Biden, California lawmakers wage war against ‘junk fees’ on hotels, concert tickets and airlines

Think of “junk fees” this way, says Susan Rice:

You go to a department store and buy a pair of blue jeans. At the register, you pay the price that’s marked on the item plus tax. Period.

But buy a concert ticket, an airline ticket, or pay your cable bill, and it’s too often not that simple, said Rice, President Joe Biden’s domestic policy adviser.

The concert ticket may be advertised at $150. The airline ticket was listed at $200. But when you get the bill, it costs more due to a “convenience fee,” or “service fee,” or seating charge or whatever.

In Sacramento and Washington, there’s a big push afoot to require companies to make it clear to consumers as they shop precisely how much they’ll pay for goods and services.

California is regarded as one of the friendlier consumer protection states. “California has been active on the junk fees issue,” said Erin Witte, director of consumer protection at the Consumer Federation of America in Washington.

She said her organization was “very happy to see their legislation package this year mirroring the White House’s initiative to crack down on junk fees in a few key marketplaces.”

A main point of the legislative efforts, said Robert Herrell, executive director of the Consumer Federation of California, is that “We need to let people know up front what they’ll pay.”.

Pinpointing the total of how much people pay each day or year is tough. “It’s very difficult to estimate the total amount that Americans pay in junk fees, because they occur in nearly every consumer-facing industry, but it is at least tens of billions of dollars,” Witte said.

Herrell maintained that often, people are too susceptible to the “five click syndrome.” As a consumer chooses a ticket, a flight, a room, and so on, they keep clicking to get to the finish line as the provider offers new windows that describe — and perhaps offer new fees — for other services.

As the consumers reach the last clicks, Herrell said, they can learn the provider is adding additional fees. By then, he said, “they’re committed” and unlikely to drop their purchase.

Biden wants action

Biden triggered a new, important wave of momentum to make the fees more transparent, and possibly curb some of them, in February in his nationally televised State of the Union address.

“My administration is also taking on junk fees, those hidden surcharges too many companies use to make you pay more,” he declared.

That helped fuel new initiatives in California. Attorney General Rob Bonta, Sens. Bill Dodd, D-Napa, and Nancy Skinner, D-Berkeley, are proposing legislation that would require the advertised price of a product or service include all fees other than taxes.

“Californians are fed up with being bombarded by junk fees that, more and more, are making it unaffordable to attend a concert, go to a sporting event, take a vacation, or stay at a hotel,” Skinner said. The Senate Judiciary Committee plans a hearing on the bill April 25.

Herrell’s group is pushing six bills in the state legislature that would help consumers understand different types of fees.

In Washington, Congress’ Junk Fee Prevention Act, a sweeping effort to deal with different charges, has Biden’s support.

Should lawmakers act on fees?

There is skepticism in Washington about whether the government should be getting involved in all this.

Sen. John Kennedy, D-Louisiana, is a member of the Senate Judiciary Committee. In January it held a hearing after Taylor Swift fans had enormous trouble getting tickets to her concerts.. Frustration over fees added to the base ticket price came up during the hearing.

Later, Kennedy had some ideas for reform, but legislation was not one of them. “You can’t legislate common sense and you can’t legislate a requirement that people do the right thing,” he said.

Biden continues to push. In March, the White House convened a seminar in Washington that featured White House officials and lawmakers from around the country, including California State Sen. Caroline Menjivar, D-Van Nuys. She spoke about fees renters often pay.

“Oftentimes when we think about these hidden fees we don’t think about how they’re embedded in rental housing,” she said.

Chris Airola, president of the California Landlord Association, said any controversy over fee disclosure is “mostly much ado about nothing since virtually all landlords and all management companies already post rent, deposit, application fees, utility fees etc. in their ads.”

Democrats are cautiously optimistic they can get fee disclosure legislation through Congress.

“Right now we’re in the midst of more hype kind of issues, but this has legs,” said Sen. Richard Blumenthal, D-Conn., one of the main sponsors of the Senate legislation. “I think this will resonate and rise again.”

Where are fees hiding?

Here’s a look at what’s happening with other attempts at fee reform at the state and federal levels:

▪ Airlines. One of the biggest complaints among consumer advocates involves the seeming barrage of add-ons many airlines want to charge passengers.

The Federal Aviation Administration is considering a rule that would say any fees “charged to seat a young child with an accompanying adult, change or cancel a flight, or travel with a first checked bag, a second checked bag, or a carry-on bag would be disclosed” for any domestic flight.

At Airlines for America, the industry trade group, spokeswoman Marli Collier said “offer transparency to consumers from first search to touchdown.”

The airlines “provide details regarding the breakdown of airfares on their websites, providing consumers clarity regarding the total cost of a ticket. This includes transparency regarding taxes and government fees on airline tickets, which account for more than 20% of many domestic one-stop, roundtrip tickets,” Collier said. Options, she said, are “stated at the time of purchase.”

Member airlines —Alaska, American, Delta, Hawaiian, JetBlue, Southwest and United — “already work to accommodate customers who are traveling together, especially those traveling with children, and will continue to do so,” she added.

▪ Cable services. The Biden administration wants to eliminate what he calls excessive fees charged for early termination of cable service. The White House said cable providers “often charge people when they’re most vulnerable, people who are forced to move because of a job loss or other financial downturn.”

Federal Communications Commission Chair Jessica Rosenworcel on March 22 proposed a rule that would require cable companies to state the total cost of video programming service “clearly and prominently, including broadcast retransmission consent, regional sports programming, and other programming-related fees”

The cost would have to be displayed as a prominent single line on a bill or in promotional material.

Brian Dietz, spokesman for NCTA–the Internet & Television Association, said that “while we have yet to see the details, our members operate in a highly competitive video marketplace and are committed to communicating clearly and transparently with relevant information about the video options available to them.”

▪ Hotels and resorts. In California, they’d be barred from “advertising or offering a room rate that does not include all fees required to book or reserve the room,” according to legislation sponsored by Assemblyman Marc Berman, D-Menlo Park.

Too often, he said, “you go to a website, enter the dates of your stay, pick a room for a certain price, enter your personal information, and then at the last minute the hotel or travel website tacks on resort or cleaning fees.”

While the legislation does not prohibit such fees, it does require lodging establishments to tell the consumer about them before booking.

Pete Hillan, spokesman for the California Hotel and Lodging Association, said “Resort fees no longer are common practice, with only about seven percent of California hotels currently using them. These, typically, are properties that have far more available amenities than other lodging facilities.”

A small number of the state’s hotels have resort fees and “fully disclose to guests the charges up front,” in line with Federal Trade Commission guidance, he said.

▪ Tickets. Ticket sellers in California will have to disclose all prices as well as precisely where seats are located and refund policies under a proposal by Assemblywoman Laura Friedman, D-Glendale. She said she’s aiming to end the practice of what she called “bait and surcharge.”

In Washington, Biden is calling on Congress to require all fees to be disclosed as part of the ticket price and to disclose the practice of holding back tickets that reduce the available supply.

The Senate Judiciary Committee’s Kennedy said the transparency issue could be eased if the artists got together and demanded reform.

“They complain about it but they allow it to happen. Not all the artists have the market power but many of them do, to say stop screwing my fans,” Kennedy said.

And, he said, “we ought to be smart enough to figure out a way to limit the transferability of those tickets. The outrageous prices are being paid because of scalping.”

▪ Other consumer protection. Under the California bill sponsored by Menjivar, landlords will have to “clearly state to potential renters what their up-front and monthly payments will be.”

“We’ve seen an explosion of add-on fees. It’s gotten out of control,” said Herell of rental charges. One example: Someone pays $50 to $75 to apply for a unit. Often, though, they must submit applications for several units, and pay the same fee over and over. Why not, said Herrell, pay one fee and have landlords use the same information?

But Airola, president of the landlord association, said fees are already clearly disclosed. ”It’s to the landlord’s advantage to post these numbers,” he said. Airola called the legislation an effort from “just another senator trying to look like a hero.”

The California consumer protection package also includes car rentals. A rental car company would be required to advertise or quote a rate that included the entire eventual charge, including taxes and any fees. The legislation is sponsored by Assemblyman Tina McKinnor, D-Inglewood.

A lot of tinkering with all this is likely, but supporters are hopeful new protections will emerge.

After all, with the push from the White House, said Herrell, “the window is open.”