NYU Academics Petition FTC to Ban “Drip Pricing” Practices NYU Academics Petition FTC to Ban “Drip Pricing” Practices
The Institute for Policy Integrity at New York University School of Law petitioned the Federal Trade Commission to request that the regulator ban so-called... NYU Academics Petition FTC to Ban “Drip Pricing” Practices

The Institute for Policy Integrity at New York University School of Law petitioned the Federal Trade Commission to request that the regulator ban so-called “drip pricing” practices. Such practices involve the display of one price to consumers, omitting fees that must be paid in order to complete the transaction. Should the FTC agree, such rules would have a dramatic impact on ticket marketplaces, as such “drip prices” are common on both primary and secondary ticketing systems.

“Under our proposal, all sellers would be required to disclose the full price of a product or service upfront, with any mandatory surcharges included as part of the total price,” wrote Max Sarinsky in an essay published by the New York Times. Sarinsky is a senior attorney at the Institute for Policy Integrity and one of the four researchers who signed the petition submitted to the FTC.

“A ban on hidden fees and drip pricing would represent a huge win for consumers and improve the functioning of markets where the practice has taken root. For the commission’s new majority, which is eager to protect consumers, such a regulation should be a high priority.”

FTC Commissioner Rebecca Slaughter indicated the organization’s willingness to make rules related to such practices back in 2019 during the agency’s “That’s the Ticket” workshop addressing online ticket sales. A number of ticketing operations have taken her warning to take consumer-friendly action related to pricing disclosures to heart, offering either a true all-in pricing model such as MegaSeats or TickPick, or at minimum a toggle allowing for prices with fees to be displayed by default, according to a recent survey by TicketNews.

Sarinsky noted that such efforts are laudable, but “they are not a substitute for protecting consumers nationwide from hidden fees in all industries.”

Indeed, many consumers likely are not aware of the fact that they can opt to display prices including mandatory fees on websites like Ticketmaster, TicketNetwork, StubHub, and Eventbrite. And on some websites – Vivid Seats and AXS serving as notable examples – fees are not shown until far into the transaction. This makes true comparison shopping much harder, as it adds numerous steps to the process of determining what a ticket listing will actually cost on any marketplace that pretends the price will be lower than a customer could ever pay until the last second.

“The more information a consumer has, the better equipped they are to make an informed decision regarding their best option, particularly in purchases of things like tickets to a live event,” says TicketNetwork Director of Government Affairs Bruce Morris, who is particpating in the ticketing legislation workshop at Ticket Summit where drip pricing and the increasing pressure to bring the practice to an end will be among the topics discussed. “While a number of companies have voluntarily stepped up and made this information readily available to consumers, it’s clear that enough of an incentive remains for hiding these manditory fees for some companies to continue the practice.”

The recent appointment by President Biden of Lina Khan as Chair of the FTC brought the organization to a 3-2 majority of democrats, which is cited as one of the reasons for the petition to be submitted at this time. “Drip pricing has been on the commission’s radar for years, and action is long overdue,” the NYT letter reads. “The agency’s new Democratic majority – led by its new chair, Lina Khan, an outspoken proponent of consumer rights – recently streamlined the commission’s rule-making process and now appears poised to pass regulations that protect consumers. Drip pricing should be high on its priority list.”

The actual petition submitted to the FTC on July 7 is available here (Petition for Rulemaking Concerning Drip Pricing)