FTC Announces Plans to Issue “Drip Pricing” Fee Regulations FTC Announces Plans to Issue “Drip Pricing” Fee Regulations
The Federal Trade Commission voted to issue an Advance Notice of Proposed Rulemaking on Junk Fees on Thursday, which could involve regulation surrounding so-called... FTC Announces Plans to Issue “Drip Pricing” Fee Regulations

The Federal Trade Commission voted to issue an Advance Notice of Proposed Rulemaking on Junk Fees on Thursday, which could involve regulation surrounding so-called “drip pricing” tactics in event ticketing. Drip pricing is the tactic of showing one price to consumers at the start of a transaction, only to have unavoidable fees added later on, which many characterize as a deceptive trade practice.

“American consumers, workers, and small businesses today are swamped with junk fees that frustrate consumers, erode trust, impair comparison shopping, and facilitate inflation,” the FTC announcement regarding the decision reads, in part. It defined “junk fees” as “unfair or deceptive fees that are charged for goods or services that have little or no added value to the consumer… the term also encompasses “hidden fees,” which are fees for goods or services that are deceptive or unfair, including because they are disclosed only at a later stage in the consumer purchasing  process or not at all.”

Those who have shopped for tickets are very familiar with the hidden fees that are frequently used in the sales process on many websites. When shopping for tickets, one price is displayed – say $100 per ticket. But when you add those tickets to your shopping cart, various fees are tacked on, including service, facility, and other fees with vague meanings that are all based off of the listing price and unavoidable. Such tactics make true comparison shopping across ticketing marketplaces almost impossible, particularly when some ticketing platforms like Vivid Seats regularly mark ticket prices down below wholesale at the initial price display, only to make up for the artificially low initial impression by adding a higher percentage fee after payment details are added by the customer lured in by the implied “deal.”

This avalanche of fees has long been a part of the ticket buying process, to the point of satire:

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 Ticket Club, MEGASeats or TickPick, or at minimum a toggle allowing for prices with fees to be displayed by default, according to an industry survey by TicketNews.

“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,” TicketNetwork Director of Government Affairs Bruce Morris told TicketNews at the time of that review. “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 mandatory fees for some companies to continue the practice.”

Max Sarinsky, senior attorney at the Institute for Policy Integrity of New York University School of Law, lauded the FTC’s decision, which that organization had pushed for in a 2021 New York Times Op-Ed and petition that paved the way for Thursday’s vote.

“Drip pricing has no legitimate business purpose and harms consumers,” he said in a statement issued following the FTC’s decision. “Regulating this pervasive practice will save consumers both time and money, and make it easier to compare the actual prices of competing offers. Today’s notice represents an important step in the effort to protect consumers from drip pricing, and the Commission should move ahead with regulating this deceptive practice.”

New York has also recently taken steps to push back against “drip pricing” in ticketing, requiring an “all-in” pricing model as part of its renewal of the laws regulating live event ticketing for consumers in the state. That decision was cited in the FTC’s announcement regarding the proposed rulemaking.

Last Updated on October 21, 2022 by Dave Clark