In his latest effort to protect consumers, President Biden is promising to save Americans billions each year by eliminating so-called “junk fees.” Biden’s campaign against “hidden, surprise fees that companies sneak onto customer bills” may sound consumer-friendly, but inevitably it will create unintended consequences. Meanwhile, the White House overlooks the nuanced benefits these fees offer to the economy.
The administration is tackling the junk fee issue with a whole-of-government approach, introducing an array of measures across a host of different federal agencies. The FTC is set to ban hidden or supposedly misleading fees on items like event tickets, hotel rooms, and car rentals. The CFPB is taking steps to ensure banks don’t charge fees for basic services like account balance inquiries or obtaining loan payoff amounts. The FTC has proposed a rule to address supposedly deceptive practices in the auto industry, such as charging for add-on products like nitrogen-filled tires.
These actions, along with other initiatives aimed at the transportation, housing, and communications sectors, represent a broad and aggressive strategy to eliminate fees across a variety of settings and markets. While many in the public might like the sound of these policies, a major concern going forward is that companies, deprived of revenue, will resort to less efficient, less consumer-friendly methods of recouping income and maintaining market share.
Read the full article on Forbes.