Biden moves to ban all junk fees and hidden charges for Iowans

If you’ve ever tried to stay at one of Iowa’s many historic hotels, such as the Des Lux, only to have exorbitant “convenience fees” or “service fees” tacked on at checkout, we’ve got some good news for you. 

The Biden administration on Wednesday proposed a new rule that would prohibit companies across the private sector from hiding additional fees–dubbed “junk fees” by the president–from consumers. 

The proposed Federal Trade Commission (FTC) rule would require all industries under its jurisdiction to show the full price of an item being purchased to the consumer “up-front,” meaning before they get to checkout. The rule would apply to concert and sports tickets, apartment and car rentals, hotel rooms, and more. 

“Folks are tired of being taken advantage of, and being played for suckers,” Biden said in a speech at the White House on Wednesday. “[These] charges are taking real money out of the pockets of American families. 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 in homes like the one I grew up in.” 

Companies that violate the proposed rule would be subject to financial penalties and be required to compensate consumers. 

According to the FTC, Americans collectively pay “tens of billions of dollars” in junk fees each year. Lina Khan, chair of the Federal Trade Commission, compared these fees to “an invisible tax that quietly inflates prices across the economy,” during a conference call with reporters on Tuesday. 

The rule will be subject to a public comment period before it can be formally approved by the FTC.

The Consumer Financial Protection Bureau (CFBB) will also evaluate whether any existing bank fees violate provisions of an existing law that requires these large banks to provide complete and accurate information to customers without charging fees.

This would mean “no more fees for basic services like checking bank account balances, obtaining a payoff amount for a loan, or getting account information needed for applications,” according to the White House. 

The CFPB will also propose new rules to make it easier to switch a financial account and find better interest rates.

Although Wednesday’s announcement marked the president’s most sweeping action against junk fees yet, it’s just the latest example of the Biden administration’s focus on reigning in junk fees and saving families money. 

In June, the administration proposed a new regulation that would require cable companies and satellite providers to show the full price of their services “upfront”—meaning hidden fees would no longer be snuck in at checkout. A week prior, Ticketmaster, SeatGeek, and other major ticketing companies announced that they agreed to institute “all-in” pricing, which would also mean that consumers will no longer be surprised by additional fees at checkout.

Biden and his administration have also broadly worked to increase transparency between companies and consumers since taking office.

The Federal Communications Commission proposed a rule last November to require internet companies to publish prices, data allowances, and other important information on “easy-to-understand labels” for consumers as they compare services. Just this week, the FCC announced that the majority of providers will be required to display these labels by April 10, 2024; providers with 100,000 or fewer subscriber lines must do so by Oct. 10 of next year. 

Earlier this year, the FTC also proposed a rule to ban non-compete clauses in employment contracts. Employers often force their workers to sign these clauses, which effectively bar them from starting their own business or finding a new job in the same field within a certain area or timeframe after leaving their current job. This rule is expected to be finalized in 2024.

Most recently, the FTC announced that it was suing Amazon, alleging that the company tricked millions of people into signing up for Prime service through “deceptive user interface designs.” The complaint also alleges that Amazon tried to keep users subscribed—even when they wanted to cancel their memberships—by making it exceedingly difficult to unsubscribe.

Speaking on Wednesday, Biden emphasized why he and his administration were so laser focused on the issues of junk fees, transparency, and deceptive business practices.

“It’s wrong. It’s just taking advantage of people,” Biden said. “And it makes it harder for honest businesses who are trying to do the right thing to compete with dishonest companies who trick customers into thinking their prices are lower when they, in fact, are not.”