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This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer. Please contact me at Jim Butler at jbutler@jmbm.com or 310.201.3526.

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19 December 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

NOTE: We represent the owners and operators of hotels, restaurants, and other hospitality facilities. We do not represent consumers making claims against such businesses. When it comes to junk fee laws at the state or national level, we help the owners and operators of hotels, restaurants, and hospitality facilities understand and comply with them. When claims are made against them by consumers or competitors, we advise on strategies and defense of such claims.

Finally!

 

The Federal Trade Commission (FTC) has been critically looking at “junk fees” for a long time. Over several years, it proposed banning “Unfair or Deceptive  Fees” across many industries. However, on December 17, 2024, the FTC surprised many when it published a significantly revised version as its final “Junk Fees Rule” (16 CFR Part 464). The Rule is scheduled to become effective 120 days after its publication in the Federal Register.

 

Unlike its predecessor proposals, The Final Rule is directed primarily to live event ticket sales and the short-term lodging industry (including hotels and vacation rentals). It will require the affected businesses to clearly disclose the total price of the goods or services (and all ancillary goods and services) to the consumer upfront as the first and most prominent price. This most-prominent total price requirement has been driven by the desire to avoid any “hidden fees” during the consumer’s browsing for information. Most criticized are mandatory charges and hidden fees that often appear at purchase confirmation or payment. Consumers and regulators hate service charges, resort fees and other unexpected items hidden until the end of a transaction and buried as if they are part of the taxes or government-imposed fees.

The total price to be disclosed under the Rule does not cover optional fees, government-imposed charges, or shipping fees. They remain excluded from the total price requirement. Importantly, businesses must ensure that the final payment amount, including any additional charges such as taxes or fees, is displayed as clearly and prominently as the initial advertised price. This eliminates the practice of bait-and-switch pricing, where the advertised price is significantly lower than the final price once all hidden fees are added.

The Rule also prohibits misrepresentations of the nature, character and purpose of fees. An example is a charge for something vague, like  “convenience fees.”

Note that nothing in the Rule limits the types or amounts of fees, as long as the total price is transparent and the description is not misleading.

Although the rule is focused on the lodging industry and ticket sales, the FTC will continue to enforce fair pricing practices in other sectors on a case-by-case basis, which could lead to increased state-level enforcement. The rule promises to improve transparency in hotel pricing, allowing consumers to make better-informed decisions without unexpected charges. We believe there may be an important warning to all businesses — even those outside live event ticket sales and short-term lodging — that many will miss because of the seemingly limited scope. One indication of this is the following statement in the Announcement:

“Industries beyond live-event ticketing and short-term lodging are prohibited from deceiving consumers about fees and pricing per longstanding law. The FTC will use its law enforcement authority to continue to rigorously pursue bait-and-switch pricing tactics, such as drip pricing and misleading fees, in other industries through case-by-case enforcement.”

We expect to provide some more insight on this soon.

See the FTC’s Final Junk Fees Rule Announcement and Final FTC Junk Fees Rule.

For more context on the FTC’s ruling, see our blogs on Junk Fees here:

Junk Fee Law: Exception for California restaurants moves forward

California’s AB 537 mandates transparent pricing for all short-term lodging as of July 1, 2024 — $10,000 penalty for violation

New Federal Junk Fee Law – The No Hidden FEES Act of 2023 (HR 6543)

Jim Butler asks Mark S. Adams for update on California Junk Fee law: Would SB 1524 gut SB 478’s honest pricing for all?

Pricing transparency without hidden mandatory junk fees. Does this apply to restaurants too? New California proposed law (SB 1524 ) says “No!” Can this be right?

FTC’s proposed rule will end drip pricing and junk fees for hotels, restaurants, and many other businesses. Goodbye to resort fees, destination fees, service charges and other miscellaneous fees?

California bans Junk Fees as of July 1, 2024. Good bye to junk fees, resort fees, mandatory service charges, and drip pricing. Hello to – the fruits of SB 478.

Disclosing Mandatory Resort Fees – What Hoteliers Need to Know

Nebraska sues Hilton over hotel “Resort Fees”

Attorney General for DC sues Marriott International over hotel “Resort Fees”

Impending eruption of litigation over Resort Fees? What’s the fuss?

The FTC takes aim at hotel Resort Fees — The FTC 2017 Report

Picture of Jim Butler

This is Jim Butler, author of www.HotelLawBlog.com and founding partner of JMBM and JMBM’s Global Hospitality Group®. We provide business and legal advice to hotel owners, developers, independent operators, and investors. This advice covers critical hotel issues such as hotel purchase, sale, development, financing, franchise, management, ADA, and IP matters. We also have compelling experience in hotel litigation, union avoidance and union negotiations, and cybersecurity & data privacy.

JMBM’s Global Hospitality Group® has been involved in more than $125 billion of hotel transactions and more than 4,700 hotel properties located around the globe. Contact me at +1-310-201-3526 or jbutler@jmbm.com to discuss how we can help.

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9 December 2024

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As previously outlined in our November blog post, the Corporate Transparency Act (CTA) was poised to impose significant federal reporting obligations on U.S. business entities starting January 1, 2025. However, a recent Federal District Court ruling has altered the compliance landscape dramatically.

On December 3, 2024, the court issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Merrick Garland, declaring the CTA likely unconstitutional. The injunction prohibits the Treasury Department from enforcing the Act while the case is under review. On December 5, the Treasury Department appealed the decision to the 5th U.S. Circuit Court of Appeals, but no guidance has been issued yet on the impact of the injunction.

What Does This Mean for Businesses?

This ruling effectively halts the January 1, 2025, CTA filing requirement for now. While businesses that were preparing to comply may be relieved, it is important to stay alert as the situation evolves. Here’s what you need to know:

  1. No Immediate Filing Obligation
    The injunction pauses the enforcement of CTA requirements, including the submission of Beneficial Ownership Information (BOI) reports to FinCEN.
  2. Uncertainty Surrounding Compliance Deadlines
    If the injunction is lifted, compliance efforts may need to resume quickly. We expect reasonable notice for any reinstated deadlines, but businesses should be prepared to act promptly.
  3. Legislative or Regulatory Action Possible
    It remains unclear if legislative changes or additional Treasury Department guidance will emerge to address the court’s ruling or adjust the CTA framework.

CONTINUE READING →

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08 November 2024

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JMBM’s Real Estate Practice Receives National Tier 1 Ranking in 2025 Edition of “Best Law Firms”

Best-Law-Firms-Badge-2025Jeffer Mangels Butler & Mitchell LLP (JMBM) is pleased to announce that its Real Estate (including its Hospitality Transactions) practice has received the highest possible designation of National Tier 1 in the 2025 edition of U.S. News and World Report – Best Lawyers® “Best Law Firms.”

The report recognizes the top law firms in the country for professional excellence based on peer review. JMBM’s Trusts & Estates and Land Use & Zoning practices also received a National Tier 1 designation.

In addition, the Firm received Metropolitan Tier 1 rankings in the following areas:

 

Los Angeles

  • Closely Held Companies and Family Businesses Law
  • Land Use & Zoning Law
  • Litigation – Trusts & Estates
  • Real Estate Law
  • Tax Law
  • Trademark Law
  • Trusts & Estates Law

CONTINUE READING →

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08 November 2024

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As the January 1, 2025, filing deadline for the Corporate Transparency Act (CTA) approaches, hotel owners, developers, and investors should be prepared to meet the new federal requirements for business transparency. Effective January 1, 2024, the CTA requires most U.S. business entities to submit detailed ownership information to FinCEN or face penalties up to $10,000. The article below by JMBM’s Taxation, Trusts & Estates Department outlines key CTA requirements, filing deadlines, and essential steps for compliance.

Corporate Transparency Act:
Upcoming January 1, 2025 Filing Deadline

by

JMBM’s Taxation, Trusts & Estates Department

Overview of the CTA Requirements and Compliance Obligations

The CTA, which became effective January 1, 2024, introduces extensive federal disclosure obligations for all businesses that do not qualify for an exemption, regardless of when formed. These new reporting requirements are stringent and can trigger multiple filings in a single calendar year exposing noncomplying individuals and entities to both civil and criminal penalties. Pursuant to the CTA, the Financial Crimes Enforcement Network (“FinCEN”) is authorized to collect beneficial ownership information (“BOI”) with respect to business entities (referred to as “Reporting Companies”) formed or registered to do business in the U.S. and disclose such BOI to various federal and state agencies (including the IRS).

In this regard, any Reporting Company that does not qualify for an exemption from reporting must comply with these reporting obligations irrespective of whether it existed before or after January 1, 2024. Penalties for noncompliance include fines of up to $10,000 – making early compliance essential for avoiding these penalties. CONTINUE READING →

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16 September 2024

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Click here for the latest articles on Data Technology, Privacy & Security.

Artificial Intelligence is Checking into your Hotel – Are You Ready?

by Robert Braun, Co-Chair, JMBM Cybersecurity and Privacy Group;
Senior Member, JMBM Global Hospitality Group

Even though artificial intelligence has been a part of our lexicon for more than seventy years, artificial intelligence remains the latest bright shiny thing. Businesses large and small feel compelled to incorporate artificial intelligence into their company descriptions even with a limited understanding of what artificial intelligence is, or how it could help their business. Hotels and hotel companies are no different; just take a look at the online newsletters and announcements hitting your mailbox; it’s a rare day that a hotel company doesn’t announce that it is incorporating artificial intelligence into their business, whether to increase guest satisfaction, offer new services, improve reservations, or any of a variety of reasons.

While artificial intelligence can clearly help, jumping on the AI bandwagon can have unintended consequences.

What is Artificial Intelligence?

Most of us have an imperfect concept of artificial intelligence: we think that the title is descriptive of the product. However, artificial intelligence is not necessarily what it sounds like. IBM defines artificial intelligence as “technology that enables computers and machines to simulate human learning, comprehension, problem solving, decision making, creativity and autonomy.” But what most people think of as artificial intelligence is generative AI, technology that can create original text, images, video, and other content without human intervention.

Underlying this is a hard fact: artificial intelligence is highly technical and very difficult. As an expert in the field, Joseph Greenfield of Maryman and Associates told me, “To understand artificial intelligence, you understand neural networks.” I don’t understand neural networks – do you?

What are the risks of Artificial Intelligence?

Some of the risks in artificial intelligence – or, more accurately, AI systems and tools – are well publicized. For example, AI “hallucinations,” occurring when a generative AI tool that creates responses to prompts that have little or no basis in fact, have become legendary. Biased or inaccurate responses are a common issue, and certain AI models have design flaws that can magnify those issues. Additionally, because of the complexity of AI systems, artificial intelligence cannot be treated simply as another form of software – different and more intensive vetting of AI systems are required. CONTINUE READING →

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02 August 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on ADA Compliance and Defense.

An offshoot of the well-established Potter Handy firm, The Reddy Law Firm is quickly becoming known for its aggressive pursuit of claims under the California Unruh Civil Rights Act and the California Disabled Persons Act. These lawsuits, often referencing the Americans with Disabilities Act (ADA), are primarily filed by serial plaintiffs who challenge businesses on a variety of accessibility issues, from parking and entrances to sales counters. With a growing number of cases being filed, especially in California state courts, it’s crucial for businesses to understand how to effectively respond to and navigate these legal challenges. In the article below, JMBM partner Stuart Tubis explores the key aspects of these lawsuits, provides guidance on how to handle them, and offers insights into the best practices for addressing such claims.

ADA Defense Lawyer: How to Respond to a Lawsuit filed by The Reddy Law Firm for Violation of the Unruh Civil Rights Act, California Disabled Persons Act, or ADA

by

Stuart Tubis, JMBM’s ADA Compliance & Defense Group

The Reddy Law Firm LLC is a relatively new law firm that started filing accessibility lawsuits on behalf of various plaintiffs alleging violations of the California Unruh Civil Rights Act and California Disabled Persons Act. Though a relatively new ADA plaintiff’s lawyers, the firm is an offshoot of Potter Handy, from San Diego.  The lawsuits generally reference the Americans with Disabilities Act (ADA) as well.

Generally, each of these lawsuits are filed on behalf of one of several serial plaintiffs, who file many similar cases each year. Some serial ADA plaintiffs in California have been known to file hundreds, sometimes thousands of lawsuits each against various businesses.

The Reddy Law Firm has filed Unruh litigation on behalf of these plaintiffs:

  • Meryl Pomponio
  • Orlando Garcia
  • Brian Whitaker

These lawsuits show no signs of stopping. Each lawsuit includes a summons as a cover page informing you that you have been sued and must respond. It also contains the complaint itself, which generally looks something like this: CONTINUE READING →

Published on:

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31 July 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

NOTE: We represent the owners and operators of hotels, restaurants, and other hospitality facilities. We do not represent consumers making claims against such businesses. When it comes to Junk Fee laws at the State or National level, we help the owners and operators of hotels and restaurants understand and comply with Junk Fee Laws. When consumers make claims against them, we advise owners and operators on strategies and defense of such claims.

Restaurants, Listen Up:
Rethink How You Disclose Your Fees to Avoid Junk Fee Lawsuits

As lawyers who specialize in representing hospitality owners, developers, independent operators, and investors, we have a critical message for restaurants: it’s time to rethink how you disclose your fees. Recent changes in the legal landscape have significant implications for your operations, and compliance is no longer a matter of choice—it’s a necessity.

Immediate Statutory Requirements

Let’s dive right in. California Civil Code 1770 now mandates that all charges must be clearly and conspicuously disclosed. This isn’t a future requirement; it’s already in effect. If you’re not disclosing fees on your webpage or menu, you’re putting your business at risk. The penalties for non-compliance can be steep, including lawsuits that could cost you hundreds of thousands of dollars, even if you come out on top.

We’ve already seen several lawsuits filed under “bait-and-switch” pricing, which is prohibited in Civil Code § 1770(a)(9). The new California Junk Fee laws may have created more confusion than clarity. The litigation is just beginning under the new Civil Code § 1770(a)(29). The so-called “restaurant exemption” of SB 1524 may not be all it is cracked up to be. In fact, it may be a trap for well-meaning business people.

If you’re unsure what that means, check out the video below for a detailed explanation. CONTINUE READING →

Published on:

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31 July 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

NOTE: We represent the owners and operators of hotels, restaurants, and other hospitality facilities. We do not represent consumers making claims against such businesses. When it comes to Junk Fee laws at the State or National level, we help the owners and operators of the hotels, restaurants and hospitality facilities to understand and comply with Junk Fee Laws. When claims are made against them by consumers of competitors, we advise on strategies and defense of such claims.

In a significant legislative move, the U.S. Senate is advancing towards establishing a new national standard for price transparency in the hospitality industry. The bill, known as The Hotel Fees Transparency Act, mandates that hotels, short-term rentals, and online travel platforms display the total price, including all mandatory fees, upfront. This initiative mirrors a similar bill passed by the House of Representatives earlier this year and stands a good chance of becoming law before the November elections.

In a new article, Sean O’Neill, senior hospitality editor at Skift, gives us the scoop on this bill’s journey, the industry’s reactions, and the potential impacts. The goal here is clear: to make booking more transparent for consumers and ensure a level playing field across the lodging industry. Jim Butler, founder and chairman of JMBM’s Global Hospitality Group®, is quoted several times, highlighting the bill’s significance and the broad support it has received. Jim notes, “We are down to the final strokes of what could be significant federal legislation,” and points out the lack of organized opposition.

CONTINUE READING →

Published on:

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31 July 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

NOTE: We represent the owners and operators of hotels, restaurants, and other hospitality facilities. We do not represent consumers making claims against such businesses. When it comes to Junk Fee laws at the State or National level, we help the owners and operators of the hotels, restaurants and hospitality facilities to understand and comply with Junk Fee Laws. When claims are made against them by consumers of competitors, we advise on strategies and defense of such claims.

Jim Butler Discusses Pricing Transparency Laws on Hotel News Now Podcast

Effective July 1, California implemented two new laws aimed at increasing transparency in advertised hotel room rates by addressing hidden or “junk” fees. These laws require mandatory fees, such as resort fees, to be included in the initial advertised price, fostering a more transparent and competitive market.

Jim Butler, founder and chairman of JMBM’s Global Hospitality Group®, recently appeared on a Hotel News Now podcast with senior reporter Bryan Wroten to discuss these new laws and their impact.

In this podcast, Jim delves into the history and evolution of mandatory fees in the hospitality industry and explains how these new laws benefit both consumers and hotel operators by creating a level playing field and promoting fair competition.

To gain a deeper understanding of these new laws and their broader implications for the hospitality industry, listen to the full podcast on the Hotel News Now website. His insights are invaluable for hotel owners, operators, and investors navigating this evolving regulatory landscape.

Listen to the Podcast Here.

Stay tuned to the Hotel Law Blog for more updates and expert analysis on legal issues affecting the hospitality industry. We are here to support you in achieving compliance and maintaining a competitive edge in this dynamic market.

CONTINUE READING →

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26 July 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on ADA Compliance and Defense.

This article was originally published on January 16, 2024 on JMBM’s ADA Compliance & Defense Blog.

Marty Orlick, Chair of JMBM’s ADA Compliance & Defense Group, was recently interviewed by ABC7 for a news report regarding the impact of serial ADA litigants on small businesses. The segment focused on a group of businesses in Santa Paula, California, who have been hit with lawsuits alleging violations of the Americans with Disabilities Act. The significant financial penalties imposed by these lawsuits threaten to close already struggling stores and restaurants.

During the segment, Marty discussed the California Unruh Civil Rights Act which requires businesses and public accommodations to provide equal access to their services and facilities. He explained that the Unruh Act “allows a plaintiff to recover $4,000 per occurrence every time they went to a particular business, or every time they thought of going but they realize there were barriers and they couldn’t get served.” The Unruh Act is often abused by serial plaintiffs who file hundreds of lawsuits every year, each claiming thousands of dollars in statutory damages.

These serial lawsuits can be incredibly damaging for businesses and are the antithesis of genuine legal action by advocates trying to make their communities more accessible.

You can watch the full ABC7 news report here.

CONTINUE READING →

Contact Information
Jim Butler, Chairman
Global Hospitality Group®
Jeffer Mangels Butler & Mitchell LLP
(310) 201-3526 • jbutler@jmbm.com
www.HotelLawyer.com

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