President Joe Biden and the heads of the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) will announce new rules and regulations to crack down on junk fees across various industries on Wednesday (Oct. 11).
Junk fees, which are hidden charges that companies add to customer bills, cost consumers tens of billions of dollars each year and stifle competition among businesses, the White House said in a Wednesday press release previewing the announcement.
The FTC will propose a rule that would ban businesses from charging hidden and misleading fees, requiring them to disclose the full price upfront, according to the press release. This rule, if finalized, would apply to industries such as event tickets, hotels, apartment rentals and car rentals. Companies failing to comply could face monetary penalties and be required to provide refunds to consumers.
“By hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront,” FTC Chair Lina M. Khan said Wednesday in a separate press release. “The FTC’s proposed rule to ban junk fees will save people money and time, and make our markets more fair and competitive.”
Similarly, the CFPB issued an advisory opinion Wednesday requiring large banks and credit unions to provide basic information to consumers without charging fees, the White House release said. This means no more fees for services like checking bank account balances or obtaining loan payoff amounts.
“While small relationship banks pride themselves on customer service, many large banks erect obstacles and impose junk fees to answer to answer basic questions,” CFPB Director Rohit Chopra said Wednesday in a press release. “While the biggest banks have abandoned the relationship banking model, federal law still requires them to answer certain customer inquiries completely, accurately and in a timely manner.”
Later this month, the CFPB will also propose a rule that allows customers to safely and securely send their banking transaction data to other companies and banks, according to the White House release. This reform will make it easier for people to switch to banks with better offerings and manage accounts from multiple providers, deterring the prevalence of junk fees.
The CFPB will also release data showing that its efforts to crack down on junk fees have already yielded significant savings for consumers, the release said. Bounced check fees have decreased by more than 86% since 2021, saving consumers nearly $2 billion. Furthermore, the CFPB has secured an additional $140 million in consumer refunds from companies that charged illegal junk fees.
In an earlier move to eliminate junk fees, the Department of Transportation enacted new mandates in September 2022 that require airlines to disclose upfront if they charge a rebooking fee for canceled flights.
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