FTC’s Junk Fee Rule, Events and Lodging Businesses Warned
Apr 3, 2025 2 minutes
The Federal Trade Commission’s final Junk Fee Rule, announced on December 17, 2024, drastically changes how live event ticketing and short-term lodging businesses must display their prices.
As the rule takes effect in April 2025, merchants in these industries face new compliance challenges that directly impact their payment processing operations.
Understanding the Junk Fee Rule Impact
The FTC’s new rule requires businesses to prominently display the total price, including all mandatory fees, whenever advertising tickets or accommodations. This transparency-focused regulation aims to eliminate “bait-and-switch” pricing tactics that have frustrated consumers for years.
While the rule doesn’t prohibit any specific fees or dictate pricing strategies, it demands upfront disclosure of the complete cost. For merchants, this means reimagining how prices are presented across all marketing channels and payment systems.
ENSURE COMPLIANCE
Why Traditional Payment Processing Is Problematic
The implementation of this rule creates additional regulatory scrutiny for businesses in the ticketing and lodging sectors. Traditional payment processors often view industries facing new regulations as higher risk, potentially leading to:
- Account freezes during compliance reviews
- Increased processing fees to offset perceived risk
- Sudden termination of merchant accounts
- Processing volume limitations
- Excessive reserve requirements
These challenges can devastate businesses that rely on consistent payment processing to maintain cash flow.
High-Risk Merchant Accounts Are The Strategic Solution
Opening a high-risk merchant account offers several advantages for businesses affected by the FTC’s Junk Fee Rule.
1. Regulatory Resilience
High-risk payment processors specialize in working with businesses operating in complex regulatory environments. They understand compliance requirements and build their systems to accommodate transparent fee structures.
2. Processing Stability
Unlike traditional processors that might terminate accounts at the first sign of regulatory change, high-risk merchant account providers expect and plan for these scenarios, offering stability during transitional periods.
3. Tailored Fee Structures
High-risk processors can create fee structures that align with your business model while maintaining FTC compliance, ensuring you don’t sacrifice profitability for transparency.
4. Chargeback Protection
As consumers adjust to the new pricing transparency, some may still dispute charges. High-risk merchant accounts typically include robust chargeback prevention tools and management systems.
5. Multiple Processing Options
High-risk providers often offer multiple processing solutions, allowing businesses to diversify their payment acceptance methods and reduce dependency on a single processor.
OPEN A HIGH-RISK MERCHANT ACCOUNT
Implementation Steps for Affected Merchants
To secure your payment processing while adapting to the new rule:
- Partner with a high-risk merchant account provider experienced in ticketing or lodging industries.
- Update your pricing display systems to clearly show total costs upfront.
- Implement transparent checkout processes that itemize fees while maintaining compliance.
- Establish chargeback prevention protocols to address potential consumer confusion.
- Create customer communication strategies explaining your transparent pricing approach.
The FTC’s Junk Fee Rule represents an opportunity for forward-thinking businesses to differentiate themselves. By securing a high-risk merchant account, ticketing and lodging merchants can not only comply with regulations but also build customer trust through pricing transparency.
Businesses that proactively address these payment processing considerations will position themselves for success in this new regulatory landscape.
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