President Biden looks to trash ‘junk fees’ in new rule aiming to protect consumers

WASHINGTON − The Biden administration is proposing a new rule to prohibit companies across the private sector from hiding fees from consumers, the president’s most sweeping action yet on “junk fees.”

The Federal Trade Commission’s rule would require all industries under its jurisdiction to show the full price upfront to consumers, including for concert and sports tickets, hotel rooms, and apartment and car rentals. Violators would be subject to financial penalties and be required to compensate customers.

President Joe Biden, in remarks Wednesday from the White House Rose Garden, called the proposal his administration’s “most comprehensive action ever” to eliminate junk fees.

“If these rules are finalized, they won’t just be voluntary, they’ll be made mandatory. It will do more than embarrass companies, it will make it mandatory,” Biden said.

The move comes as Biden has made tackling junk fees a top priority to help consumers. Americans collectively pay “tens of billions of dollars” in junk fees each year, according to the FTC. Lina Khan, chair of the FTC, likened the fees to “an invisible tax that quietly inflates prices across the economy.”

“Our proposed rule to ban junk fees would not just return money to people’s pockets but also restore a degree of justice to American families and restore fairness in our markets,” Khan said.

The rule will be subject to a public comments period before it can be formally adopted by the FTC.

The U.S. Chamber of Commerce urged the administration to reverse course.

Neil Bradley, the business group’s executive vice president and chief policy officer, called it baffling that the administration believes it would help consumers by regulating how businesses price the nearly 400,000 transactions Americans engage in “every minute of every day.”

“The reality is this attempt at price controls will only stifle the innovation that leads to more choices and lower prices for consumers,” Bradley said in a statement.

The American Bankers Association and the Consumer Bankers Association also criticized the new actions.

Biden also takes aim at bank fees
Taking aim at the financial industry, the Biden administration is also warning large banks and credit unions that they can’t charge fees for basic services. Examples include routine checking of bank account balances or asking the amount needed to pay off a loan.

“Folks are tired of being taken advantage of and being played for suckers,” Biden said.

The Consumer Financial Protection Bureau will evaluate whether any existing bank fees violate provisions in a more than 10-year-old law that bureau director Rohit Chopra said requires large banks provide complete and accurate information to customers.

“Today’s guidance outlines a pretty basic concept,” Chopra said. “When people request basic information about their accounts, big banks cannot charge them massive fees or trap them in endless customer service loops.”

Chopra touted recent oversight inspections of major financial institutions that led to $140 million in refunds for fees that shouldn’t have been charged.

For example, he said, one financial company charged monthly fees for paper statements that were never actually printed or mailed to customers.

The agency also will propose new rules to make it easier to switch a financial account and find better interest rates.

Biden’s efforts on junk fees have nudged Ticketmaster and mobile ticket vendor SeatGeek to voluntarily agree to no longer hide fees from total ticket costs. Four major airlines companies have agreed to wipe away fees for families to sit together on planes.

Some of the many other rules changes proposed under Biden would lower credit card late fees, require cable and internet providers to list fees upfront, and force major broadband companies to display all costs and fees for services.