The Federal Trade Commission (FTC) has finalized its groundbreaking Junk Fees Rule, targeting deceptive pricing practices across industries, including short-term rentals. Announced on December 17, 2024, the rule mandates that businesses disclose the total price—inclusive of all mandatory fees—whenever prices are advertised. This shift could significantly impact short-term rental managers and their pricing strategies. Let’s explore which fees will need to change, what this means for the industry, and whether the rule is built to last.
A Long Time Coming
This rule responds to years of consumer complaints about hidden fees. Public backlash against surprise costs—like resort fees or cleaning charges—helped push the FTC to propose the regulation in 2023. Thousands of comments from frustrated consumers during the review period underscored the demand for transparency in pricing.
Although the rule has garnered bipartisan support, it may face challenges from businesses and potential shifts in FTC leadership under the incoming administration. For short-term rental managers, however, compliance isn’t optional—it’s essential.
Which Fees Are Affected?
The Junk Fees Rule eliminates hidden mandatory fees, ensuring consumers see the full cost of a transaction upfront. Here are the key fee categories impacted by the rule:
- Cleaning Fees
Cleaning fees are often added during checkout, surprising guests with a higher total than expected. Under the new rule, cleaning fees must be included in the total price displayed on listing platforms and direct booking websites. - Resort and Service Fees
Resort fees or service charges that are mandatory must also be folded into the advertised total price. Listing these separately as “extras” during checkout will no longer be permitted. - Optional Add-Ons
Fees for optional services, such as pet fees or early check-in charges, are not banned but must be clearly disclosed before consumers complete their purchase. These charges cannot be hidden or misleadingly labeled.
What’s in the Rule?
1. Transparent Pricing is the Priority
The most prominent price displayed must be the all-in total price, covering all mandatory fees like resort charges, cleaning fees, or service fees. This eliminates “drip pricing,” where additional costs are revealed only during checkout.
2. Fees Aren’t Gone, But They’re Out in the Open
Businesses can still charge fees, but the total price—including these charges—must be displayed more prominently than any other pricing information. This ensures transparency without capping what sellers can charge.
3. Optional Fees Must Be Clearly Disclosed
Charges like optional add-ons or taxes that aren’t included in the total price must be transparently disclosed before a consumer provides payment information.
4. Global Context: Learning from Europe
Europe is already ahead in mandating clear pricing across all online travel agencies (OTAs). Platforms like Airbnb, Expedia, and Booking.com display all-in prices to comply with consumer protection laws. In the U.S., however, only Airbnb has voluntarily adopted similar practices.
The new FTC rule forces other platforms to follow suit, closing the transparency gap between the U.S. and Europe.
What Does This Mean for Short-Term Rental Managers?
The new rule demands significant changes in how rental managers display pricing. Here’s what you need to know:
1. Cleaning Fees and Beyond: What You Must Change
All mandatory fees, including cleaning or service charges, must be integrated into the total price visible to consumers. Ensure your listings comply by auditing pricing displays on your direct booking site and third-party platforms.
2. Optional Fees: Be Transparent or Be Penalized
If you offer optional add-ons, such as premium amenities or extra services, itemize these costs and disclose them before the guest proceeds to payment. Transparency is key to maintaining trust and avoiding penalties.
3. Leverage Transparency as a Competitive Edge
While some managers may lament losing the ability to entice guests with low advertised rates, transparent pricing can enhance trust and simplify the booking process. Use this shift as an opportunity to highlight the value behind your rates, such as premium amenities or exceptional service.
4. Monitor Changes on OTAs
Third-party platforms like Vrbo and Expedia will need to comply with the new rule, adjusting how they display pricing. Stay informed about these changes and ensure your listings align with their updated practices.
Will the Junk Fees Rule Last?
The rule is scheduled to take effect 120 days after its publication in the Federal Register. However, its long-term survival isn’t guaranteed. Republican FTC Commissioner Andrew Ferguson dissented from the rule’s passage, criticizing it as regulatory overreach. With President-elect Donald Trump’s administration set to take office, the FTC’s priorities could shift, potentially stalling enforcement or weakening the rule’s impact.
Legal challenges from businesses could also threaten the rule. If courts block its implementation or overturn it entirely, transparency gains could be short-lived.
Why This Matters
This regulation aims to save consumers 53 million hours annually by eliminating the guesswork of calculating total costs—an estimated economic benefit of $11 billion over the next decade. For short-term rental managers, the Junk Fees Rule signals a shift toward greater fairness and accountability in the market.
But with a changing political landscape and potential legal battles looming, the central question remains: Will this junk fee ban last? For now, the best course of action is to adapt swiftly, align your practices with the new rule, and keep an eye on developments.
