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junk fees
Trump FTC Pick Casts Lone No Vote on Rule Banning Deceptive Junk Fees
Andrew Ferguson has opposed several major initiatives championed by Lina Khan, including FTC rules banning anti-worker noncompete agreements and making it easier for consumers to cancel subscriptions.
Dec 18, 2024
President-elect Donald Trump's pick to lead the Federal Trade Commission cast the lone no vote Tuesday against a newly finalized rule banning deceptive junk fees in live-event ticketing and short-term lodging.
The rule, according to an FTC release, "targets specific and widespread unfair and deceptive pricing practices in the sale of live-event tickets and short-term lodging, while preserving flexibility for businesses."
"It does not prohibit any type or amount of fee, nor does it prohibit any specific pricing strategies," the agency said. "Rather, it simply requires that businesses that advertise their pricing tell consumers the whole truth up-front about prices and fees."
FTC Commissioner Andrew Ferguson, Trump's choice to head the bipartisan agency, was the only member to vote against the junk fees rule. In his dissenting statement, Ferguson wrote that his opposition had "nothing to do with the merits" of the finalized rule but was rather a vote against any additional rulemaking by the Biden administration.
"It is particularly inappropriate for the Biden-Harris FTC to adopt a major new rule that it will never enforce, as the final rule will not take effect until many months after President Trump takes his oath of office," Ferguson wrote.
Ferguson has been a consistent opponent of causes championed by FTC Chair Lina Khan, including the agency's rules banning anti-worker noncompete agreements and making it easier for consumers to cancel subscriptions.
Nidhi Hegde, interim executive director of the American Economic Liberties Project, said in response to the newly finalized rule that "banning junk fees is broadly popular across the country because Americans are tired of being tricked by hidden costs that inflate prices and distort competition."
"Finalizing this rule with bipartisan support demonstrates Chair Khan and the commission's commitment to delivering real results for consumers, saving Americans both time and money," said Hegde. "We're pleased to see the FTC work to get this done, and encourage federal and state policymakers to build on this effort to put an end to junk fees once and for all."
With his dissent on Tuesday, Ferguson offered a glimpse of "how he plans to lead the FTC—and how the Trump administration plans to run the independent agencies put in the crosshairs by the Project 2025 plan," political reporter Matt Sledge wrote for The Intercept on Wednesday.
"While calling on the FTC to stop issuing rules until Trump takes office might win favor with the incoming president, it is sharply at odds with positions on the agency's independence that Republicans were putting out just weeks ago," Sledge noted. "As recently as October, the House Oversight Committee released a report dinging Khan for a supposed lack of independence from the Biden administration."
"Since Trump's election, however, Republicans have shown newfound enthusiasm for the idea of bringing independent agencies under executive control," he added. "That vision was laid out in Project 2025."
Since he's already a commissioner at the agency, Ferguson will not require Senate confirmation to become FTC chair once Trump takes office next month.
In his job pitch to Trump's team, Ferguson pledged to use his tenure as FTC chair to "reverse Lina Khan's anti-business agenda" and halt her "war on mergers."
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New Rule From Agency Trump Wants Destroyed Would Save Consumers $5 Billion Per Year in Overdraft Fees
One advocate called the CFPB's new rule "a major milestone in its effort to level the playing field between regular people and big banks."
Dec 12, 2024
The Consumer Financial Protection Bureau, one of President-elect Donald Trump's top expected targets as he plans to dismantle parts of the federal government after taking office in January, announced on Thursday its latest action aimed at saving households across the U.S. hundreds of dollars in fees each year.
The agency issued a final rule to close a 55-year-old loophole that has allowed big banks to collect billions of dollars in overdraft fees from consumers each year,
The rule makes significant updates to federal regulations for financial institutions' overdraft fees, ordering banks with more than $10 billion in assets to choose between several options:
- Capping their overdraft fees at $5;
- Capping fees at an amount that covers costs and losses; or
- Disclosing the terms of overdraft loans as they do with other loans, giving consumers a choice regarding whether they open a line of overdraft credit and allowing them to comparison-shop.
The final rule is expected to save Americans $5 billion annually in overdraft fees, or about $225 per household that pays overdraft fees.
Adam Rust, director of financial services at the Consumer Federation of America, called the rule "a major milestone" in the CFPB's efforts "to level the playing field between regular people and big banks."
"No one should have to pick between paying a junk overdraft fee or buying groceries," said Rust. "This rule gives banks a choice: they can charge a reasonable fee that does not exploit their customers, or they can treat these loan products as an extension of credit and comply with existing lending laws."
The rule is set to go into effect next October, but the incoming Trump administration could put its implementation in jeopardy. Trump has named billionaire Tesla CEO Elon Musk to co-lead the Department of Government Efficiency, an advisory body he hopes to create. Musk has signaled that he wants to "delete" the CFPB, echoing a proposal within the right-wing policy agenda Project 2025, which was co-authored by many officials from the first Trump term.
"The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they're charging on overdraft loans."
"It is critical that incoming and returning members of Congress and President-elect Trump side with voters struggling in this economy and support the CFPB's overdraft rule," said Lauren Saunders, associate director at the National Consumer Law Center (NCLC). "This rule is an example of the CFPB's hard work for everyday Americans."
In recent decades, banks have used overdraft fees as profit drivers which increase consumer costs by billions of dollars every year while causing tens of millions to lose access to banking services and face negative credit reports that can harm their financial futures.
The Federal Reserve Board exempted banks from Truth in Lending Act protections in 1969, allowing them to charge overdraft fees without disclosing their terms to consumers.
"For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans' deposit accounts," said CFPB Director Rohit Chopra. "The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they're charging on overdraft loans."
Government watchdog Accountable.US credited the CFPB with cracking down on overdraft fees despite aggressive campaigning against the action by Wall Street, which has claimed the fees have benefits for American families.
Accountable.US noted that Republican Reps. Patrick McHenry of North Carolina and Andy Barr of Kentucky have appeared to lift their criticisms of the rule straight from industry talking points, claiming that reforming overdraft fee rules would "limit consumer choice, stifle innovation, and ultimately raise the cost of banking for all consumers."
Similarly, in April Barr claimed at a hearing that "the vast majority of Americans" believe credit card late fees are legitimate after the Biden administration unveiled a rule capping the fees at $8.
"Americans pay billions in overdraft fees every year, but the CFPB's final rule is putting an end to the $35 surprise fee," said Liz Zelnick, director of the Economic Security and Corporate Power Program at Accountable.US. "Despite efforts to block the rule and protect petty profits by big bank CEOs and lobbyists, the Biden administration's initiative will protect our wallets from an exploitative profit-maximizing tactic."
The new overdraft fee rule follows a $95 million enforcement action against Navy Federal Credit Union for illegal surprise overdraft fees and similar actions against Wells Fargo, Regions Bank, and Atlantic Union.
Consumers have saved $6 billion annually through the CFPB's initiative to curb junk fees, which has led multiple banks to reduce or eliminate their fees.
"Big banks that charge high fees for overdrafts are not providing a courtesy to consumers—it's a form of predatory lending that exacerbates wealth disparities and racial inequalities," said Carla Sanchez-Adams, senior attorney at NCLC. "The CFPB's overdraft rule ensures that the most vulnerable consumers are protected from big banks trying to pad their profits with junk fees."
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Agency Trump and Musk Want to 'Delete' Set to Deliver $1.8 Billion to Scammed US Consumers
"When the Consumer Financial Protection Bureau is allowed to fully do its job, Americans only stand to benefit."
Dec 06, 2024
In the coming weeks, as President-elect Donald Trump's second term approaches and his pledge to dismantle key agencies potentially comes closer to fruition, 4.3 million consumers are set to receive checks from one of the agencies the incoming administration wants to "delete."
The Consumer Financial Protection Bureau (CFPB) announced Thursday that it will soon begin distributing a historic $1.8 billion to millions of people who were charged illegal junk fees or defrauded by credit repair companies including Lexington Law and CreditRepair.com.
The money will be distributed from the CFPB's victim relief fund, which was created by Congress and is financed entirely by civil penalties paid by companies and individuals who violate consumer financial protection laws.
The fund has distributed $3.3 billion to consumers since its inception, and the CFPB said the forthcoming payment will be its largest ever.
"Lexington Law and CreditRepair.com exploited vulnerable consumers who were trying to rebuild their credit, charging them illegal junk fees for results they hadn't delivered," said CFPB Director Rohit Chopra. "This historic distribution of $1.8 billion demonstrates the CFPB's commitment to making consumers whole."
A district court ruled in August 2023 that the two companies had violated the Telemarketing Sales Rule's prohibition on advance fees, which bars credit repair firms from collecting fees from consumers until they prove they have achieved the results they promise to their customers.
If the CFPB payments are divided equally among those who were wrongly charged fees by the two companies, each consumer would receive about $419.
The payments are being sent days after the CFPB proposed a rule aimed at reining in data brokers who sell people's personal information.
As Common Dreamsreported, billionaire entrepreneur Elon Musk has expressed concern about the practices of data brokers—but as Trump's nominee to co-lead the Department of Government Efficiency (DOGE), a yet-to-be-created commission that would cut regulations and government spending, Musk has pledged to "delete" the CFPB.
Filmmaker and media activist Danny Ledonne said Musk and Vivek Ramaswamy, another businessman nominated to lead DOGE, likely want to do away with the CFPB because the agency acts "in the interest of regular people."
Liz Zelnick, director of the Economic Security and Corporate Power Program at government watchdog Accountable.US, said the upcoming $1.8 billion payout shows why the CFPB should remain in operation.
"When the Consumer Financial Protection Bureau is allowed to fully do its job, Americans only stand to benefit," said Zelnick. "Between surprise fees and misleading business practices, today's victory affirms the importance of the CFPB for defending people across the country from shady industry actors."
Rep. Mark Pocan (D-Wis.) said supporters of consumer protections in Congress will "fight any attempts to dismantle [CFPB], whether from Trump, Musk, or their billionaire buddies."
"The CFPB fights for everyday Americans against corporate greed, junk fees, and predatory lenders," he said. "This watchdog agency protects normal people like you and me."
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