Dive Brief:
- The Federal Trade commission’s final rule requiring full transparency on fees charged to consumers applies to hotels and live-event ticket vendors, but not restaurants, according to an announcement by the FTC.
- Previous versions of the rule proposed requiring restaurants to disclose many fees, including service charges and delivery fees, to consumers as a part of the total price of goods.
- Earlier this year, California also moved to exempt some kinds of restaurant fees from a rule requiring operators to include things like service fees in the price of individual goods.
Dive Insight:
Restaurants, through the actions of federal courts and backtracking by regulators themselves, have largely escaped many dreaded regulations this year.
Industry groups welcomed the removal of restaurants from the final rule. In a statement emailed to Restaurant Dive, the National Restaurant Association called the result a major victory and trumpeted its lobbying and outreach efforts to exempt the industry from regulation.
“[The] successful outcome is a direct result of the concerted efforts of thousands of restaurant operators who voiced their concerns to the FTC and lawmakers on Capitol Hill,” Michelle Korsmo, the NRA’s CEO and president, said in a statement.
The NRA claimed the rule bans fees that would have imposed costs on restaurant operators. The rule, according to the FTC, “does not prohibit any type or amount of fee, nor does it prohibit any specific pricing strategies.”
Instead, the rule requires the disclosure of fees in the total price of services or goods.
In its public communications about earlier versions of the rule, the NRA said the rule “would ban widely accepted restaurant fees, such as delivery and large-party service fees,” and encouraged restaurateurs to contact the FTC.
In a footnote to the rule, the commission noted the NRA’s claims that appeared in “over 4,600 comments submitted through a National Restaurant Association mass mailing campaign misinterpreted the rule as ‘eliminating the use of fees and surcharges.’”
The International Franchise Association praised Commissioner Andrew Ferguson’s dissenting opinion, which claimed that the FTC should halt rulesmaking processes until after President-elect Donald Trump is inaugurated next year. Ferguson is set to become FTC chair under Trump.
Many regulations opposed by the restaurant industry and its close allies in franchising have been scrapped this year. The National Labor Relations Board’s joint employer rule went down thanks to the Fifth Circuit earlier this year. The Department of Labor withdrew its 80/20 tip credit rule this month after a similar court loss. And California recently clarified that many restaurant fees are exempt from that state’s price transparency rules.
