In January, Biden vowed to take on junk fees. How’s he doing so far?
Jul 13, 2023, 6:30 PM
President Joe Biden speaks in the South Court Auditorium on the White House complex in Washington, Thursday, June 15, 2023, to highlight his administration's push to end so-called junk fees that surprise customers. (AP Photo/Susan Walsh)
Credit: ASSOCIATED PRESS
(AP Photo/Susan Walsh)
SALT LAKE CITY — Junk fees can include the surcharges consumers pay on credit cards, bills, loans, air travel, hotel rooms and event tickets, such as sports and concerts. During his State of the Union speech in January, President Joe Biden pushed for support of the Junk Fee Prevention Act and help to end them.
“The Biden administration is also taking on junk fees. Those hidden surcharges too many companies use to make you pay more.
“For example, we’re making airlines show you the full ticket price upfront [and] refund your money if your flight is canceled or delayed.
“We’re reducing exorbitant bank overdrafts by saving consumers more than $1 billion a year [and] cutting credit-card late fees by 75% from $30 to $8,” the president said.
Junk fees are punitive
Ted Rossman, a senior industry analyst with Bankrate, joins Dave & Dujanovic and started the discussion by defining how junk fees stand apart from other fees.
“The way the government seems to be defining it, the Biden administration and the Consumer Financial Protection Bureau is they seem to talk about fees that are not really proportional to the value received.
“That’s really been a key argument with these credit-card late fees, which currently run up to $30 for a first offense and up to $41 for subsequent offenses,” Rossman said. “The CFPB wants to cap that at just $8 saying basically that these have become profit centers that are really far exceeding the value received.”
How is Biden doing so far?
Update: On June 15, Mr. Biden announced that a group of event-ticketing and travel companies will commit to all-in pricing and eliminating the “hidden” aspect of hidden fees, but this does not eliminate fees altogether.
- Ticketmaster (owned by Live Nation) is committing to providing upfront all-in pricing in September. That includes Ticketmaster events, as well.
- SeatGeek, a primary and secondary ticketing platform, plans to roll out all-in pricing this summer.
Last week, the Biden administration vowed to crack down on so-called junk insurance.
Lower the fee, raise the fee
Rossman said some junk fees are coming down or at least being unhidden but some are just shifting or what he called “whack-a-mole.” For example, overdraft fees are falling amid scrutiny but ATM fees at banks are at record highs, he said.
Rossman said the credit card late-fee proposal could cost banks $9 billion in revenue.
If that passes, “I don’t think they would just swallow that. I think they would look to raise fees elsewhere,” he said.
So perhaps the best that happens is consumers get transparency about these “hidden fees” but the result is they end up paying the same.
Rossman recommends educating yourself about all fees before making a transaction or purchase. He added it doesn’t hurt to ask about rescinding a fee — if it doesn’t apply.
“If a hotel is tacking on a fee for the pool or the gym, and you didn’t use the pool or the gym, it doesn’t hurt to ask nicely, like, ‘Hey, could you take that fee off?’ Sometimes that works,” he said.
Read more:
Bank of America to pay over $250 million over junk fees, other issues
Dave & Dujanovic can be heard weekdays from 9 a.m. to noon. on KSL NewsRadio. Users can find the show on the KSL NewsRadio website and app, as well as Apple Podcasts and Google Play.
