Biden admin targets "bogus" fees for hotels, tickets in latest crackdown
The Biden administration is stepping up its efforts to eliminate junk fees.
Why it matters: The Federal Trade Commission (FTC) proposed a new rule Wednesday to ban the use of "bogus" fees, the latest action in a wider crackdown on the hidden costs that set consumers back "tens of billions of dollars" annually, per an FTC press release.
- The FTC estimates the proposed rule will save consumers "more than 50 million hours per year of wasted time spent searching for the total price in live-ticketing and short-term lodging alone."
- "These junk fees can add up to hundreds of dollars, weighing down family budgets, making it harder to pay family bills. These junk fees may not matter to the wealthy, but they sure matter to working folks," Biden said at an event Wednesday.
Be smart: Junk fees are additional costs that are disclosed after a consumer has decided to purchase a service or product that obscure the true price, per a White House guide.
Details: The new rule would make businesses disclose all mandatory fees when listing a price, making it easier for consumers to compare prices and encouraging businesses to compete to offer the lowest price.
- The rule would also have "enforcement teeth" by giving the FTC the ability to get refunds for consumers and seek penalties against offending companies, per the press release.
- "The proposed rule would provide a level playing field for honest businesses by requiring all businesses to quote total prices at the start of the purchasing process," according to the press release.
- Other agencies, including the Consumer Financial Protection Bureau and Department of Transportation, are also developing rules banning junk fees, the FTC said.
What they're saying: Sen. Amy Klobuchar (D-Minn.) praised the proposed FTC rule in a statement Wednesday, calling it an "important step towards ensuring that the price you see is the price you pay."
Zoom out: The administration is also taking other new actions to crack down on junk fees.
- The Consumer Financial Protection Bureau issued guidance Wednesday calling for large banks and credit unions to not charge fees when providing customers with "basic information about their own accounts."
- Later this month the CFPB will propose a rule that would make it easier for customers to switch banks, per a White House press release.
Flashback: The Biden administration issued new guidance last year targeting some banking overdraft fees charged to consumers.
- Earlier this year, ticketing giants Live Nation and SeatGeek agreed to get rid of junk fees following pressure from the White House.
What to watch: After the proposed FTC rule is published in the Federal Register, there will a 60-day period for public comment.
Editor's note: This story was updated with a statement from Sen. Klobuchar, comments from President Biden and more info from a White House release.