The campaign to prohibit what the regulators are continuing to call “junk fees” intensified again this week as the Biden administration, the Federal Trade Commission and the Consumer Financial Protection Bureau all made moves associated with the topic.

First, the FTC announced a new proposed rule involving “junk fees” that the regulator said are “hidden and bogus fees that can harm consumers and undercut honest businesses.”

Meanwhile, the CFPB issued an advisory opinion regarding a provision enacted by Congress which generally prohibits large banks and credit unions from imposing “unreasonable obstacles on customers,” such as charging excessive fees, for basic information about their own accounts.

Speaking at the White House Rose Garden this week, President Joe Biden reiterated that he created what he called a Competition Council to “promote competition across the economy and lower costs for families.

“One of the key things I’ve asked the council to tackle are the unfair fees known as ‘junk fees,’ those hidden charges that companies sneak into your bill to make you pay more because they can. Just simply because they can. Charges that are taking real money out of the pockets of American families,” Biden continued.

“These junk fees can add up to hundreds of dollars, weighing down family budgets and making it harder to pay family bills,” he went on to say. “These junk fees may not matter to the wealthy, but they sure matter to working folks in homes like the one I grew up in.”

Consumer Bankers Association president and CEO Lindsey Johnson strongly pushed back on the president’s assertions.

“Banks exist to provide consumers and small businesses access to the financial tools necessary to help them achieve their American Dream. Nobody likes to pay unnecessary fees and the reality is that banks operate in one of the most highly regulated and competitive markets in the world. It is deeply concerning to see this administration once again use rhetoric that fails to reflect this reality and mischaracterizes an industry whose central mission is to strengthen the financial well-being of millions of Americans on Main Streets across this nation,” Johnson said in a statement.

“Given the many challenges we face today as a country, including heightened geopolitical uncertainty and ongoing economic headwinds, policymakers should instead be focused on working in tandem with banks on furthering shared priorities for the people we’re all working to serve,” Johnson continued while adding that the CBA and its members would welcome the opportunity to discuss these and other priorities directly with CFPB director Rohit Chopra.

More details about FTC proposal

The FTC recapped that it launched a proceeding last year requesting public input on whether a rule would help to eliminate these “unfair and deceptive” charges.

After receiving more than 12,000 comments on how fees affect their personal spending or business, the FTC is seeking a new round of comments on a proposed “junk fee” rule.

“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape. These junk fees now cost Americans tens of billions of dollars per year—money that corporations are extracting from working families just because they can,” FTC chair Lina Khan said in a news release.

“By hiding the total price, these junk fees make it harder for consumers to shop for the best product or service and punish businesses who are honest upfront. The FTC’s proposed rule to ban junk fees will save people money and time, and make our markets more fair and competitive,” Khan continued.

The proposed rule would ban the following “junk fee” practices that “consistently confuse and trick consumers,” according to FTC, which added businesses would have to include all mandatory fees when telling consumers a price, making it easier for consumers to comparison shop for the lowest price.

Officials explained how the proposal would bar what they called “hidden fees.”

“Consumers told the FTC that dishonest businesses routinely engage in bait-and-switch pricing tactics that hide mandatory fees and deceive consumers about the price. This is because fees imposed later, but before the purchase is made, significantly increase the total that consumers pay,” the FTC said.

“Accordingly, the proposed rule would prohibit businesses from advertising prices that hide or leave out mandatory fees,” the regulator continued.

Officials also explained how the rule targets “bogus fees.”

Many consumers also said that they often do not know what fees are for, because dishonest businesses routinely misrepresent or fail to adequately disclose the nature or purpose of the fees. The rule would prohibit sellers from misrepresenting fees and require them to disclose upfront the amount and purpose of the fees and whether they are refundable,” the FTC said.

“These provisions are aimed at ensuring businesses will no longer be able to lure consumers with artificially low prices that they later inflate with mandatory fees or to deceive consumers about the nature and purpose of fees,” the commission continued. “In addition, the proposed rule would provide a level playing field for honest businesses by requiring all businesses to quote total prices at the start of the purchasing process and to remove false or misleading information about fees from the marketplace.”

The proposed rule will save consumers more than 50 million hours per year of “wasted time” spent searching for the total price in live-ticketing and short-term lodging alone, according to FTC estimates.

Officials said this time savings are equivalent to more than $10 billion over the next decade.

“Americans are fed up with the junk fees that are creeping across the economy,” Chopra said in the FTC’s news release. “The FTC’s proposed rule will protect families and honest businesses from race-to-the-bottom abuses that cost us billions of dollars each year. If finalized, the CFPB will enforce the rule against violators in the financial industry and ensure that these firms play fairly.”

The complete rule proposal can be viewed via this website.

More details of CFPB guidance on fees

The bureau explained what the basis was for this guidance about fees.

Officials explained that under a 2010 federal law, large banks and credit unions must provide complete and accurate account information when requested by accountholders.

As many large banks shift away from a relationship banking model that prioritizes high levels of customer service, the CFPB said this advisory opinion clarifies that people are entitled to get the basic information they need without having to pay “junk fees.”

“While small relationship banks pride themselves on customer service, many large banks erect obstacle courses and impose junk fees to answer basic questions,” Chopra said in another news release. “While the biggest banks have abandoned the relationship banking model, federal law still requires them to answer certain customer inquiries completely, accurately, and in a timely manner.”

From its market monitoring and the public’s comments about large banks’ customer service, the CFPB said it is aware that some large banks charge customers for basic information that is critical to fix problems with their bank account or to manage their finances.

Officials said this guidance explains how the CFPB will administer the legal requirement for large banks when it comes to customer service, including how the CFPB will evaluate fees imposed on customers for making reasonable requests, such as seeking original account agreements or information about recurring withdrawals from an account.

The guidance can be viewed via this website.