FTC rule promotes transparency in pricing

[UNITED STATES] If you haven’t noticed yet, take a quick scroll through Airbnb, Ticketmaster, Booking.com, or StubHub. Something’s changed. The total price is now displayed upfront—no more sticker shock at checkout. These platforms, once infamous for springing fees at the last minute, are now a bit more transparent. But this shift isn’t due to a sudden corporate enlightenment. It’s because they’re being told to clean up their act.

As of May 12, a new rule from the Federal Trade Commission—one that garnered bipartisan support—took effect, targeting deceptive pricing practices. The regulation bans “bait-and-switch” pricing and other tactics that hide or distort the full cost of a product or service. For now, the rule only applies to short-term lodging and live-event tickets. So yes, if you're booking a rental car or ordering food delivery, you're still navigating a minefield of surprise fees. But for affected sectors, it signals the end of stealthy surcharges sneaking in at the final step of your purchase.

Companies can still tack on charges like “convenience fees”—but they must show their hand from the outset.

It might sound like a minor update, but it’s a meaningful one. That’s why companies like Airbnb and Ticketmaster are loudly celebrating the change—just not why it happened. Upfront pricing levels the playing field, supports consumer choice, and rewards businesses that opted for honesty before the government stepped in. And, importantly, consumers like it.

Transparency advocates have pushed for this for years. Hidden fees, often buried in fine print, inflate costs and make comparison shopping nearly impossible. The FTC’s new rule is a major win for consumers, though plenty of industries—travel, retail, delivery—still lag behind in price clarity.

“This just makes common sense,” said Adam Rust, director of financial services at the Consumer Federation of America. “Especially when prices are high and people are struggling, consumers need clear costs to make sound decisions.”

And yet, if all-in pricing truly benefited companies, more would have adopted it voluntarily. Instead, many cling to strategies like drip pricing, which dangle a low upfront price and layer in fees later—nudging people to spend more than they intended, or at all.

Consumers have long been irritated by this. A CFA survey found nearly 90% of shoppers felt misled by hidden fees. That frustration echoes across forums and social media, where users share tales of being duped by surprise charges. The FTC hopes its new rule will help rebuild consumer trust.

The design of drip pricing exploits human psychology. Research shows that once people invest time and effort into a purchase, they’re more likely to follow through—even if the price increases along the way. It’s the “sunk cost fallacy,” and companies bank on it.

“It’s harder for consumers to back out when they feel invested,” said Hal Singer, managing director at Econ One and a professor at the University of Utah. “Sometimes you don’t find out about a fee until you’re literally at the resort.”

Companies, of course, make more money with hidden fees. A study of StubHub found that when it showed full pricing upfront—from January 2014 to August 2015—its revenue dropped by 28%. Though ticket quality and volume improved, the financial hit was enough to end the experiment.

“Companies do it because it drives up revenue,” said Steven Tadelis, economics professor at UC Berkeley and co-author of the StubHub study. “It exploits our tendency to ignore fees we don’t see until later. People end up making purchases they wouldn’t have made with full information.”

StubHub, for its part, hoped that transparency would earn it consumer goodwill. That didn’t happen. People simply saw higher prices and assumed they were getting worse deals—not realizing those prices included everything.

In a landscape where competitors still obscure their fees, even well-intentioned companies hesitate to act alone. Transparency can backfire if others aren’t playing by the same rules. The FTC’s move aims to break this cycle.

“This creates bad incentives,” said Michael Luca, professor at Johns Hopkins’ Carey Business School. “Companies know they can tack fees on later and extract more value from customers.”

Plus, added fees often obscure rather than clarify. “When companies have bad news, they want it to be complicated,” Luca noted. “When it’s good news, they want it to be obvious.”

Anecdotally, the changes are already making a difference. One recent Sunday evening, I spent a few hours browsing Airbnbs for a trip I never ended up taking. While the trip didn’t happen, the browsing was refreshingly straightforward: I set a $500 max and scrolled through places that actually respected that limit. (This has been an optional filter for years—but it’s now baked in automatically.) Had I spent that time juggling spreadsheets and decoding extra fees, only to cancel the trip, I would’ve been far more annoyed.

But here’s the thing: companies aren't likely to adopt all-in pricing on their own, especially when the incentives don't support it. The StubHub case showed that unless everyone’s doing it, there’s little competitive gain. Drip pricing suppresses competition and raises prices overall, because it blocks easy price comparisons. The Biden administration has dubbed such charges “junk fees,” estimating they cost Americans billions each year.

Some companies argue that consumers don’t actually want all-in pricing. They say itemized add-ons provide more flexibility. And that’s partially true—people want to choose whether to pay for seat selection or checked bags. But that doesn’t mean consumers wouldn’t benefit from clearer upfront pricing on platforms like Expedia or Google Flights.

Worse, many of these “optional” fees aren’t optional at all. U-Haul’s “environmental fee” is non-negotiable. Food delivery apps bake in unavoidable charges with generic names like “service fee.” The same goes for many line items buried in online receipts.

“It’s not hard for a company to display accurate prices on their website,” Rust said. “But it’s hard for shoppers to invest time in a purchase, only to find out the final cost is way off.”

Lauren Wolfe, counsel at Travelers United, a consumer travel advocacy group, underscored how broadly supported this change is. “It’s one of the rare issues that has bipartisan backing,” she said. A bill targeting resort fees recently passed the House and, she believes, stands a good chance of becoming law.

Hidden fees may not be the economy’s biggest issue—not in the era of inflation, tariffs, and looming recessions. But on a daily level, they’re a persistent, costly nuisance. Like seasonal pests, they show up again and again, even when you think you’ve sealed every crack. All-in pricing isn’t taking over the economy just yet. But where it’s mandated, it’s a welcome relief.