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Consumer Reports applauds Biden Administration for prompting companies to limit junk fees

CR calls on Congress to Pass the Junk Fees Prevention Act to Protect Consumers From Costly Hidden Fees That Hike up the Cost of Goods and Services

WASHINGTON, D.C. – Consumer Reports is praising the Biden Administration today for its efforts to encourage companies to limit junk fees that inflate the cost of goods and services and make it difficult for consumers to compare prices. The Administration is holding a meeting today with companies that have voluntarily agreed to end hidden fees by disclosing them upfront to consumers. While these announcements represent some progress, CR is calling on Congress to pass the Junk Fees Prevention Act to require all companies to address this vexing problem for consumers.

“These are positive developments from a handful of companies, but the devil will be in the details of how prices are presented to consumers,” said Chuck Bell, advocacy program director for Consumer Reports.  “We need oversight and enforcement to make sure there is no gaming of the system or backsliding.”

Bell continued, “Consumers are getting hit with costly junk fees everywhere they turn whenever they make a purchase. That’s why we need Congress to take comprehensive action to promote fair and transparent pricing across the board.”

CR supports the Junk Fees Prevention Act introduced by Senators Richard Blumenthal and Sheldon Whitehouse that would require hotels and event ticket sellers to disclose all fees upfront; ban early termination fees charged by cable TV, internet and mobile phone companies and require all mandatory fees to be disclosed in advertised prices; and require airlines to provide children 13 years old or younger a seat next to a family member at no extra charge.

CR has urged the CFPB to use its authority to ensure that financial fees are clearly disclosed in plain language, imposed fairly, and reasonably proportionate to the cost of providing the service.

CR has urged the CFPB to use its authority to ensure that financial fees are clearly disclosed in plain language, imposed fairly, and reasonably proportionate to the cost of providing the service. The CFPB has been examining exploitive fees that can obscure the true cost of services and undermine family finance. CR supports a proposed rule announced by the CFPB in February to limit excessive credit card late fees that cost families an estimated $12 billion each year. Last fall, the CFPB issued guidance to help banks avoid charging illegal junk fees on deposit accounts.

In April 2023, Consumer Reports conducted a nationally representative survey of 2,121 U.S. adults to learn more about their experiences with hidden fees across a range of products and services in the past two years.  CR asked Americans who had used particular services in the past two years whether they had encountered unexpected fees and found that 49 percent had experienced hidden fees for telecommunications services; 45 percent for live entertainment or sporting events; 37 percent for gas and electric utilities; 37 percent for hotel stays; 35 percent for air travel; 27 percent for credit cards; 26 percent for auto loans and purchase; and 23 percent for personal banking services.

Fifty-one percent of Americans who had encountered hidden fees for telecommunications services said that the fees caused them to exceed their budget for cable, internet, or phone service, and two out of three Americans (68 percent) say they  are paying more in hidden fees now than they did five years ago.

Junk fees have become increasingly common in recent years and made it difficult for consumers to know the true cost of services based on the advertised price. For example, the Government Accountability Office found in 2018 that fees charged on concert, sports and event tickets add an average 27 percent more to the ticket’s face value price. Likewise, a Consumer Reports investigation in 2019 found that cable company-imposed fees cost consumers $37 per month, on average, and add an extra 24 percent surcharge on top of the advertised price.

Last year, a CR review of broadband service bills found that more than a dozen internet service providers charged company-imposed fees under names such as “network enhancement fee,” “internet infrastructure fee,” deregulated administration fee,” and technology service fee.” These fees can surprise consumers when they appear on monthly bills, and can enable providers to raise prices without seeming to violate marketing or contractual price commitments.

Michael McCauley, michael.mccauley@consumer.org, 415-902-9537