How Biden's action against hidden junk fees affects your wallet
Ever try to buy a concert ticket for an arena show and end the transaction deeper in the financial hole than you were expecting? Thank junk fees.
Why it matters: Junk fees — or additional charges that often accompany hotel or lodging reservations, bank services and ticket purchases — have attracted mounting criticism from consumers and public officials alike.
Often designated as "service charges," junk fees frequently don't show up until final stages of a payment, so consumers aren't immediately clear how much they'll pay for a good or service.
- They "can undermine competition and have serious ripple effects on people's finances," the Consumer Financial Protection Bureau, a regulatory watchdog, has said.
- People can't shop around to compare the total cost of an item or service if they are not presented with the full cost upfront, the CFPB said.
Driving the news: President Biden has called for action against hidden fees during his time in office, and some companies including Live Nation and Ticketmaster have committed to disclosing all fees up front.
How do junk fees show up?
- As an example, people can be hit with fees when depositing a check that bounces.
- "They often charge these fees to feed their bottom line, even if people aren't really getting anything in return," the CFPB said in a video last year.
Many Americans have spent more than they budgeted because of unexpected fees according to a 2018 Consumer Reports survey.
- That was the case with roughly 50% of survey respondents who paid for telecommunications, live entertainment and sporting events, hotels, air travel and car rentals.
In what sectors do consumers pay junk fees?
Consumers have paid these fees in a variety of ordinary transactions, including:
- Bank bills
- Concert and live event tickets
- Hotels (known as "resort" fees)
- Airlines (baggage, internet, changing seat fees)
- Broadband providers (internet, phone and television bills)
What is being done about them?
Biden's administration and consumer protection agencies have advocated for further transparency with service fees.
- Live Nation and SeatGeek have committed to reveal the entire cost of certain tickets up front, the White House said Thursday. Consumers will continue to pay service fees, but they will know the total amount from the start of the purchase.
- "The venue sets the service fee rate card and keeps most of the service fees, with some portion going to the ticketing company and to pay credit card fees," Ticketmaster said.
The CFPB's increased oversight has also led 15 of the 20 biggest banks to ending bounced check fees entirely, the White House said.
- Bank of America, Capital One, Citibank and Wells Fargo have banned overdraft fees, according to Bankrate, a consumer financial services company.