The Biden administration is intensifying its efforts to eliminate hidden and excessive fees that consumers often encounter, with new plans put forth by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). These measures aim to protect people from undisclosed and unwarranted fees, ultimately saving them time and money.
The proposed rules, jointly announced by the FTC and CFPB, would require businesses to transparently display the full price of various transactions upfront. This would apply to a wide range of transactions, including purchasing concert tickets, renting cars, booking hotels, or leasing apartments.
The objective is to empower consumers to make informed choices while shopping and avoid the financial burden of hidden fees, which collectively cost people billions of dollars each year.
The Chairwoman of the Federal Trade Commission, Lina Khan, emphasized that these proposed rules seek to prevent corporations from adding hidden or deceptive fees to bills. Violators of these rules would face monetary fines, promoting transparency and honest pricing.
The Consumer Financial Protection Bureau, on the other hand, is taking specific action to prevent major banks and credit unions from imposing charges on customers for routine activities such as checking account balances, accessing loan statements, or scanning checks. Director Rohit Chopra underlined the importance of ensuring that customers are not burdened by exorbitant fees or subjected to endless customer service interactions when seeking basic account information.
This initiative builds on previous actions taken by the CFPB, which led to significant reductions in “non-sufficient funds” fees, resulting in annual savings of approximately $2 billion for consumers. Furthermore, businesses have reimbursed customers $140 million in unwarranted fees following the CFPB’s investigations, including instances where charges were levied for paper statements that were never produced or mailed.
The Biden administration has been dedicated to addressing these issues for over a year, striving to eliminate unnecessary fees that affect bank customers, travelers, concert attendees, and others. While companies have made commitments to display “upfront all-in pricing,” some consumer advocates argue that more comprehensive measures are needed to fully protect consumers.
These announcements by the FTC and CFPB are part of a broader effort to tackle these issues, particularly at a time when inflation is impacting Americans’ ability to meet their financial obligations. The focus on fees and costs that offer little or no value aims to alleviate the financial burden on individuals. While the impact on consumers’ savings remains uncertain, government officials suggest that it could potentially result in savings amounting to billions of dollars.
The proposed FTC rule must undergo public review and commentary before it can become law, potentially facing legal challenges from business groups. The CFPB’s guidance is based on a 2010 law, and it may impose fines for violations occurring after February 1, 2024, with the objective of ensuring customers have access to vital account information without unnecessary charges.