The Biden administration on Wednesday announced a new effort to crack down on so-called junk fees that the White House says will save consumers billions of dollars.
Junk fees are hidden or surprise fees that companies tack on to the bills of customers. This latest move by the White House, which includes a new proposed rule by the Federal Trade Commission, is part of a broader push by the Biden administration to cut down on such fees and hidden pricing.
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“Some have asked me why the president of the United States is concerned about a $50 fee here and a $35 fee there,” Lael Brainard, director of the National Economic Council, said on a call with reporters. “Those sneaky fees might not matter a lot to the wealthiest Americans, but they sure do matter for hard-working Americans sitting around the kitchen table trying to stay on top of their bills and have a little left over.”
Chief among the latest actions against junk fees by the White House is the announcement of a proposed FTC rule that would ban companies from charging hidden or misleading fees and mandate that they show the full price to consumers upfront. Additionally, the FTC rule, if finalized as proposed, would require that businesses disclose upfront whether fees are refundable or not.
The FTC rule would not just apply to one industry or sector but applies to industries across the entire economy, including for things like event ticketing, travel, vehicle rentals, and hotel bookings. Companies that violate the rule could face fines from the FTC and be compelled to provide customer refunds.
“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape,” said FTC Chairwoman Lina Khan. “These junk fees now cost Americans tens of billions of dollars per year—money that corporations are extracting from working families just because they can. By hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront.”
To go alongside the proposed rule on junk fees, the Consumer Financial Protection Bureau on Wednesday announced new guidance to stop large banks from charging excessive or “junk” fees for providing basic customer service.
Under federal law, big banks and credit unions are required to provide complete and accurate account information when requested by customers. The new CFPB guidance aims to clarify that people are not allowed to be charged fees for those basic requests.
“While small relationship banks pride themselves on customer service, many large banks erect obstacle courses and impose junk fees to answer basic questions,” said CFPB Director Rohit Chopra. “While the biggest banks have abandoned the relationship banking model, federal law still requires them to answer certain customer inquiries completely, accurately, and in a timely manner.”
This isn’t the first time that the Biden administration has targeted so-called junk fees. Over the summer, the White House announced assurances from several major companies to be more upfront with pricing.
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The commitments included those from major ticketing companies, such as Live Nation, that have faced criticism in the past for the often-expensive hidden fees that are tacked on to the listing price for tickets.
“In total, the companies that are making new commitments today will improve the purchasing experience for tens of millions of customers annually,” the White House said in a news release at the time. “These commitments are in response to the President’s call to action on junk fees in his State of the Union.”