In his State of the Union address Tuesday night, President Joe Biden vowed to ban an economic harassment that affects nearly every American: so-called “junk fees.”
These charges now touch everything from financial products like credit cards to concert and airline tickets, as companies find seemingly endless new ways to deal with the bogus. fees each year. About 85% of people have encountered such hidden charges, according to Consumer Reports reconnaissance From 2019.
They’re a big source of money for airlines, financial services companies and others, with consumers paying at least $29 billion each year in exorbitant fees, according to the Consumer Financial Protection Bureau. These fees are often not clearly announced to consumers when they purchase a product or service, and can raise costs beyond what people expected to pay.
“Junk fees may not matter to the wealthy, but they do matter to most people in homes like the one I grew up in. They add up to hundreds of dollars a month,” Biden said in his speech. “I know how unfair it is when a company overcharges you and gets away with it.”
He added, “Not anymore.”
Unsolicited Cartoons Prevention Act
On Tuesday, Biden urged Congress to pass a new “junk fee prevention act,” which his administration is running Proposal on February 1, which will focus on reducing surcharges in four areas:
- Eliminate “excessive” concert, sporting event and other entertainment ticket fees.
- Prohibition of airline ticket fees for family members with young children to sit.
- Ban “exorbitant” early termination fees for television, telephone and Internet services.
- Surprise resort and destination fees are prohibited.
“We’re going to get internet and cell phone companies to stop charging you $200 or more when you decide to switch to another provider,” Biden said. “And we’re going to stop airlines from charging families up to $50 round trip just to sit together.”
The administration said it plans to work with Congress in the coming weeks and months to advance the legislation.
Inappropriate “convenience” fee
At the same time, the Federal Trade Commission is looking into whether it needs to create a rule against unwanted fees, a given area He began to examine last fall.
“It is not frustrating to end up spending more than you budgeted because of random and arbitrary fees,” FTC Chair Lena M. Khan said in an October statement announcing the effort. “Nobody ever felt the ‘convenience fee’ was appropriate.”
Currently, the FTC is soliciting feedback from members of the public about their views on the unwanted charges and whether regulation is necessary. So far approx 12,000 comments The list has been posted to the bylaws, with the comment period ending today, February 8th.
Consumer Financial Protection Bureau
The CFPB, which was created in the aftermath of the 2008 financial crisis to protect consumers from financial exploitation, is also cracking down on unwanted fees, with an emphasis on financial services companies.
For example, last fall the agency asked the Regions Bank Recovery At least $141 million for customers who have been concerned about what the CFPB describes as “illegal sudden overdraft charges.”
The agency, which solicited consumers’ opinions on fees for financial services last year, said it may use the information to create new rules and regulations.
“In many cases, unwanted fees are often penalties, such as insufficient funds and late credit card charges, rather than compensation for a legitimate service,” CFPB Director Rohit Chopra said in January 2022.
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