The Biden administration announced on Wednesday that it’s cracking down on junk fees across banking, live events, and more, in a move that officials estimate will save Americans tens of billions of dollars a year.
“Folks are tired of being taken advantage of and be played for suckers,” Biden said during remarks at the White House.
“Unfair fees known as junk fees: those hidden charges that companies sneak into your bill to make you pay more because they can. Simply because they can,” he said. “These junk fees can add up to hundreds of dollars weighing down family budgets, making it harder to pay family bills.”
The Federal Trade Commission (FTC) has proposed a rule that would prohibit junk fees across industries, including for renting housing, paying utility bills and purchases like concert tickets and hotel stays. Under the proposal, the FTC would be able to fine companies that attempt to hide fees and secure refunds for consumers harmed by the practice, while also requiring companies to disclose the amount and purpose of fees for purchases.
The agency estimates that hidden fees waste 50 million hours per year for consumers — time spent investigating unexpected prices or searching for alternatives. The time savings alone are expected to be equivalent to over $10 billion over the next 10 years, officials estimate.
“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape. These junk fees now cost Americans tens of billions of dollars per year,” FTC Chair Lina Khan said in a statement. “By hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront.”
In the proposed rule, the FTC places a particular focus on fees on Ticketmaster, which is estimated by government officials to control over 80 percent of the ticketing industry. Ticketmaster came under scrutiny last year when Taylor Swift fans were unable to purchase tickets to her tour after Ticketmaster’s website crashed; when tickets were finally accessible, some of them were listed on resale sites for tens of thousands of dollars.
At a Senate hearing following the snafu, Sen. Amy Klobuchar (D-Minnesota) said that Ticketmaster fits the “definition of monopoly.”
The Consumer Financial Protection Bureau (CFPB) is also joining the effort to crack down on fees. Agency officials issued an advisory clarifying that it is illegal for banks and credit unions to place fees on basic services like viewing checking account balances, obtaining payoff information for a loan or accessing basic account information for applications.
The CFPB is also planning to propose a rule to require financial institutions to allow customers to send money between other companies and banks to make it easier for consumers to switch banks and manage different accounts.