Mark S. Adams | June 14, 2024

By Jim Butler and the Global Hospitality Group®

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers against hotels, restaurants, or other business owners. We are part of the fabric of the hospitality industry and are committed to informing, educating, and assisting the industry. We represent business owners, helping them to understand and comply with applicable laws and defending them from consumer charges.

HR 6543: The US Congress wants in on Junk Fee regulation for hotels

Over the past several weeks, we have written about recent major regulatory developments concerning Junk Fees, Hidden Fees, and Drip Pricing:

  • California’s SB 478, The California Junk Fee Law, Honest Pricing Law, Transparent Pricing Law or Hidden Fees Statute
  • California’s proposed SB 1524, which will carve out an exception for the restaurant industry from the application of SB 478, and an update on its
  • FTC’s proposed rule on Unfair or Deceptive Fees, adding Part 464 to 16 CFR, defining junk fees and drip pricing to be unfair or deceptive acts or practices under Section 5(a)(1) of the FTC Act (15 U.S.C. 45(a)(1)

We now turn our attention to the very latest – the Federal proposed “No Hidden FEES Act of 2023”.

The House passes HR 6543 and enters the ring to regulate Junk Fees
for hotels and short-term lodging
by
Mark S. Adams
Hotel Dispute Lawyer, Partner & Senior Member
JMBM’s Global Hospitality Group

On June 11, 2024, the United States House of Representatives passed HR 6543, the so-called “No Hidden FEES Act of 2023” which introduces federal regulations aimed at enhancing transparency and fairness in the advertising of hotel room and short-term lodging prices. A critical component of this Act is its preemption clause, found in Section 4(a), which establishes a national standard prohibiting states from enforcing any laws that conflict with the federal mandate. This provision has significant implications for state regulations, such as California’s SB 478, which also aims to protect consumers from hidden fees in various transactions. The scope and application of this preemption clause are essential for assessing how state laws will be affected and ensuring compliance with the new federal standards.

Below, we compare the No Hidden FEES Act of 2023 to the Proposed FTC Rule on Junk Fees and California’s SB 478:

Aspect No Hidden FEES Act of 2023 Proposed FTC Rule on Junk Fees California’s SB 478
Scope and Focus Targets hotel rooms and other short-term lodging. Broad scope targeting various industries (e.g., events, rental cars). Focuses on hidden fees in consumer transactions, including internet service, tickets, and more.
Prohibits advertising lodging prices that exclude mandatory fees. Addresses a wide range of hidden fees added at the end of transactions. Requires upfront disclosure of all mandatory fees in advertised prices.
Focuses on transparency in the lodging industry. Ensures upfront disclosure of all mandatory fees across multiple sectors. Aims to enhance transparency and protect consumers from deceptive pricing practices.
Enforcement Mechanisms Enforced by the FTC, treating violations as breaches of the FTC Act. Enforced by the FTC under its mandate against unfair/deceptive practices. Enforced by the California Attorney General and local district attorneys.
State attorneys general can bring civil actions with FTC notification. Similar enforcement mechanisms to other FTC regulations (investigations, fines). Allows for civil penalties and enforcement actions at the state level.
Provides for state-level enforcement within a unified federal standard. May include provisions for consumer restitution and corrective measures. Focuses on state-level enforcement to protect California consumers.
Specific Provisions Defines terms like “mandatory fee” and “covered provider.” Likely to include industry-specific definitions and requirements. Defines “mandatory fee” and requires clear disclosure in advertisements.
Allows display of individual price components if the total price is clear. Emphasizes upfront disclosure in all advertising and marketing materials. Mandates that the advertised price must include all mandatory fees.
Establishes a one-year timeline for the Act to take effect. Implementation details and timelines may vary by industry. Effective from January 1, 2023.
Similarities Enhances pricing transparency and protects consumers from deceptive practices. Aims to prevent hidden fees and ensure consumers understand total costs. Seeks to prevent hidden fees and ensure clear pricing for consumers.
Enforced by the FTC with provisions for state enforcement. Requires upfront disclosure of all mandatory fees. Enforces clear and upfront pricing for all mandatory fees.
Differences Focused specifically on the lodging industry. Broader focus across multiple sectors. Focused on a wide range of consumer transactions within California.
Specific state enforcement provisions and lodging-related definitions. Varied implementation details depending on sector. State-specific law with enforcement at the state level.
Preemption Establishes a national standard, potentially preempting conflicting state laws. Could potentially conflict with state regulations depending on scope. State law; may be preempted by the No Hidden FEES Act of 2023 if it establishes a national standard.

 

Preemption of SB 478 will be an issue if the No Hidden FEES Act of 2023 is enacted.  As noted above,  the “No Hidden FEES Act of 2023” would establish a national standard for advertising hotel room and short-term lodging prices. This national standard could preempt California’s SB 478 to the extent that SB 478 conflicts with federal law. Specifically, Section 4(a) of the No Hidden FEES Act of 2023 prohibits states from maintaining or enforcing laws that contradict the Act’s provisions on price advertising for short-term lodging. However, SB 478 might still apply to other types of transactions not covered by the federal Act, such as internet services and event tickets, unless explicitly preempted by other federal regulations.