President Joe Biden has made taking on “junk fees” — hidden fees on everything from airline bookings to concert tickets — a key part of his domestic agenda.
His administration has already tried to limit fees on things like bank overdrafts and late credit card payments, and Monday, it turned its attention to making subscriptions and memberships easier to cancel.
White House policy adviser Neera Tanden said in a call with reporters that new Federal Trade Commission and Federal Communications Commission rules should make it so Americans only need “one or two clicks on your phone” to end a service.
“Businesses often trick consumers into paying for subscriptions — on everything from gym memberships to newspapers to cosmetics — that they no longer want or didn’t sign up for in the first place,” a White House fact sheet released Monday reads. “Consumers shouldn’t have to navigate a maze just to cancel unwanted subscriptions and recurring payments.”
Americans regularly cite the economy as one of the US’s most important problems. And the Biden administration’s attempts to rein in junk fees are a way for it to make the case that Democrats are addressing Americans’ concerns about high prices before the election. Limiting fees is popular on a bipartisan basis: a December Data for Progress poll found that 77 percent of voters — including 81 percent of Democrats, 78 percent of independents, and 72 percent of Republicans — said they supported legislation banning junk fees.
“Essentially in all of these practices, the companies are delaying services to you or, really, trying to make it so difficult for you to cancel the service that they get to hold on to your money longer and longer,” Tanden said. “And what that means is, ultimately, consumers, the American public, is losing out.”
How the policy would work
The Biden administration’s proposals would prohibit companies from billing customers without their consent, failing to disclose cancellation policies, and making cancellation difficult by, for example, requiring customers to cancel in person or endure long holds on the phone with customer service. Companies that fail to comply with the rule could face civil penalties, like those the FTC has sought in recent cases related to advertising.
The FTC is currently reviewing public comments on its proposed rule, which would require companies to allow customers who sign up online for a service to also cancel that service online in no more steps than it took them to sign up. Companies would be allowed to make additional offers when a customer tries to cancel, but only if they first ask if a customer is open to hearing them. Companies would also have to provide reminders before subscriptions are automatically renewed if they are not for any physical good.
That rule could go into effect in the coming months.
Meanwhile, the FCC opened an inquiry Monday into pursuing a similar rule that would apply to the communications industry. If the FCC decides to do so, that rule might not go into effect before Biden’s term ends, though if Vice President Kamala Harris wins the 2024 election, she would likely advance it.
Biden’s subscription cancellation policy is part of a broader pro-consumer agenda
In addition to his latest move on subscriptions, Biden has pursued a still-pending broad regulation to combat junk fees overall, as well as regulations aimed at industry-specific junk fees.
Notably, the Consumer Financial Protection Bureau (CFPB) proposed a rule to curb overdraft fees incurred when consumers withdraw more than the available funds in their bank account — a move that might save customers about $3.5 billion a year overall.
The administration’s efforts have hit some barriers, however. Airlines recently sued the Biden administration over a new final rule that requires airlines and ticket agents to disclose upfront any fees associated with booking a plane ticket. And a federal judge temporarily blocked a Biden administration rule that would limit fees on late credit card payments to $8 per month, which the CFPB said would cut costs for Americans by $10 billion a year. Bank and credit card company lobbyists, supported by some Republican members of Congress, had argued that the rule was unconstitutional.
Though those lawsuits are meant to limit the administration, Biden has also used the courts in an aggressive antitrust pro-consumer strategy. His administration has filed a flurry of sweeping lawsuits against major companies, including four Big Tech companies, on the grounds that they are harming competition in their industries and, therefore, American consumers.
The Biden administration recently won a major ruling against Google in which the judge found that the company’s search business constituted an illegal monopoly. Other antitrust lawsuits are pending against Google over its ads business, Meta over its acquisitions of Instagram and Whatsapp, Apple over its alleged anticompetitive practices in the smartphone market, and Amazon over its restrictions on third-party sellers that have served to keep prices higher.
The Biden administration has also filed a lawsuit seeking to break up Live Nation, Ticketmaster’s parent company, accusing it of operating an illegal monopoly through anticompetitive behavior that has harmed everyone from consumers to concert venues to artists.
The durability of Biden’s consumer protection initiative may depend in part on the November election. A Harris administration would likely uphold these policies and could continue to pursue these antitrust lawsuits and then some. But if former President Donald Trump wins the election, it’s probably a different story — the Trump administration didn’t make consumer protection a priority in its first term, and has not made doing so in a second term central to its campaign.
Source: vox.com
