Advocacy groups ask FTC to expand Biden administration efforts to rein in junk fees
President Joe Biden devoted 19 sentences of his State of the Union speech to “junk fees,” which includes credit card late fees, service fees for concert tickets and airplane seating preferences that he said strain families’ budgets. Biden did not mention the numerous and opaque fees faced by prisoners and their families every day. But several think tanks and advocacy organizations want the federal government to tackle them.
The groups sent a letter on Feb. 8 to the Federal Trade Commission to let the agency know that prisoners and their families also need financial relief. The FTC announced in October that it was considering a rule to end many of the “unnecessary, unavoidable, or surprise charges,” which the agency said are cost-free to companies and target consumers who have no way to avoid them.
The Prison Policy Initiative, a criminal justice policy think tank, and the National Consumer Law Center, along with 27 other organizations, including the Center for Responsible Lending, and Southern Poverty Law Center, signed the letter. It explained that incarcerated people are often hit with fees for phone calls and messaging services, electronic monitoring and post-arrest diversion programs.
Prepaid debit cards given to people leaving a correctional facility with money they earned in prison or received from family also include a range of fees, including for balance inquiries and for not using the correct bank for a transaction — despite card companies rarely providing lists of banks, according to the Prison Policy Initiative.
“These excessive fees bear all of the hallmarks of an unfair act or practice under the Commission’s enforcement authority,” the organizations wrote. “They cause substantial harm because they constitute high sums for people least able to afford them. They cannot reasonably be avoided because consumers are captive to private companies awarded exclusive contracts.”
These companies also benefit from monopoly contracts and provide little to no added value for consumers, the groups added.
Their language reflects that used by Biden during his State of the Union speech when he pushed for the passage of the Junk Fee Prevention Act. The administration has been targeting junk fees since last year. In September, Biden called on federal agencies to address the issue of hidden fees or junk fees, an issue he said should help relieve families’ budgets.
“Look, junk fees may not matter to the very wealthy, but they matter to most other folks in homes like the one I grew up in, like many of you did. They add up to hundreds of dollars a month. They make it harder for you to pay your bills or afford that family trip,” he said in his speech.
The president told Congress to focus on regulating consumers’ entertainment ticket fees, airline fees, phone, internet, and television fees for switching providers, and resort fees and destination fees that hotel guests only see at the end of their reservation process.
Several agencies have already taken steps to alleviate the fees, including:
- In October, the Department of Transportation proposed a rule to require airlines to clearly disclose fees, including fees for family members to sit with young children, when the consumer sees schedule and fare information.
- Over the summer, the department encouraged airlines not to charge parents for seating their child next to them during a flight.
- The Consumer Financial Protection Bureau proposed a rule this month to lower late fees from credit card companies.
- The Federal Communications Commission has rules going into effect in 2024 to adopt labels that consumers can check out early in the process of shopping for broadband providers so that they can comparison shop for a better price.