it is 

easily noticed, read, and understood. 

(3) An audible disclosure, including 

by telephone or streaming video, must 

be delivered in a volume, speed, and 

cadence sufficient for ordinary 

consumers to easily hear and 

understand it. 

(4) In any communication using an 

interactive electronic medium, such as 

the internet or software, the disclosure 

must be unavoidable. 

(5) The disclosure must use diction 

and syntax understandable to ordinary 

consumers and must appear in each 

language in which the representation 

that requires the disclosure appears. 

(6) The disclosure must comply with 

these requirements in each medium 

through which it is received, including 

all electronic devices and face-to-face 

communications. 

(7) The disclosure must not be 

contradicted or mitigated by, or 

inconsistent with, anything else in the 

communication. 

(8) When the representation or sales 

practice targets a specific audience, 

such as children, older adults, or the 

terminally ill, ‘‘ordinary consumers’’ 

includes reasonable members of that 

group. 

(d) Government Charges means all 

fees or charges imposed on consumers 

by a Federal, State, or local government 

agency, unit, or department. 

(e) Pricing Information means any 

information relating to an amount a 

consumer may pay. 

(f) Shipping Charges means the fees or 

charges that reasonably reflect the 

amount a Business incurs to send 

physical goods to a consumer through 

the mail, including private mail 

services. 

(g) Total Price means the maximum 

total of all fees or charges a consumer 

must pay for a good or service and any 

mandatory Ancillary Good or Service, 

except that Shipping Charges and 

Government Charges may be excluded. 

§ 464.2 Hidden Fees Prohibited. 

(a) It is an unfair and deceptive 

practice and a violation of this part for 

any Business to offer, display, or 

advertise an amount a consumer may 

pay without Clearly and Conspicuously 

disclosing the Total Price. 

(b) In any offer, display, or 

advertisement that contains an amount 

a consumer may pay, a Business must 

display the Total Price more 

prominently than any other Pricing 

Information. 

§ 464.3 Misleading Fees Prohibited. 

(a) It is an unfair and deceptive 

practice and a violation of this part for 

any Business to misrepresent the nature 

and purpose of any amount a consumer 

may pay, including the refundability of 

such fees and the identity of any good 

or service for which fees are charged. 

(b) A Business must disclose Clearly 

and Conspicuously before the consumer 

consents to pay the nature and purpose 

of any amount a consumer may pay that 

is excluded from the Total Price, 

including the refundability of such fees 

and the identity of any good or service 

for which fees are charged. 

§ 464.4 Relation to State Laws. 

(a) In General. This part will not be 

construed as superseding, altering, or 

affecting any State statute, regulation, 

order, or interpretation relating to unfair 

or deceptive fees or charges, except to 

the extent that such statute, regulation, 

order, or interpretation is inconsistent 

with the provisions of this part, and 

then only to the extent of the 

inconsistency. 

(b) Greater protection under State law. 

For purposes of this Section, a State 

statute, regulation, order, or 

interpretation is not inconsistent with 

the provisions of this part if the 

protection such statute, regulation, 

order, or interpretation affords any 

consumer is greater than the protection 

provided under this part. 

Appendix A to Part 464: Short-Term 

Lodging Industry Minutes per Listing 

Calculations 

1. Low-End Estimate of Minutes per Listing 

Calculation 

We use the Airbnb user search statistics 

reported in Fradkin (2017) to obtain a lowend estimate of minutes to view one listing 

after clicking on it. The paper provides data 

on a random sample of users who searched 

for short-term rentals on Airbnb in a large 

U.S. city. It reports search behavior 

separately for all searchers and for searchers 

who contacted the host, either to inquire 

about a listing or to book it. We use those 

numbers to calculate search behavior for the 

group of searchers who did not send a 

contact. The relevant statistics for these three 

groups are summarized in Table A.1. 

‘‘Average unique listings seen’’ includes all 

listings users see on a search result page, 

including listings users do not click on. 

‘‘Average time spent browsing’’ includes 

entering search parameters, scrolling through 

results, and viewing listings after clicking on 

them. ‘‘Average number of contacts’’ is the 

average number of times searchers contacted 

a host for a listing. Since contacting the host 

requires users to click on the listing, we use 

this to proxy for number of clicked-on 

listings. 

TABLE A.1 

(1) 

All searchers 

(2) 

Searchers who 

sent at least one 

contact 

(3) 

Searchers who did 

not send a contact 

Observations .............................................................................................................. 12,241 4,426 7,815 

Average unique listings seen .................................................................................... 68.53 87.81 57.61 

Average time spent browsing (min) ........................................................................... 35.77 57.87 23.25 

Average number of contacts (proxy for clicks) .......................................................... .............................. 2.37 ..............................

From the third column, we calculate: 

Time to view each listing without clicks = 

Average time spent browsing/Average 

unique listings seen = 23.253/57.61 = .40 

minutes per listing. 

Because the average time spent browsing 

for the group in column (2) is inclusive of the 

amount of time spent sending contacts, not 

just viewing listings that were not contacted, 

we use the preceding value calculated from 

the group in column (3) to estimate the 

following that applies to searchers in column 

2: 

Time spent viewing listings without clicks = 

Time to view each listing without clicks 

* Average unique listings seen = .40 * 

87.812 = 35.44 minutes 

and 

Average total time viewing listings after 

clicking = Average time spent 


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380The numerator of ‘‘Time per listing’’ is an 

underestimate because ‘‘Time spent browsing 

without clicks’’ may capture some time spent 

viewing clicked-on listings that didn’t result in a 

contact. The denominator of ‘‘Time per listing’’ is 

also an underestimate because the number of 

listings clicked on is proxied using the number of 

listings users book or send an inquiry about. Users 

may click on more listings than just the ones they 

want to inquire about or book. The two values are 

related. If the true denominator is higher than what 

we estimate, then the true numerator will be higher 

too. Higher listing clicks beyond those that resulted 

in a contact means more time spent viewing 

clicked-on listings that didn’t result in a contact. 

The ratio should remain about the same. 

browsing¥Time spent viewing listings 

without clicks = 57.874¥35.44 = 22.43 

minutes. 

Finally, we calculate time to view one 

listing: 

Time per listing = Average total time viewing 

listings after clicking/Average number of 

contacts = 22.43/2.367 = 9.48 minutes 

per listing.380

2. Upper-End Estimate of Minutes per Listing 

Calculation 

We use the hotel search cost model 

developed by Chen and Yao (2016) to 

calculate an upper-end estimate of minutes to 

view one listing. The paper uses data from 

consumer search behavior when booking 

hotels in four major international cities on an 

anonymous major U.S. online travel website. 

A search is defined as a listing clickthrough, and the search cost for a listing is 

specified as: 

cij = ci(TimeConstrainti, Slotj) = exp(γi0 + 

γi1TimeConstrainti + γi2 Slotj) = 

exp(3.07¥.05*TimeConstraintj +.01 * 

Slotj

where TimeConstrainti is the number of days 

between consumer i’s search and her 

check-in. Slotj is the slot position of the 

j-th search. The exponential operator 

ensures that the costs are positive. The 

gammas are mean levels of cost 

coefficients. 

Using this we can find that the mean 

search cost per listing when 30 days in 

advance (the sample average) is 

exp(3.07¥(.05*30)) = $4.81 per listing. The 

inflation adjusted value is $5.86. 

From this we find that total search cost is 

then $5.86 per listing * 2.3 searches on 

average = $13.48. This total cost can be 

conceptualized as the number of minutes of 

viewing listings multiplied by the 

consumer’s value of time. Using $24.40 per 

hour as the value of time, we find that the 

time spent viewing listings is ($13.48/$24.40 

per hour) * 60 minutes per hour = 33.15 

minutes. 

We can calculate the minutes to view one 

listing as 33.15 minutes/2.3 searches = 14.41 

minutes per listing. 

By direction of the Commission. 

April J. Tabor, 

Secretary. 

[FR Doc. 2023–24234 Filed 11–8–23; 8:45 am] 

BILLING CODE 6750–01–P 


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