Protecting Consumers From Junk Fees and Unfair Pricing

Fighting to lower costs for Amer-icans is at the heart of President Biden’s economic agenda—just as it is for the National Consumers League (NCL). The last few years have been especially challenging for a lot of families, as the pandem-ic-era disruptions and Putin’s war have driven up costs in every part of a household budget, from rent to groceries to childcare.

Since taking office, President Biden has called on big corporations to pass along savings to consumers; secured historic legislation lowering the costs of prescription drugs, childcare, utility bills, and health insurance; directed his Cabinet to use every administrative tool to lower costs; and gone after hidden junk fees in nearly every area of a family’s budget—from banking overdraft fees and credit card late fees to attending live events. 

These junk fees are everywhere, whether in the form of mysterious “resort fees” that are tacked onto bills for ordinary hotel stays or “processing fees” attached to concert tickets at the last minute. While hidden fees might not matter to the wealthiest Americans, they add up for hard-working Americans. Research shows that consumers pay upwards of 20% more when faced with junk fees than if they had access to the all-in price up front. It is hard for honest companies that show the all-in price up front to compete fairly when competitors post prices without the hidden fees that consumers will ultimately have to pay.

This is why the President launched a Strike Force on Unfair Pricing and has charged his Competition Council with eliminating junk fees across industries. The Administration has implemented rules against junk fees related to air travel, cable TV, broadband, and financial services—like banking overdraft fees. This is putting hundreds of dollars back into the pockets of American families.

The Administration’s actions to cut credit card late fees will save the estimated 45 million Americans who regularly incur these fees an average of $220 per year. Our actions to ban family seating fees could save a family of four $200 on a round-trip ticket. Another proposed action would require businesses—including online ticket sellers, apartment rental companies, hotels, and car rentals—to provide consumers with the all-in price up front and to disclose any mandatory fees, what they are for, and whether they are refundable. The Administration’s actions are projected to save Americans more than $20 billion annually—and we are just getting started.

So much of the progress we have made to crack down on junk fees would not be possible without the advocacy and research of organizations like the NCL, which has a distinguished 125-year history of advocating on behalf of American consumers.

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Lael Brainard is an economist who serves as the Director of the National Economic Council.