Oct. 11 (UPI) — The Biden administration on Wednesday announced new measures in its ongoing effort to eliminate so-called “junk fees.”
Biden said new rules proposed by his administration’s Federal Trade Commission would ban the fees across the U.S. economy.
“My administration is taking the most comprehensive action ever to eliminate junk fees in industries and sectors across the board, across the entire economy. If these rules are finalized, they won’t just be voluntary, they’ll be made mandatory,” Biden said during remarks in the White House Rose Garden on Wednesday.
Biden said the FTC’s proposed new rule would “require companies to show consumers the all-in pricing upfront that includes what these fees are for and how much they amount to in full.”
The Federal Trade Commission proposed new rules Wednesday that would ban hidden fees on goods and services that continue to nickel and dime American consumers with unexpected costs.
“These junk fees can add up to hundreds of dollars weighing down family budgets, making it harder to pay family bills,” Biden said. “These junk fees may not matter to the wealthy, but they sure matter to working folks in homes like the one I grew up in.”
If enacted, the new rules would prohibit junk fees and deceptive charges for airline tickets, hotel and resort bookings, live events, apartment rentals, and utility bill payments — potentially saving taxpayers tens of billions of dollars each year.
Biden said that, since he took office, nearly two-thirds of the largest banks have ended bounced-check fees entirely. He said those fees declined by nearly $2 billion dollars.
He cited an example of airlines that two summers ago charged fees for rebooking flights when flights were delayed or canceled, while today 10 airlines now rebook for free.
Biden said tens of millions of Americans already have benefitted from his administration’s efforts to eliminate junk fees.
He said his administration is working to crack down on “unfair and deceptive junk fees” in banking, hotels, concerts, airlines, retail housing, cable internet, and health care among other areas.
Biden said the junk fees elimination efforts is a part of his overall economic policies that seek to end trickle-down economics, the idea that policies benefitting wealthier Americans would somehow “trickle down” to benefit all.
“When I ran for president, I promised we would not continue the trickle down economics of the past because here’s the simple truth. Trickle down economics represented the moment we walked away from how this country’s middle class was built, in my view,” Biden said. “Not a lot trickled down on my Dad’s kitchen table.”
Biden opened his remarks by commenting on the war in Israel and Gaza. He said his administration is closely monitoring developments there.
“This attack has brought to the surface the painful memories and scars left by a millennia of anti-Semitism and genocide against the Jewish people,” he said. “And this moment we have to be crystal clear there is no justification fo terrorism to excuse the type of terrorism that was exhibited here was just beyond the pale.”
He repeated that the U.S. commitment to Israel’s security and the safety of the Jewish people is “unshakeable.”
The U.S. Consumer Financial Protection Bureau also issued fresh guidance Wednesday to the nation’s big banks, saying they were still subject to the 2010 Consumer Financial Protection Act, which prohibits large financial institutions and credit unions from charging junk fees for basic customer service.
“While small relationship banks pride themselves on customer service, many large banks erect obstacle courses and impose junk fees to answer basic questions,” Chopra said in the statement from the agency. “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.”
Since taking office in 2021, Biden has called for increased limits on bank fees for bounced checks and account overdrafts, which would save consumers more than $5 billion a year.
Under the FTC rule changes, businesses would have to disclose all mandatory fees up front, which would make it easier for consumers to comparison shop for the lowest price, the agency said.
Airlines would also be required to disclose all fees up front, and eliminate family seating fees, while hidden fees for concert and sports tickets would also be prohibited, the White House said previously.
The proposed rules seek to end bait-and-switch practices across the wider economy and prevent businesses from running up the tab with hidden fees, ensuring customers know exactly how much they are paying and what they are getting from the deal.
The changes would have the effect of sparking more competition in the market, leading to lower prices for consumers, the administration said.
The time savings alone equates to about $10 billion, or 50 million hours, that consumers currently spend each year searching for cheap tickets and hotel stays, according to government estimates.
The Biden administration requested public comments on bogus fees a year ago, with more than 12,000 consumers attesting to the ongoing impact of hidden charges.
“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape,” FTC Chair Khan wrote in a press release announcing the next phase of public commentary on the issue. “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.”
Khan said the hidden fees take advantage of consumer-protection loopholes while serving as a drag on the American economy.
During the first public comment phase, a majority of consumers said merchants often don’t reveal the total cost of a product until the transaction is completed, and the receipt printed with the fees included.
Many also said that sellers often misrepresent the purpose of certain fees, leaving consumers wondering what they are paying for or if they are getting anything at all for the fee charged, the agency said.
“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,” Khan wrote. “The FTC’s proposed rule to ban junk fees will save people money and time, and make our markets more fair and competitive.”
Should the provisions become law, the FTC vowed to enforce the rules by seeking federal damages against companies that do not comply and give those awards back to consumers.
The FTC voted 3-0 to approve the public notice of the proposed rules, which will now go into the Federal Register for 60 days for public comment.
