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-Editorial
The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on consumers.
Research shows that fees charged at the back end of the buying process make it harder to compare shops for the best deal and lead to consumers paying upward of twenty percent more. Junk fees also make it hard for honest businesses to compete, stifle innovation, and hurt small businesses.
The FTC is proposing a rule that, if finalized as proposed, would ban businesses from charging hidden and misleading fees and require them to show the full price upfront. The rule would also require companies to disclose up front whether fees are refundable. This would mean no more surprise resort fees at check out or unexpected service fees to buy a live event ticket. The rule would apply to industries across the economy, including event tickets, hotels and lodging, apartment rentals, car rentals, and more. Under the proposed rule, companies that fail to comply could face monetary penalties and have to provide refunds to consumers.
The CFPB is taking action to require large banks and credit unions to provide basic information to consumers without charging fees—meaning no more fees for basic services like checking bank account balances, obtaining a payoff amount for a loan, or getting account information needed for applications.
“When companies sneak hidden junk fees into families’ bills, it can take hundreds of dollars a month out of their pockets and make it harder to make ends meet. That might not matter to the wealthy, but it’s real money to hardworking families—and it’s just plain wrong. This is about the companies that rip off hardworking Americans simply because they can,” President Biden said. “That’s why today, my Administration took new actions to tackle these hidden fees by proposing a rule that would end excessive overdraft fees. For too long, some banks have charged exorbitant overdraft fees—sometimes $30 or more—that often hit the most vulnerable Americans the hardest, all while banks pad their bottom lines. Banks call it a service—I call it exploitation.”
Consumer Financial Protection Bureau found that bounced check fees are down more than 86 percent since 2021—saving consumers nearly $2 billion—and that nearly two-thirds of large banks have eliminated these fees. Previous CFPB studies have shown that bounced check fees, which can cost $30-40 per transaction, hit low-income and minority Americans the hardest. This new finding adds to the $5.5 billion annual reduction in banking junk fees achieved by the Biden-Harris Administration, for a total of an average of $170 in annual savings for the 33 million households that pay these fees.
The bureau also announced it secured an additional $140 million in consumer refunds from companies that charged illegal junk fees, such as surprise overdraft fees and multiple bounced check fees for the same transaction.
