The Price Should Be the Price: A Simple Fix for Hidden Fees and Surprise Taxes

Some consumer-protection laws don’t need to be complicated. A truth-in-advertised-price law is one of them. If a business advertises a price, that price should show what the customer is actually expected to pay, not a partial number that increases as the customer moves through checkout.

The principle is simple: any advertised price should show the base cost, mandatory fees, estimated taxes, and the final estimated total before the customer chooses the product, compares options, or starts the purchase process. A hotel room shouldn’t appear cheaper than it is because a resort fee shows up later, a concert ticket shouldn’t look affordable until service fees appear after the customer has picked seats, and a delivery order shouldn’t seem reasonable until platform fees, local fees, and taxes turn the total into something else.

This isn’t an argument for banning companies from charging fees. Some fees are legitimate, and taxes obviously aren’t optional. The problem is that customers are often asked to compare prices that aren’t real. If one company advertises the full cost and another advertises only the first layer of the cost, the honest business can look more expensive even when it isn’t.

A fair market needs fair price comparison, which means the number shown to customers should be close to the number they’ll actually pay.

The Problem Is Bigger Than Annoyance

Hidden fees are annoying, but the real problem is that they distort decisions. When customers compare hotel rooms, tickets, rentals, subscriptions, delivery orders, or service plans, they’re usually trying to answer a basic question: “What will this cost me?” If the answer appears only after the customer has clicked, selected, customized, and committed time to the purchase, the comparison is already tilted.

Researchers often call this drip pricing. Drip pricing means a seller advertises part of the price up front and reveals additional mandatory charges later in the buying process. Those charges may be called service fees, convenience fees, facility fees, resort fees, cleaning fees, platform fees, processing fees, or administrative fees, which is a long way of saying that the advertised price wasn’t the real price.

The Federal Trade Commission finalized a bipartisan Junk Fees Rule in 2024 for live-event tickets and short-term lodging, targeting bait-and-switch pricing and requiring businesses in those industries to disclose total prices more clearly. That rule was useful, but it was narrower than the broader problem because it focused on specific sectors and generally allowed taxes and certain shipping charges to be shown later before payment. [1]

That’s where this proposal goes further. The advertised price should include the base price, mandatory fees, estimated taxes, and the estimated total at the point where customers compare options, not merely before they enter a credit card. Taxes can be estimated when the business doesn’t yet know the customer’s exact address or tax status. Still, the customer shouldn’t have to reach the end of checkout to find out whether the advertised price was a useful number or a polite fiction.

The White House Council of Economic Advisers described junk fees as mandatory charges that aren’t transparently disclosed to consumers and argued that they undermine competition by making it harder for customers to compare prices. The core economic issue is that hidden fees don’t just irritate people; they make the market less honest. [2]

Why Hidden Fees Work

Hidden fees work because a lower advertised price attracts attention, ranks higher in search results, and makes a business look cheaper than competitors who show the real total up front. Once the customer has spent time picking a hotel room, choosing seats, comparing rental dates, building an order, or entering account information, many will continue the purchase even after the total increases.

That doesn’t mean every fee is fake or every company is acting in bad faith. Taxes vary by location, delivery charges may depend on address, and some fees reflect real costs. The problem is that when mandatory charges are separated from the advertised price, businesses have an incentive to compete on the smallest visible number rather than the real total.

Research supports that concern. A large field experiment involving StubHub found that hiding fees until checkout led customers to spend about 21% more than when full prices were shown up front, suggesting that hidden fees didn’t merely annoy customers; they changed what customers bought and how much they paid. [3]

A Boston University law-and-economics experiment reached a similar conclusion in a different setting. In a randomized online marketplace experiment involving real purchases of gift cards, researchers found that drip pricing increased the average price paid for identical goods by up to about 10%, with a maximum effect of 13%, compared with transparent pricing. [4]

That’s why this issue belongs in public policy rather than just customer-service complaint threads. If hidden mandatory charges cause people to choose more expensive options while believing they’re getting the cheaper one, then the market isn’t working as cleanly as it should.

What the Law Should Require

A strong truth-in-advertised-price law should be practical, easy to understand, and easy to follow. Whenever a business advertises a price, the customer should see four numbers: the base price, mandatory fees, estimated taxes, and the final estimated total.

The base price is the product or service’s underlying price before any extra charges. Mandatory fees are charges the customer can’t avoid if they complete the purchase, even if the business gives them official-sounding names such as service fee, resort fee, platform fee, facility fee, administrative fee, or convenience fee. Estimated taxes are taxes that the business can reasonably calculate based on the information available at that point, such as the venue location, hotel address, delivery address, billing ZIP code, or search location. The final estimated total is the number the customer should use when comparing options.

The rule should apply where price comparison actually happens: advertisements, search results, booking pages, ticket listings, menus, app screens, subscription sign-up pages, quotes, and product listings. A total that appears only after the customer has selected the item, entered personal information, or moved deep into checkout is better than nothing. However, it’s still too late to support fair comparison.

The rule should also separate mandatory charges from optional add-ons. A business shouldn’t have to include tips, upgraded shipping, premium seats, trip insurance, room upgrades, optional equipment, gift wrapping, or voluntary donations in the advertised total, because the customer can choose not to buy them. But if the customer can’t complete the purchase without paying a charge, that charge belongs in the advertised total.

Taxes deserve special treatment, but not a free pass. If the business knows enough to calculate the tax, it should show the tax. If it doesn’t yet know enough, it should show a reasonable estimate and clearly label it as estimated. Once the customer provides more precise information, the total should update before payment.

In plain English, the rule should be this: show the customer the real expected cost as early as reasonably possible, and don’t make the lowest-looking number the least truthful one.

The Business Objection Deserves an Answer

Businesses will object to this proposal, and some of their concerns are legitimate. Taxes can be complicated, and fees may vary by location, vendor, payment method, delivery address, event venue, occupancy type, or customer choice. A national retailer, marketplace, hotel platform, ticket seller, or delivery app may not always know the exact final total on the first screen.

There’s also a real compliance concern. Businesses that operate across cities and states already deal with different tax rules, fee restrictions, disclosure requirements, and industry-specific regulations. A poorly written law could create more confusion, especially for small and mid-sized companies that don’t have large legal teams or custom pricing systems.

The answer isn’t to pretend those problems don’t exist. The better answer is to design the law around reasonable estimates, clear categories, and consistent formatting. A business shouldn’t be punished because the final tax changes after the customer enters a more precise address, applies a discount, selects delivery, or adds an optional upgrade. The business should face consequences only if it hides charges that it knew, or reasonably should have known, the customer would have to pay.

Industry groups have argued that overly broad fee rules can micromanage pricing and raise consumer costs. That concern deserves a practical response rather than a shrug. A durable law should target misleading price presentation, not every pricing model a company uses. [5]

The goal isn’t to ban fees, freeze prices, or force every business into the same billing structure. The goal is to make sure customers can compare real totals before they spend time, attention, and effort on a purchase.

The Counterbalance: Give Companies a Clear Pricing Format

The fair compromise is to let companies keep lawful fees and variable taxes, but require them to present prices in a standard, understandable format. Instead of forcing businesses to collapse everything into a single unexplained number, the law should allow a clear breakdown: base price, mandatory fees, estimated taxes, and the estimated total.

That format helps consumers without hiding how the price is built. A hotel could show the nightly rate, resort fee, estimated occupancy taxes, and estimated stay total; a ticket seller could show the ticket price, service fee, facility fee, estimated tax, and final estimated total; and a delivery app could show food cost, delivery or platform fees, estimated taxes, and the total before tip. Customers would see the full price, while businesses could still explain which charges are company revenue, third-party fees, or taxes collected for the government.

This is useful for companies because it doesn’t require perfect tax certainty on the first screen. It allows estimates when exact numbers aren’t yet available, preserves optional add-ons as separate choices, and provides a consistent structure that businesses can build into websites, apps, advertising, and checkout systems.

The line should be clear: mandatory charges must appear before the customer relies on the price, while optional charges may remain separate as long as they’re truly optional. If the customer can’t buy the product without paying the charge, it should be included in the advertised total.

Safe Harbor, Cure Period, and One National Standard

A truth-in-advertised-price law should give honest companies a clear path to compliance. A safe harbor would do that by spelling out what counts as compliance: a standard price display, reasonable tax estimates, clear labeling of mandatory and optional charges, updated totals before payment, and records showing how estimates were calculated.

This is important because the proposal asks businesses to provide more information earlier, and that should be accompanied by legal certainty. If a company uses the approved format, makes a good-faith tax estimate, updates the total when new information becomes available, and doesn’t hide mandatory fees, it shouldn’t face severe penalties for small estimation errors or technical mistakes.

The law should also include a reasonable cure period for first-time technical or design problems that don’t involve intentional deception. A cure period gives a company time to fix a violation after being notified, rather than immediately facing penalties, while preserving enforcement against businesses that repeatedly hide mandatory charges, mislabel required fees as optional, or keep advertising totals they know are wrong.

Finally, a national standard would help both consumers and businesses. Customers would get the same basic price transparency wherever they shop, and businesses wouldn’t need to build different advertising and checkout systems for different states. That consistency is a real concession, especially for online businesses that sell across state lines.

That’s the trade: customers get prices they can actually compare, while businesses get a standard format, room for reasonable estimates, a safe harbor, a cure period, and one national rule. Companies would lose the ability to compete on incomplete prices, but they’d gain a clearer compliance path and a more honest marketplace.

The Economic Case

Truth-in-advertised pricing would help the economy because price comparison is one of the basic ways markets are supposed to work. If customers can’t see the real cost until late in the buying process, businesses aren’t competing on price as much as on when to reveal it.

Transparent pricing would reward companies that already show full costs because they’d no longer look more expensive than competitors that hide mandatory charges. It would also help newer and smaller businesses compete on the real total instead of being punished for honest advertising.

The research on drip pricing shows why this is important. In the StubHub field experiment, customers spent more when fees were hidden until checkout. In the Boston University experiment, customers paid more for identical goods under drip pricing than under transparent pricing. Those findings suggest that hidden fees don’t merely shift when customers feel annoyed; they affect actual spending decisions. [3] [4]

A true advertised price rule could also reduce wasted time. Customers wouldn’t need to click through multiple screens, create accounts, select seats, enter dates, or build carts just to find out whether the initial price was meaningful. Businesses would spend less time handling complaints, refund requests, abandoned carts, and disputes over charges customers didn’t expect.

Clearer pricing would also improve trust. When customers believe the advertised price is only the opening bid in a negotiation they didn’t agree to join, they become more skeptical of the entire transaction. When the full expected total is visible early, customers can make faster decisions, businesses can compete more honestly, and the final payment screen becomes a confirmation rather than a surprise ending.

The broader benefit is a more honest pricing economy. Businesses that already disclose full costs wouldn’t be punished for doing the right thing, and businesses that rely on incomplete prices would have to compete on a level playing field with everyone else. That isn’t anti-business. It’s pro-competition.

Why This Should Appeal Across Political Lines

This proposal should appeal across political lines because it’s based on transparency, competition, and consumer choice. Conservatives can support it as a market-pricing reform that helps customers compare real costs without banning lawful fees; liberals can support it as protection against deceptive pricing and unwanted charges; small businesses can support it because a standard national format is easier to follow than a patchwork of state rules; and consumers can support it because nearly everyone has watched a checkout total climb after the advertised price did its job.

The FTC’s 2024 Junk Fees Rule passed unanimously, showing that the basic idea has bipartisan appeal when framed around honest price disclosure rather than price control. A stronger legislative approach should build on that foundation while adding the missing piece: taxes should be estimated and shown as part of the advertised total, not treated as an afterthought that the customer discovers at the end. [1]

The goal isn’t to tell companies what they may charge. The goal is to ensure customers can see what they’re being charged before they make a decision. A business that wants to charge a fee should be able to explain it, a business that needs to collect taxes should show them when it reasonably can, and a business that wants to compete on price should compete on the price the customer will actually pay.

The price should be the price. If it’s only the introductory price, the advertisement should say so.

References

[1] Federal Trade Commission. “Federal Trade Commission Announces Bipartisan Rule Banning Junk Ticket and Hotel Fees.” December 17, 2024.

[2] Council of Economic Advisers. “The Price Isn’t Right: How Junk Fees Cost Consumers and Undermine Competition.” March 5, 2024.

[3] Berkeley Haas School of Business. “Buyer Beware: Massive Experiment Shows Why Ticket Sellers Hit You With Hidden Fees.” October 2019.

[4] Rory Van Loo and collaborators. “Measuring and Mitigating Drip Pricing Overcharge: Evidence From an Online Marketplace Experiment With a Digital Shopping Assistant.” Boston University School of Law Faculty Scholarship.

[5] Associated Press. “US Agency Adopts Rule to Make It Easier for Consumers to Cancel Unwanted Subscriptions.” October 2024.