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Michael Hiltzik: The war on 'junk fees' is gaining ground, but the fight is not yet won

Michael Hiltzik, Los Angeles Times on

Published in Business News

"I talk to a lot of of banks," Rep. Dan Meuser, R-Pennsylvania, told Rohit Chopra, director of the Consumer Financial Protection Bureau, "and they're really not happy with your agency."

He urged Chopra to "be responsive to the clientele you're supposed to be helping."

With admirable restraint, Chopra replied: "Just to be clear, the clientele of the CFPB is not the banks. The clientele is the public."

The exchange occurred at a hearing of the House Committee on Financial Services on June 14. Leaving aside that Wall Street banks and brokerages have been among Meuser's leading campaign donors, the congressman was not lying about the bankers' opinion about Chopra and his agency — in fact, he may have minimized their hostility.

The U.S. Chamber of Commerce, speaking on behalf of the financial services industry, has called Chopra a "radical" pursuing an "ideologically driven agenda." Last year, the American Bankers Association and two other bankers' lobby groups published a 21-page broadside against him, calling on Congress and the federal courts to rein him in.

Their ire has intensified in recent months, as the CFPB has stepped up its campaign against "junk fees." The agency defines these as excessive or unnecessary fees on overdrafts, account information requests, late payments on loans or credit cards, among other charges.

 

The CFPB's campaign is part of the Biden administration's broader attack on junk fees across the U.S. economy — fees that appear on a consumer's bill at the end of a transaction, rather than being disclosed in advance.

If you've rented a car, bought an airline ticket, booked a hotel room or paid a cable bill, you probably know what the White House is talking about: hidden, surprise charges for services you may not even have used, transaction charges for buying online or downloading a concert ticket instead of picking it up at the box office, etc., etc.

These charges have proliferated as retailers and service providers try to raise revenues by "unbundling" services that used to be provided at no extra charge. The quintessential example comes from the airline industry, where baggage fees have soared, reaching nearly $6.8 billion last year among the top domestic carriers, up from $464 million in 2007. Some ostensibly low-cost airlines charge for checked bags and carry-ons.

Biden took aim at the nickel-and-diming of American consumers within six months of taking office in 2021, when he instructed agencies including the Department of Transportation, Federal Trade Commission and Federal Communications Commission to devote close scrutiny to regulated industries' treatment of consumers.

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