The president’s government Joe Biden expanded his strategy against so-called “junk charges””, those hidden fees that banks, airlines and other companies charge customers.
Biden, Federal Trade Commission (FTC) Chair Lina Khan, and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra will announce the new efforts.
“The FTC is proposing a rule that, if finalized as proposed, would prohibit companies from charging hidden and misleading fees and would require them to show the total price in advance to customers,” the White House indicated in a document distributed to the media. “The rule would also require companies to disclose in advance whether fees are refundable.”
This is to ensure that there are no more surprise fees, for example, when a person leaves a hotel or when they buy a ticket for a concert or any artistic event.
“The rule would apply to industries across the economy, including event tickets, hotels and lodging, apartment rentals, car rentals and more,” it was announced. “Under the proposed rule, companies that do not comply could face monetary penalties and have to offer refunds to consumers.”
The measure is part of President Biden’s Executive Order on Promoting Competition, where he asked federal agencies, Congress and private companies to take action against extra tariffs.
“Junk Tariffs Cost American Families Tens of Billions of Dollars every year and inhibit competition, harming consumers, workers, small businesses and entrepreneurs,” the Biden Administration indicated. “Research shows that fees charged at the end of the purchasing process make it more difficult to shop around to find the best deal and cause consumers to pay more than twenty percent more.”
Greater pressure on banks
Banks will face increased pressure from the CFPB, which will also be eyeing credit unions to provide basic information to consumers without charging fees.
“[Esto significa] that there will be no more fees for basic services such as verifying bank account balances, obtaining the settlement amount of a loan or obtaining the account information necessary for applications,” it is anticipated.
It will be at the end of October when the CFPB will propose the rule that, if finalized, would also require that financial companies “allow customers to securely and reliably send their banking transaction data to other companies and banks,” it was noted.
The CFPB reports that fees for bad checks, for example, have decreased more than 86 percent since 2021, saving consumers nearly $2 billion.
The Biden Administration had also achieved an annual reduction of $5.5 billion in extra fees at banks.
“CFPB also announces it obtained an additional $140 million in refunds to consumers from companies that charged illegal junk fees, such as surprise overdraft fees and multiple bad check fees for the same transaction,” he said.
The Biden Administration’s plans include improving competition with actions by the Office of Information and Regulatory Affairs (OIRA), which publishes new guidelines.
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