Kuttner on TAP: Biden’s Latest Initiatives Against Junk Fees

To take a tour of all the deceptive “junk fees” imposed on consumers by an array of industries is to appreciate the insidious nature of predatory capitalism that has become all too normal. Getting rid of junk fees and saving consumers hundreds of billions of dollars has been a Biden administration theme.

It’s also very good politics, since it demonstrates how Democrats are on the side of ordinary people, as well as demonstrating the need for countervailing consumer regulation—and it smokes out Republican fake “populism,” since Republicans hate an activist state constraining corporate abuses.

Today, the administration took junk-fee prohibition to a new level, with detailed initiatives by the Federal Trade Commission and the Consumer Financial Protection Bureau. New FTC rules will require all businesses to show all fees up front, as well as clear disclosure of whether fees are refundable. This rule would apply to event tickets, hotels, car rentals, apartment rentals, and more. Companies that failed to comply would pay fines as well as customer refunds.

New rules by the CFPB will require all banks to provide information requested by account holders free of charge. Another pending CFPB rule will make it easier for customers to send and receive data from banks and to switch banks. The CFPB announced research findings that its previous pro-consumer rules limiting bank fees on bounced checks have already saved consumers at least $2 billion.

All of these new rules are out for comment, and still need to be finalized, and we can expect a massive industry lobbying campaign to water them down. This kind of vivid pro-consumer activity is the Biden administration at its best, and it is frankly class warfare pitting the mass of citizens against rapacious and deceptive economic elites.

Today’s announcement also enlisted the White House Office of Information and Regulatory Affairs (OIRA) to help mobilize other agencies of government to carry out the administration’s all-of-government competition agenda. In past administrations, Democrat as well as Republican, OIRA has been used mainly to bottle up or weaken regulations.

Last February, in a previous round of agency actions against junk fees, including limits on credit card late fees, Biden announced legislative plans for a comprehensive Junk Fee Prevention Act that would, among other things, ban early termination fees. Since then, much of what was proposed for legislation turns out to be within the power of the FTC, CFPB, the Department of Transportation, and other agencies under existing law.

Still, it would be useful to get a floor vote on an anti–junk fee bill to put Republicans on the spot and give the issue added visibility. Such a bill was introduced in March by Sens. Blumenthal and Whitehouse, but has not come to the floor of either house.

These orders are both a vivid demonstration of practical help to ordinary people, and a teaching tool about the need for creative and aggressive regulation against predatory opportunistic corporate deceptions.