WASHINGTON — October 11, 2023
President Biden, joined by Federal Trade Commission (FTC) Chair Lina Khan and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, unveiled a series of comprehensive measures aimed at safeguarding consumers from hidden and costly “junk fees” that have long plagued industries across the American economy. The announcement, made today, comes as part of the administration’s commitment to promote competition and transparency in various sectors, addressing a problem that has cost American families billions of dollars annually, according to a White House statement Wednesday.
Junk fees, those insidious and often undisclosed charges that businesses impose on their customers, contribute to rising costs, hampering competition and hurting consumers, small businesses, and workers. A report revealed that such fees often lead consumers to pay over twenty percent more than they initially anticipated, making it challenging to make informed decisions.
The Biden-Harris Administration has introduced a comprehensive plan to combat this problem, featuring the following key initiatives:
- FTC Proposal to Ban Hidden Fees: The Federal Trade Commission is proposing a rule that would effectively ban hidden and misleading fees across various industries, including event tickets, hotels and lodging, apartment rentals, and car rentals. Under this proposed rule, companies will be required to disclose the full price upfront and inform customers about the refundability of fees, eliminating the surprise fees that have long irritated consumers. Non-compliant companies could face monetary penalties and be obligated to refund consumers.
- CFPB’s Crusade Against Banking Fees: The Consumer Financial Protection Bureau is taking action against large banks and credit unions by compelling them to offer basic services to consumers without imposing fees. This means that services like checking bank account balances and obtaining information needed for loan applications will no longer come with additional charges.
- Facilitating Banking Data Sharing: Later this month, the CFPB is set to propose a rule that would allow financial companies to securely and reliably share banking transaction data with other banks and companies. This reform will enable consumers to manage their accounts more easily and switch to banks with better offerings, promoting competition based on service quality and pricing transparency.
Additionally, the CFPB announced that its crackdown on junk fees has already saved consumers billions of dollars. Bounced check fees have decreased by over 86 percent since 2021, with nearly two-thirds of large banks entirely eliminating these fees, providing an average annual savings of $170 for the 33 million households that used to pay these fees. The CFPB has also secured $140 million in consumer refunds from companies that imposed illegal junk fees, including surprise overdraft charges.
The Biden-Harris Administration’s efforts to promote competition extend beyond addressing junk fees. The Office of Information and Regulatory Affairs (OIRA) is releasing new guidelines to help agencies develop regulations with a focus on competition. This move is part of the administration’s comprehensive approach to support fair competition in various sectors of the economy.
The Administration’s initiatives to tackle junk fees are not limited to these announcements. Other departments and agencies have taken similar measures in their respective domains, such as the Department of Transportation (DOT) securing commitments from airlines to improve services, the Department of Housing and Urban Development (HUD) advocating for transparency in fees faced by renters, and the Federal Communications Commission (FCC) mandating “Broadband Nutrition Labels” for internet service providers.