Surge in "Junk Fee" Class Actions Targets Hidden Pricing Practices

Published
Score
15

Why it matters

The Federal Trade Commission's Rule on Unfair or Deceptive Fees took effect on May 12, 2025, requiring companies to disclose total prices upfront for live-event tickets and short-term lodging, including all mandatory fees. The rule has accelerated an already-steep rise in junk fee litigation across ticketing, hospitality, banking, and rental industries. Class actions and mass arbitrations alleging "drip pricing"—the practice of hiding or misrepresenting fees until late in transactions—have spiked since 2022, with potential exposures exceeding $10 million per case. California's SB 478, effective July 1, 2024, compounds liability by imposing penalties up to $2,500 per violation. Plaintiffs' firms are pursuing coordinated mass arbitrations against ticket sellers, banks, landlords, and online retailers, often bypassing class-action waivers through arbitration clauses.

The scope of ongoing enforcement remains fluid. State regulators continue developing their own fee-disclosure standards, and the full universe of companies targeted by mass arbitrations has not been publicly identified. The FTC's enforcement posture under current leadership has not shifted materially from prior administrations, though the agency's specific litigation priorities for 2026 are still emerging.

In-house counsel should audit pricing disclosures now against the FTC rule's requirements and state equivalents, particularly for ticketing and lodging operations. Companies face dual exposure: regulatory penalties and class-action liability under state consumer-protection statutes. Arbitration clauses may not shield defendants from coordinated mass filings. Compliance should prioritize displaying total price—including all calculable mandatory charges—before consumers reach checkout.

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