New federal “junk fees” rule requires short-term rentals to reveal full price up front

The Federal Trade Commission (FTC) has finalized a new nationwide rule requiring certain businesses to be transparent about pricing by displaying fees along with the base price of transactions.

Businesses covered in the rule include short-term accommodations providers such as Airbnb and Vrbo, independent short-term rental (STR) operators, as well as hotels, motels, and inns. The rule doesn’t define a short-term stay, but the FTC has stated that the rule doesn’t cover long-term rental housing. The rule also applies to providers of tickets to live events such as concerts, sports, theater productions, and other performing arts shows.

The Junk Fees Rule requires businesses to clearly disclose the total price, inclusive of all mandatory fees, whenever they offer any price for short-term lodging or live-event tickets. 

Businesses must display the total price more prominently than most other pricing information so consumers can easily see how much they’ll pay.  

Charges that may not be known up front, such as taxes, shipping, and fees for optional goods or services selected by the consumer do not need to be disclosed up front, but the purpose and amount of those fees must be clearly displayed before the consumer consents to pay. The rule also requires businesses to include credit card surcharges and processing fees in the total price if payment by credit card is mandatory. 

“People deserve to know up-front what they’re being asked to pay — without worrying that they’ll later be saddled with mysterious fees that they haven’t budgeted for and can’t avoid. The FTC’s rule will put an end to junk fees around live event tickets, hotels, and vacation rentals, saving Americans billions of dollars and millions of hours in wasted time,” said FTC Chair Lina M. Khan.

The FTC started work on the rule in 2022 and received more than 70,000 public comments in the process. The original rule as written would have applied to all businesses, but it was narrowed to focus on short-term lodging and live-event ticket providers.

The rule will go into effect 120 days after its publication in the Federal Register, so it will begin after Trump is inaugurated. Commissioner Andrew Ferguson, who will lead the FTC in the next administration, criticized this timing of the rule and was the only dissenting vote on it.

California passed a law requiring all STRs and hotels to reveal all mandatory costs up front, which went into effect July 1, 2024. Under the measure, all fees that must be paid as part of the booking — including cleaning fees, host fees, service fees, and more — must be visible to prospective guests at first glance in advertisements and listings. Taxes are not included in the law and can be added when the guest is ready to book. 

Major STR marketplaces Airbnb and Vrbo have already complied with the rule for their California listings. Airbnb shows the total before taxes, as well as the nightly price, at first glance. In other states without the mandate, Airbnb only shows the nightly rate up front. Vrbo shows both nightly and total rate at first glance for all states.

Minnesota also passed a junk fee law that applies to all businesses, not just STRs. That measure went into effect January 1, 2025, except for industries in which prices are regulated by the Metropolitan Airports Commission. Those businesses have until June 1, 2025, to comply.

The new FTC rule will require fees to be revealed before taxes — which can include state or local lodging and sales taxes. While these taxes commonly apply to the base cost of accommodation, fees are often taxed as well. However, this depends on the jurisdiction — fees that are taxable in one area may be exempt in another. 

The rules regarding taxability can be complex. Avalara MyLodgeTax can help. MyLodgeTax automates and simplifies STR tax compliance, including registration and filing with state and local tax authorities. If you have tax questions related to your STR, drop us a line and we’ll get back to you with answers.