FTC Looks at Taking on “Resort Fees” in New Rule
Joe Cortez November 08, 2022
Perfect beach swimming pool with tropical resort relax.
Published in the Federal Register, the FTC is soliciting public comments on a new proposed rule addressing unfair or deceptive fees.
Junk Fee Rule to Address “Unfair or Deceptive Fees” Added to Purchases
The new proposed rule comes after the Consumer Financial Protection Bureau (CFPB) requested public comment on “fees levied on consumer financial products or services.” This ultimately led to the FTC looking into the “junk fees” on a broader level, which affect travelers on a daily basis.
Resort fees originated in the United States, dating back to 1997. First found at popular resort destinations, the trend has expanded to everything from full-service properties around the world to two-star hotels in America. Hotels usually justify the additional fee beyond the daily rate as a way to pay for access to pools, free in-room internet and other amenities.
“Junk fees impose substantial economic harms on consumers and impede the dissemination of important market information,” the Advance Notice of Proposed Rulemaking document reads. “A Commission analysis of hotel ‘resort fees’ that were mandatory and undisclosed in the posted room rates concluded such fees ‘artificially increas[e] the search costs and the cognitive costs’ for consumers carrying out the transaction…These fee practices can be found throughout the economy but appear to be particularly widespread in markets for travel such as hotels, room-sharing, car rentals, and cruises.”
As a result, the FTC is asking for public input on a proposed rule to address resort fees and other “junk fees” imposed upon the customers. In particular, the rule would make it “an unfair or deceptive act or practice and unfair method of competition to advertise or solicit the sale of a product or service without prominently disclosing the entire price to be paid by the customer inclusive of all unavoidable fees and service charges (excluding government taxes).” Comments will be accepted through January 9, 2023 and can be shared on Regulations.gov under docket FTC-2022-0069.
Proposed Rule Marks Second Time Government Asked Flyers for Advice This Year
The new proposed rulemaking marks the second time in 2022 where flyers were asked for advice on future policies. In August 2022, the Federal Aviation Administration asked for comments on proposed airline safety measures in order to potentially create a minimum seat dimension for airlines.
Share your experiences with resort fees (and how to get out of them) on the FlyerTalk forums
The most ridiculous one I've seen yet is a "Downtown Fee" that includes a bottle of water added to my room at a Holiday Inn in Sioux Falls, South Dakota.
Honestly, we should do this for everything, all the way through Sales Tax on normal items, fees on event tickets. Show me a higher advertised price.
I know why that's logistically hard in the US with sales tax - but still a world without billing surprises would be nicer.
It's easy, the net and gross price of everything is already in every company's systems. I live in Australia and it's law that the advertised/displayed price of almost everything must include all applicable fees and taxes, so the price dispayed is the price you pay, no surprises, no guessing, no bill shock.
I don't get the argument that "it's hard with sales tax"... Walmart has different prices in different shops in the same state! So the argument that the tax situation makes it difficult is just laughable - if the companies can't work out the price to print on the tickets, then they shouldn't be in business :)
There are tens if not hundreds of thousands of different sale tax rates, including different states, counties, cities and other taxing agencies. And those can change from time to time. What if they all change at once? Until the whole thing is automated on a national basis by the governmental agencies that mandate them, it would cost a phenomenal amount of money for properties to deal with them.
The cost of doing this would ultimately be passed on to the consumer, so all that is accomplished by requiring perfect pricing is to raise the prices even further. And if it's not perfect, companies will end up being sued and fined.
It's more complicated than that. In most states, sales tax is calculated based on Point of Sale which is different if you pick it up in the store vs have it delivered. You can live a mile away from the store and have a different sales tax rate. Until you select the purchase method, the sales tax is not fixed.
Seeing it in restaurants now. A dish is advertised at a certain price, but then an "inflation" fee is added to your check.
These fees are a total ripoff and should end.
They seem very silly to me, but certainly not a ripoff when they are disclosed at time of purchase.
Earlier this year, I was charged some type of fee by a Marriott property and successfully argued to have the hotel waive it. It was essentially a restaurant subsidy! I was charged a $20 fee and received a $20 restaurant voucher/credit. A subsidy, a way to artificially create demand for the on-sight restaurant property.
I also get sick of paying a "resort fee" for amenities that I do not use (bike access) or are already included in my status membership (internet).
Hope something will change or these fees will be prohibited without true transparency.