⚖️ FTC bans "junk fees"

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The FTC’s Ban on Hidden Junk Fees

The Federal Trade Commission’s (FTC) new rule banning hidden “junk fees” aims to increase transparency in pricing for live events, hotels, and vacation rentals. By targeting deceptive practices like “bait-and-switch” pricing, the rule ensures that consumers see the full cost upfront, including commonly hidden fees such as “resort” or “service” charges. While businesses can still impose these fees, they must now include them in the advertised total price and display it more prominently than any other pricing information. This change enables clearer price comparisons, improving consumer trust and streamlining purchasing decisions.

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Implications for Startups in Affected Industries

For startups operating in ticketing, short-term rentals, or related sectors, compliance with this rule is essential. Businesses must adapt their pricing models and website displays to ensure all fees are transparent at the initial point of customer interaction. Startups that fail to disclose mandatory fees or mislead consumers with partial pricing risk significant penalties and reputational damage. While the rule primarily affects live events and lodging, it signals the FTC’s broader intent to crack down on unfair pricing practices, potentially expanding enforcement to other sectors in the future.

Building a Competitive Advantage Through Transparency

Rather than viewing this as a regulatory burden, startups can leverage the rule as an opportunity to differentiate themselves. Transparent, upfront pricing fosters consumer confidence and reduces cart abandonment caused by surprise fees. Startups that implement clear, honest pricing early will not only ensure compliance but also position themselves as customer-centric businesses. Consulting legal and compliance experts now can help startups preempt further regulatory changes and gain an edge in a marketplace increasingly focused on fairness and transparency.

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