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monopolists
Biden Applauded for Fighting 'Billion-Dollar Rip-Off' With Proposed Junk Fees Ban
"It's a bad day for corporate monopolies," said one advocate.
Oct 11, 2023
Consumer advocacy groups on Wednesday applauded new efforts announced by the Biden administration to rein in banks and other companies that make billions of dollars per year charging Americans what President Joe Biden called "outrageous" hidden fees when they make purchases or use basic financial services.
Speaking in the Rose Garden at the White House, Biden said the Federal Trade Commission (FTC) has proposed a new rule that would ban businesses from charging "junk fees"—unexpected "service charges" and other fees that are revealed to a consumer just before an online purchase is finalized by ticketing companies, car rental agencies, and other businesses.
Biden said companies charge the fees "simply because they can" and that banning them will give households across the nation more "breathing room."
"These junk fees can add hundreds of dollars weighing down family budgets, making it harder to pay family bills," said the president. "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."
The proposed rule has a 60-day public comment period. If finalized, the FTC would be empowered to impose financial penalties on companies that don't make their products' full prices clear to consumers, and obtain refunds for people who are charged junk fees.
"Today's monopolists and other powerful private corporations are true experts in exploiting their leverage to rip off the American people, with the harm falling especially hard on the poorest, least educated, and least powerful members of our society," said Barry Lynn, executive director of the Open Markets Institute. "Today's announcement demonstrates that President Biden is truly serious about banning these outrageous and abusive tactics and forcing corporations to just tell the truth about their services and prices."
While many in the American public may have come to accept junk fees as a part of life, Faiz Shakir, interim executive director of the American Economic Liberties Project, said the charges—which companies have increasingly used over the past 30 years—"aren't just a nuisance; they're a billion-dollar rip-off squeezing nearly every American's wallet."
"With a new proposed rule today from the FTC to flat out ban junk fees across the economy," said Shakir, "the Biden-Harris administration is standing up for working families. From banking to credit cards, hotels to airlines, and healthcare to entertainment, big corporations all across the economy abuse their market power to nickel and dime working families and undermine fair competition."
The president also announced that the Consumer Financial Protection Bureau (CFPB) will require large banks and credit unions to provide basic services to consumers, such as account balances and information needed for applications, without charging fees.
"These fees are now illegal," said Biden.
The CFPB has taken numerous actions since Biden took office to protect consumers from unfair fees, and announced Wednesday that its work has brought bounced check fees down more than 86% since 2021, saving Americans—particularly low-income families—nearly $2 billion.
The bureau also said it has secured $140 million in refunds for people who were charged types of junk fees that are already illegal, such as surprise overdraft charges and multiple bounced check fees for one transaction.
With Wednesday's announcement, "once again, the Biden administration has stepped up for consumers," said Susan Harley, managing director of the Congress Watch division of consumer watchdog Public Citizen.
"Ending junk fees," she added, "will allow Americans to make better informed decisions about how to spend their hard-earned money."
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