HARRISBURG, Pa. — It can be a pain when you're booking a trip and you think you're getting a great deal until you go to check out and there a ton of added fees.
The Biden administration is now trying to make that process more transparent, by eliminating so-called junk fees
FOX43 Finds Out chatted with Ted Rossman from Bankrate to ask some of the most frequently asked questions surrounding the new policy.
What is a junk fee?
"The Biden administration defines it largely as a fee that's not proportional to the value received. So credit card late fees are a common example; those go up to $30 for the first offense and up to $41 for subsequent offenses. The Consumer Financial Protection Bureau is trying to cap that at $8, basically saying that these have become profit centers that are far exceeding the real value. Junk fees also encompass things like hotel resort fees, airline seat selection fees, concert ticket fees, all these surprise add-ons," said Rossman.
Is this actually going to save people money, or are you just going to see more of what it costs upfront as opposed to on the back end?
Rossman said, "I think we're going to see more transparency, but I'm not sure that we'll see all that much savings. It's interesting because on the face of it, transparency is a good thing, and it is nice to know what you're getting into. There is a school of thought though that says that this bundled all-in pricing might in a weird way make it easier for these companies to raise fees because then they can maybe hide behind inflation or some other excuse for like, 'Oh, things just cost more over time."
What are some of the businesses that have come out and said they're going to eliminate junk fees?
"One thing that immediately comes to mind is in the buy now, pay later industry, which often positions itself as this kinder, gentler alternative to credit cards. Affirm has been very upfront from the beginning talking about late fees, a lot of their plans don't have interest, although some do, especially the longer ones. In the ticketing world, the White House recently held an event with LiveNation, Ticketmaster, Seat Geek and some other companies, and they pledged more transparency. Airbnb pledged to be more transparent and unveiled some functionality to that effect late last year. So these are some of the progression we've seen on this," said the Bankrate expert.
What do you think consumers are going to take away from this?
Rossman said, "I think if nothing else, we should take away greater awareness of these kinds of fees because they can really add up. I've seen estimates that the average family may be spending hundreds of dollars a month in what amounts to junk fees. It depends on your individual habits, but even things like free trials that turn into paid subscriptions, there are a lot of kind of 'gotchas' out there and there is some hidden marketing. I think to the extent that you can scrutinize these things, look for hidden line items. Speak up if something doesn't look right, but in general, I do think hopefully we'll see more transparency when it comes to booking things, and that can help people when it comes to comparison shopping."
On top of the federal regulation, there is also legislation in Pennsylvania that would require all mandatory fees to be included upfront. It's called the "Pay the Price You See" bill. Currently, the bill is waiting to be voted out of committee.