“Too many businesses misleadingly tout low prices that? aren’t? actually available once you’re ready to pay.?”
In recent years, a wide variety of businesses have turned “junk fees” into a common scourge for consumers. These charges, such as “resort fees,” “convenience fees” or “overdraft fees,” often are hidden from customers until the transaction is almost over — for example, when you’re checking out of a hotel or website. Sometimes, it’s difficult to differentiate between reasonable charges and exploitative ones.?Some companies slip junk fees into your final invoice by giving them a fancy name that isn’t accurate or by portraying them as mandatory when they’re really optional.?
As e-commerce has become a dominant force in our economy over the past quarter-century, consumers have raised their expectations for personalization of products and services. When businesses customize their base offerings for us, they have every right to charge clear add-on fees. For example, when you order a pizza — either online or while dining in — the pizzeria’s menu usually states how much you need to pay for a plain cheese pie and how much mushrooms or another extra topping will cost you.
It’s legitimate for a business to charge you whatever they want when they offer such upfront transparency. You can choose the extras or not. It is not OK to bury a fee in a thicket of words of terms and conditions and pretend it was appropriately disclosed.
“Junk fees cost Americans tens of billions of dollars annually and hurt honest businesses. ”
My organization, PIRG, has been fighting to protect consumers from junk fees for decades.?Now, the Biden administration, the Consumer Financial Protection Bureau and the Federal Trade Commission say they’re going to?adopt new rules?to squash junk fees and demand that companies provide accurate prices up front.?The CFPB is targeting bank fees, while the FTC plans to crack down on other unfair fee practices.
The disease has spread to all parts of the economy and is driving consumers crazy. They are?paying for some things twice?and too often?for nothing at all. Worst of all, fees add up in so-called drip pricing — which isn’t shown as a total until you see a surprisingly high final price on your shopping cart screen or printed invoice.?
Federal officials say junk fees cost Americans tens of billions of dollars annually and hurt honest businesses whose products or services might appear more expensive because they’re honestly disclosing the full price. Too many businesses misleadingly tout low prices that?aren’t?actually available once you’re ready to pay.?
Our national junk-fee problem has progressed slowly enough that consumers have experienced it as a form of?boiling frog syndrome. Initially, in the early 1980s, the main offenders were banks, which, following deregulation, began instituting fees. In 1994, many younger Americans first took note of the issue when?Pearl Jam took on Ticketmaster’s rapacious ticket price add-ons, ultimately, in vain.?
The recent junk fee explosion was preceded by an increase in unfair or deceptive practices. What’s changed? For one thing, businesses began to charge fees for products that?weren’t even delivered. Then, they began to charge fees for things that were once — and still should be — part of what you pay for a base service, such as seats on an airplane. Then, they began to charge mystery fees at the last second, such as a “kitchen” fee on your restaurant bill.
“Biden’s 2023 State of the Union address called for passage of a ?Junk Fee Prevention Act ”
President Joe Biden’s 2021?Executive Order on Competition?urged U.S. agencies to investigate and act on “hidden fees” and “early termination fees,” among others.?Last fall, Biden joined?CFPB Director Rohit Chopra and FTC Chairperson Lina Khan?to announce major coordinated U.S. actions against junk fees.?Biden did not mince words?nor did he spare companies in any sector of the economy for gouging consumers and families.?Then, his 2023 State of the Union address called for passage of a?Junk Fee Prevention Act. The president specifically excoriated airlines for their practices, including the imposition of family seating fees that treat children “like a piece of baggage.”
Recent FTC actions suggest a welcome acceleration of?its?efforts to battle junk fees and other unfair marketplace practices.?The agency has taken a series of actions against non-bank junk fees, primarily in the travel and entertainment sectors, as well as against unfair online subscription practices. As the FTC develops?its?rules, it is seeking public comment on these topics:?necessary charges for worthless, free, or fake products or services;?unavoidable charges imposed on captive consumers, and surprise charges that secretly push up a product’s or service’s purchase price.
Americans need the FTC and CPSC to institute and enforce their new junk fee policies as soon as possible. Until then, too many consumers will find their money is being treated just like junk — thrown away. After all, who actually finds a “convenience fee” convenient?
Ed Mierzwinski is senior director of the Federal Consumer Program for U.S. PIRG