President Joe Biden Announces New Initiatives to Combat “Junk” Fees

Drew Angerer | Getty Images

Background

The White House is taking action to address the issue of surcharges, also known as “junk” fees, that affect the affordability of goods and services. These fees, which may seem insignificant to the wealthy but can significantly impact hardworking Americans who struggle with their bills, are now the focus of new policy proposals.

The Partnership and the Goal

President Joe Biden, along with the Federal Trade Commission (FTC) Chair Lina Khan and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, aims to ban junk fees in certain sectors, thus protecting consumers from unnecessary financial burdens.

The FTC’s Proposed Rule

The FTC’s rule proposal seeks to prevent businesses from concealing fees within transactions. Instead, they would be required to disclose the amount and purpose of surcharges upfront. The commission estimates that implementing this rule could save consumers over $10 billion in the next decade. If businesses violate the mandate, the commission would have the authority to secure refunds for consumers.

The CFPB’s Focus on Big Banks

The CFPB is targeting big banks by emphasizing consumers’ rights to access complete, accurate, and free account information. Charging excessive fees or trapping customers in endless customer service loops when they request basic information about their accounts would be prohibited. The CFPB has already fined Wells Fargo, Bank of America, and Regions Bank for extraneous overdraft fees or overcharges. Additionally, the bureau plans to propose a requirement for financial companies to enable easy transfer of customers’ banking transaction data to competitors, aiming to address big banks’ monopoly.

A Comprehensive Effort to Increase Competition

These policy proposals align with the Biden administration’s commitment to fostering competition across industries. In 2022, President Biden issued an executive order on promoting competition in the economy. To establish the new standard, the federal Office of Information and Regulatory Affairs, in partnership with the National Economic Council (NEC) and the Council of Economic Advisers, will publish new guidance.

The FTC and CFPB’s Ongoing Actions

Both the FTC and the CFPB have already taken steps to combat junk fees. The CFPB released a rule proposal on excessive credit card fees earlier this year, while the FTC has been targeting unfair practices in ticketing and other fees since late 2022. After a 60-day comment period, the FTC will consider a final rule.

How AI legalese decoder Can Help

The use of AI legalese decoder can play a significant role in addressing the issue of junk fees. It can assist in identifying hidden fees or surcharges buried within transactions and ensure that businesses present them transparently to consumers. By analyzing legal documents and relevant regulations, AI legalese decoder can help companies comply with the FTC’s proposed rule and avoid violations that may lead to consumer refunds. Furthermore, AI legalese decoder can aid in the transfer of banking transaction data, facilitating competition among financial institutions and providing customers with more choices.