President Biden’s administration is taking aim at ‘junk fees’, hidden charges added to products and services, through a combination of proposed rules and directives to provide greater transparency for consumers.

The proposal: The Federal Trade Commission proposes a new rule forcing companies to cease hidden and ‘bogus’ fees and instead disclose all mandatory costs upfront.
* Violators of the rule could face financial penalties.
* The rule aims to allow easier price comparison for consumers and create fairer competition between businesses that disclose total costs in advance.

Additional actions: The Consumer Financial Protection Bureau (CFPB) has ordered banks and credit unions to provide basic information, like account balances, without charging fees.
* Later this month, the CFPB will propose another rule that would force financial institutions to enable customers to easily share their information with other banks if they want to switch.

Criticism and support: While the U.S. Chamber of Commerce’s Neil Bradley criticized the crackdown on ‘junk fees’ as potentially harmful to consumers, consumer advocates praised the move.
* Consumer protection officials estimate that these fees cost buyers over $64 billion each year.
* Erin Witte, director of consumer protection at the Consumer Federation of America, pointed out that ‘junk fees’ disproportionately affect low-income consumers and communities of color.

Industry response: The American Hotel & Lodging Association plans to review the FTC rule, stating it supports creating a uniform standard for mandatory fee display across the lodging industry.
* Earlier this year, President Biden asked legislators to pass the Junk Fees Prevention Act, a proposed law aimed at curtailing excessive fees charged by companies.

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