Junk fees: Will the government pull through for consumers?

The Junk Fee Prevention Act is a significant legislative effort aimed at combating hidden and excessive fees across various consumer services.

Introduced by Senator Richard Blumenthal, and backed by President Biden, seeks to safeguard consumers from unfair costs that not only strain personal finances but also obscure the true price of goods and services, undermining competitive practices in the economy. As of this writing it is introduced in the Senate and just wrapping up a comment period.

In October of 2023, Governor Newsom signed a similar bill into law in California. Senate Bill 478 bans “offering a price for a good or service that does not include all mandatory fees or charges other than taxes or fees imposed by a government on the transaction.”

Typically, when California sets a new law that imposes a higher standard for regulations, New York and parts of the rest of country follow, or a federal law like in this case.

The key aspects of the Act reflects a seemingly earnest effort to enhance transparency and consumer protection.

It identifies four major areas for cracking down 

• Excessive online ticket fees: Hefty service fees often tacked on at the checkout for online ticket purchases, which are not disclosed upfront. Some charges from entertainment platforms like Ticketmaster can amount to more than half the ticket's face value. After Taylor Swift tickets went upwards of 70 times the price of the original ticket on resale platforms, consumers exhibited support for the bill in an attempt to take Ticketmaster to task.
• Family seating fees on airlines: It proposes to end the practice of airlines charging extra for seating children next to their family members during flights, a common source of frustration among traveling families.
• Early termination fees: Commonly seen amongst TV, phone, and internet service providers, these fees lock consumers into services and stifle competition.
• Surprise resort and destination fees: The act intends to ban unexpected "resort fees" or "destination fees" at hotels, which can hide the true cost of a stay and hinder effective price comparison.
• Predatory fees in general: The act also considers how to tackle the broader issue of excessive predatory fees across various industries. Practices like making a resident benefits package mandatory, could be considered junk fees in the future. Hidden fees can significantly raise the cost of services and goods, misleading consumers or taking advantage of those who don't have other options.

Endorsed by Consumer Reports

Consumer Reports has endorsed the Junk Fee Prevention Act, saying it's about time and it's a start: 

"Consumers are rightfully fed up with the proliferation of junk fees that jack up the price of everything from event tickets and hotels to airline flights and internet services.” - Chuck Bell, advocacy program director for Consumer Reports.

“Junk fees can add up to a lot of extra money and pose a real financial strain for families at a time when inflation is already taking a big bite out of their wallets,” he said.

The organization highlights the importance of transparency and fairness in consumer transactions, urging Congress to pass the Act to ensure advertised prices are more reflective of the actual costs consumers will face. They reference some powerful numbers: 

The Governmental Accountability Office reported on the consumer issues of the event ticketing market in April 2018, and found that combined fees averaged 27 percent of the ticket’s face value, with values ranging from 13% to 58%.

The White House estimates that between the CFPB, DOT and FCC working on their own initiatives, predatory fee initiatives are projected to reduce typical late fees for consumers from roughly $30 to $8, saving Americans as much as $9 billion a year in late fees.

Perks are the alternative

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