During his State of the Union address last week, President Joe Biden declared that he would push Congress to legislate a Junk Fee Prevention Act, protecting consumers from hidden costs, excessive service fees and misleading pricing across industries including entertainment, communications, travel and lodging.
The Junk Fee Prevention Act is only a proposal so far, but it should serve to spark close scrutiny of these “junk fees” — by consumers and state governments, as well as Congress and federal regulators.
After all, fees and cleverly hidden costs are now everywhere. Fees that pop up online, just as a buyer is prepared to tap the “purchase now” option. “Service” fees that seem to include no service, but do pad a vendor’s bottom line. And conversely, “rock bottom” pricing that may not include amenities a buyer expects.
Even if a “junk fee” bill does materialize as federal legislation (and this is not guaranteed), many of the fees consumers now regularly face are not going away anytime soon.
In today’s market environment, savvy consumers must be attentive and be prepared to question mysterious or “surprise” fees. If fees seem unwarranted, a company’s management may respond to complaints; otherwise, shoppers may opt for businesses that don’t downplay total costs or charge costly fees for “extras.”
Adding fees after a purported price is disclosed can mislead consumers. For example, adding a “service fee” and “convenience fee” to the price of a concert ticket at checkout can be disconcerting, to say the least.
Biden has signaled that he wants Congress to bar excessive fees and require those fees to be disclosed in ticket prices from the start. This is good policy and should be implemented.
Fees charged to end a cable, phone or internet plan — which can be hefty — are also within the president’s sights. These fees discourage competition, by increasing the cost of switching plans, and often do not reflect actual costs for companies that charge them.
In both cases, fees that generate profit without reflecting service provided should be reined in and regulated to prevent price-gouging.
Other service fees may well be justified, but regulation is necessary to ensure that customers aren’t “tricked” into paying them. The remedy here is full transparency.
For example, finding out that it will cost $100 round trip to check bags that don’t fit under the seat on a “basic economy” flight can be upsetting for a budget-conscious flier. However, a fully informed backpacker who appreciates the opportunity to pay much less than a traveler with suitcases may highly value that same fare.
Further, if fees are mandatory, they should be included in a total cost that is disclosed at the onset of a search or transaction.
Hawaii requires the state’s hotels to disclose resort fees, and also subjects mandatory fees to the state’s transient accommodations tax, as it should. Provided that these resort fees are clearly revealed at the same time that a guest inquires about rates, it’s proper to separate them out — this actually gives consumers more information to work with — but transparency is essential.
Bottom line: Buyers should not be led to believe a product will cost one amount, then find that their total costs are much higher, and they shouldn’t have to be detectives to ferret out total prices for tickets, phone or cable service, flights or a hotel stay. Action to prevent excessive fees and require uniform price disclosures is needed — and would be a welcome protection for all who value a fair deal.
