The White House, in collaboration with two of the country's main consumer-protection agencies, will unveil new steps to reign in tens of billions of dollars worth of surcharges attached to products and services, also known as the "junk fees."
Director of the National Economic Council (NEC) Lael Brainard said in a statement with reporters, "Those sneaky fees might not matter a lot to the wealthiest Americans, but they sure do matter for hardworking Americans sitting around the kitchen table trying to stay on top of their bills and have a little left over."
'Junk Fees' Ban
There are new policy ideas from the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) that will outlaw junk fees in specific industries, as reported by CNBC. These will be announced on Wednesday, October 11, by President Joe Biden, FTC Chair Lina Khan, and CFPB Director Rohit Chopra.
According to a press release, the FTC is proposing new rules that would require firms to disclose the amount and rationale behind surcharges up front, possibly saving customers over $10 billion over the next decade. The regulation allows the commission to collect consumer reimbursements in the event of a mandate violation.
Khan told reporters on Tuesday, October 10, that the regulation would do more than simply put money back in people's wallets as it will also bring justice to American families and fairness to the markets.
Meanwhile, CFPB enforcement efforts focus on customers' rights under federal legislation passed in 2010 to provide them with comprehensive, accurate, and free account information upon request.
Chopra explained, "When people request basic information about their accounts, big banks cannot charge them massive fees or trap them in endless customer service loops. Charging a competitive price for a legitimate service makes sense, but charging junk fees for basic customer responsiveness doesn't."
Wells Fargo, Bank of America, and Regions Bank have all been hit with penalties by the CFPB in recent years due to excessive overdraft fees and overcharges. The bureau plans to submit a proposal later this month to oblige financial institutions to make it simple for clients to transfer their banking transaction data to competitors in an effort to break up the monopoly of large banks.
Biden's 2022 executive order on strengthening competition in the economy is the starting point for the administration's sweeping plan to enhance rivalry across businesses. Fresh guidance will be published by the Office of Information and Regulatory Affairs (OIRA) on Wednesday to assist federal agencies in establishing the new standard in collaboration with the NEC and the Council of Economic Advisers.
In the last several months, the FTC and the CFPB have taken the first steps in cracking down on junk fees. The CFPB proposed new rules on credit card overcharges earlier this year, while the FTC started investigating potentially misleading pricing on tickets and other services in late 2022.
