How are Las Vegas resorts responding to new FTC ‘junk fee’ rule?
The Federal Trade Commission’s new rule about disclosing “junk fees” on short-term lodging and live-event ticketing events has been in place for only three days, but it has already generated confusion.
Businesses were alerted in December of the changes that took effect Monday. The new Rule on Unfair or Deceptive Fees orders prominent full disclosure of total pricing and prohibits bait-and-switch tactics that draw consumers in only to tack on unexpected fees that jack up the total price.
To be clear, the new FTC rule does not eliminate so-called junk fees. It only requires companies to clearly show them in all advertising and on websites.
“Businesses must disclose fees or charges for mandatory ancillary goods or services in the total price,” the FTC explanation on its website says. “Fees or charges are mandatory if they relate to a good or service that is necessary to make the underlying good or service fit for its intended purpose; or a required purchase when people buy the underlying good or service.”
Use of resort fees
In Southern Nevada, the biggest application of the rule applies to the disclosure of reviled resort fees charged up and down the Strip and in downtown Las Vegas.
Resort fees can add up to $60 a night to the cost of a hotel stay. Resorts aren’t required to disclose taxes or other government charges, shipping charges and charges for optional goods or services people may select to buy as part of the same transaction.
For that reason, some websites aren’t including the cost of parking — though that’s often included at no cost for hotel guests.
Many of the websites selling hotel rooms at Las Vegas resorts complied immediately.
Reviews of websites used by Caesars Entertainment, Wynn Resorts Ltd. and Golden Nugget properties showed room pricing to prominently display the total price as well as the amount of the resort fee.
Other travel websites, including vegas.com, hotels.com, expedia.com and trivago.com, appear to be complying. Some of those sites also include the cost of sales tax for the transaction and refer readers to detailed property descriptions to learn about parking charges.
MGM criticized
One Las Vegas company that has received online criticism for its presentation is MGM Resorts International, which has 12 gaming and nongaming hotels on the Strip.
From his X account, user @Jordan02017, who goes by Will, said he believes MGM has not complied with the new rule.
“Looking at room rates, now that the new law is in effect, @CaesarsPalace is following the law and including all taxes and fees. @MGMGrand is clearly not complying with the new law,” he wrote Tuesday.
MGM did not have a comment about the criticism, but said the company is committed to following the law and is always evaluating and improving processes as needed for guest experience.
MGM and other Las Vegas resort operators display calendars that show room rates by the day. (The FTC says it’s permissible to offer dynamic pricing as long as the pricing information is not misleading.) However, MGM’s calendar shows the room rate and not the total cost, with a note referencing the resort fee.
A representative of MGM said the company believes it complies because once a consumer clicks on a date to book a room, a box pops up disclosing all the details of the room rate, the resort fee and the total cost.
Resorts World Las Vegas and Fontainebleau Las Vegas have similar calendar displays with room rates only and not a total cost on their respective websites.
What happens if a company doesn’t comply with the rule? The FTC is urging consumers to make a complaint.
“Businesses that violate any FTC trade regulation rule — including this one — could be ordered to bring their practices into compliance, refund money back to consumers and pay civil penalties,” the FTC says on its website.
The agency suggests consumers report possible violations to its dedicated fraud website, reportfraud.ftc.gov.
While the FTC is encouraging the public to watch for possible violations, some consumer advocates are skeptical that the agency will be able to keep up with complaints.
Since the notification of the rule in December, the Trump administration has pushed to eliminate nearly 90 percent of the Consumer Financial Protection Bureau staff. Democratic commissioners Alvaro Bedoya and Rebecca Kelly Slaughter were fired in March.
The actions are being challenged in the U.S. court system.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.