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Edited by: TJVNews.com
President Joe Biden highlighted progress in chipping away at so-called junk fees as a “win for consumers” Thursday, as he met at the White House with executives from Live Nation, Airbnb and other companies that have taken steps to embrace more transparent pricing, according to an AP report.
Biden prioritized the effort to combat surprise or undisclosed fees in his State of the Union address and has called for legislation, regulation and private sector action to end them. The AP reported that the president, at Thursday’s event, praised actions by companies that have eliminated or plan to eliminate those surprise fees.
The consumer advocacy push is part of Biden’s pitch to voters ahead of his 2024 reelection bid that government can help improve their lives in big and small ways, as was reported by the AP.
At the White House, Live Nation, which is based in Beverly Hills, California, announced that it will provide customers with upfront all-in pricing — meaning the actual purchase price including service charges and any other fees — for its owned venues by September and that Ticketmaster will give consumers the option to view all-in pricing up front for other venues on the live-entertainment tickets platform, according to the AP report. SeatGeek, based in New York, will also unveil features to make it easier to browse for tickets with the true cost displayed.
San Francisco-based Airbnb rolled out its all-in pricing tool in December, after Biden first called on companies to stop hiding fees, the AP report said.
“These are just the latest private sector leaders who are responding to my call to action,” Biden said, saying junk fees “can add hundreds of dollars a month and make it harder for families to pay their bills.”
“I’m asking their competitors to follow suit and adopt an all-in pricing as well,” Biden said, as was reported by the AP. “These actions matter and it’s inspiring companies to change their practices.”
National Economic Council director Lael Brainard said in a statement that the president “has been working to lower costs for hardworking families by bringing down inflation, capping insulin prices for seniors, and eliminating hidden junk fees.”
“More companies are heeding the President’s call so that Americans know what they’re paying for up front and can save money as a result.”
Hidden fees have become a pervasive issue that affects many Americans, leading to a surge in consumer complaints. From cable TV bills to airline charges, these additional costs are leaving customers frustrated and financially strained. Consumer Reports (CR) launched its “What the Fee?!” campaign to address this problem and has received over 3,480 letters from angry consumers in the past 13 months alone.
One of the main concerns raised by consumers is the lack of transparency in billing practices. Many individuals find themselves paying for services they never use, such as sports fees for non-sports enthusiasts. In addition, exorbitant cancellation fees further compound the problem, making it difficult for customers to switch providers without incurring significant costs.
The issue of hidden fees extends beyond telecommunications. Travelers have also fallen victim to excessive charges, such as administrative fees levied by car-rental companies on top of highway tolls. Even small toll charges can result in disproportionate processing fees, leaving customers outraged.
The music industry is not exempt from these practices either. Concertgoers have discovered that the ticket price advertised is rarely the final amount paid. After adding fees, the total cost often exceeds the initially quoted price, leaving consumers feeling deceived and frustrated.
Consumer Reports conducted a survey that revealed the extent of the problem. Three out of ten participants reported experiencing hidden charges in the past two years, and nearly two-thirds of those who contested the charges were successful in obtaining refunds or having the fees removed.
The fight against hidden fees has gained momentum across different sectors. In South Carolina, Duke Energy faced customer backlash and criticism from CR and other organizations over a proposed 238 percent increase in fixed fees. Following the outcry, the company scaled back the hike, highlighting the impact of consumer advocacy.
Among the most common areas where hidden fees are prevalent are cable TV, cell-phone services, and internet providers. CR launched a petition signed by approximately 140,000 cable TV subscribers, demanding the elimination of add-on fees and the promotion of transparent pricing. Nearly 3,000 people sent their cable bills to CR to demonstrate how these charges affect consumers.
Hidden fees impose a significant financial burden on typical American families, often amounting to thousands of dollars annually. Data from specific industries reveals the substantial sums being extracted from consumers. Airlines, for instance, generated $7.6 billion in revenue from reservation change fees and baggage fees in 2018. Banks profited from increasing overdraft fees, reaching $11.5 billion in 2018 for the largest institutions. The hotel industry amassed a record $2.9 billion in resort fees and other charges in the same year.
The rise of online shopping platforms may have inadvertently contributed to the prevalence of hidden fees. While these websites have facilitated price comparison and driven down costs, companies have responded by obscuring prices through the inclusion of fees. Glenn Ellison, an economics professor at the Massachusetts Institute of Technology, explains that fees enable businesses to present lower prices while still recovering costs. The fees, often hidden until later in the shopping process, can escape the attention of consumers.
Despite the theoretical possibility of calculating true costs if fees are disclosed, the reality is that finding and understanding these charges can be challenging. Companies employ a “drip pricing” strategy, gradually revealing fees across multiple web pages or within fine print. Such tactics exploit consumer inertia and discourage price comparison. Vicki Morwitz, a marketing professor at New York University, explains that people are less likely to abandon a purchase once they have invested time in researching a price, even when confronted with unexpected fees.
“Once people have spent time searching a price, they are less likely to start over when they see the fees,” Morwitz, “They often mistakenly assume competitors will have the same fees,” she says.
Consumers may also make calculation errors when attempting to determine the total cost of fees. A study by researchers at the University of Chicago and the Consumer Financial Protection Bureau (CFPB) found that participants often struggled to identify the lower-cost product when faced with complex disclosures. Despite a preference for complexity in disclosures, participants were overconfident in their ability to accurately calculate fees, leading to higher expenses.
The frustration surrounding hidden fees underscores the need for increased transparency and consumer protection. While efforts like CR’s “What the Fee?!” campaign and the petition against cable TV fees demonstrate a growing resistance, more action is needed to address this issue comprehensively. Consumers must be equipped with clear, upfront pricing information to make informed decisions, without the fear of falling victim to hidden charges.
