The Washington Post reports today on the proliferation of junk fees:
The fees together may cost Americans at least $64 billion annually, according to a rough White House estimate.
This may sound like a lot, but it actually amounts to only 0.34% of all consumer spending.
However, that understates things because there are huge swaths of life that have no fees at all: grocery shopping, gasoline, medical care, and so forth. Junk fees seem to be truly visible in three big sectors: banking, airlines, and ticket brokers.
Airlines earn about 10% of their revenue from "ancillary services." Ticket vendors add an average of 27% in "convenience fees." The banking industry charges total fees equal to about 13% of operating revenue.
The Biden administration's approach has been to cap fees in some cases (credit card late fees, for example) and to demand transparency in others (like airline baggage fees). Or, rather, their approach is to try to do this, since they've been far from universally successful so far. As the Post article documents, vendors are fighting fee restrictions like crazed weasels, promising (at the least) to tie this stuff up in court for years. Don't expect a lot of relief anytime soon.
"However, that understates things because there are huge swaths of life that have no fees at all: [...] medical care, and so forth"
I'm sorry, but what?!
I agree with architectonic: medical care shouldn't qualify for that list. Facility fees, anesthesiologists, aspirin, bandaids, and on and on.
That's just plain ol' higher prices, they have no need of extra fees.
Honestly, I don't wish to advocate mass roundups, so maybe we could just impose a statutory restriction on "business degrees" or something?
Rent. Utilities. Paying bills online sometimes has "convenience fees" attached that have nothing to do with the charge for handling a credit card. Instead of just including whatever the handling cost is in the amount of rent, we literally have to choose from paying: (a) $2 convenience charge for paying by app *plus* $2.49 from the app handler itself, (b) $5 for paying by check that we'd have to pay to mail to them, or (c) $25 for paying by cash. Instead of just eating these costs out of the price of rent, they're added on - and sure, they're not huge, but they could just as easily by higher. For example, maybe they'd charge 3% for paying online (which would be over $10) or $50 for paying by cash or check simply because their staff had to do manual labor, gods forbid.
At her last place, my partner had to pay $4.99 utility handling fees in a large multifamily building. The only reason for these fees is to hide the true price and pad the bottom lines of companies. There's a reason they need to be illegal.
Fees for paying bills or invoices by ACH transfer.
Paying extra at the pump for paying by card instead of cash (although it's advertised in the reverse, as a cash discount - but at least the fee is included in the price in this case).
Dining out - places charge credit card fees or "wage fees" instead of simply raising prices.
The list goes on, and on, and on, and on... it's not universal for any of these things, but it's still pervasive and harmful.
Wow! I don't encounter any of these particular fees here in Albuquerque! And the State charges no fees for ACH transfers, although they will for paying your taxes with a credit card.
Interestingly, if you do your vehicle renewal online, you get a discount that exceeds the credit card fee the state charges. Win--win!
A fee that can be avoided isn't generally junk - paying for the credit-card transaction fee when you could send a check or pay in cash, for instance.
But charging that when you can't, ever, would be a junk fee. It should just be part of the price.
Alright, I'll agree to that - simple definitions are good. If you can avoid the fee through reasonable measures, it's not junk.
Hotels are another huge offender with the infamous "resort fee". Just raise the frickin price already. The ability to hide the true cost is infuriating and exactly the sort of things the Consumer Financial Protection Bureau should take on.
SEVERELY OFF TOPIC********
RIP Rosalyn Carter who died just a short time ago.
Tireless worker for those with mental health issues
One very "under appreciated" first ladies. (except by her husband)
I would add all the junk fees on a land line bill. (before anyone starts sneering about my still having a land line, note that I live out of town near the edge of cell phone reception and that my only internet option is a DSL line which I can get bundled with a land line)
"It actually amounts to only 0.34% of all consumer spending" is today's installment of "That Thing You're Mad at? It's Not a Big Deal to Me, Kevin Drum", granted, a more minor chapter than previous ones.
They could at least force junk fee purveyors to show the "extra" amount before a buyer makes the purchase. Just stayed in a hotel for two nights. Rate looked good when I booked it online. Got my final bill today with two $20 per night "resort fee" items. Not a biggee, and wouldn't have changed my plans to stay there--but it would have been nice if they just included it in the quoted price online.
I second the RIP note above about the passing of Rosalyn Carter.
And Jimmy just turned 99!
On topic: I was recently surprised (as an infrequent traveler) that after I paid for plane tickets to Europe and back, I had to go online again and pay for seats to sit in on the flights! I'm old enough to remember when a plane ticket included the seat.
BTW, it was a British Airways Airbus and the seats were so close together I could barely move to shift my legs. The next day after I returned I had a pain in my leg (pretty near the idomatic location for such a pain) that lasted 5 days. A similar event occurred to my other leg a few years ago on a long flight from Sao Paulo to Texas. At least that seat came with the ticket.
You would think that if seats cost extra, they could give passengers another 2 inches of wiggle room. Whoever came up with the current regime is definitely going where Dante toured, and it won't be Virgil leading the way.
What would they do if you didn't pay for seats?
My favorite was the cable companies who said they couldn't list the fees in their ads because they couldn't keep track of them. Fortunately under Biden the response was, "if you know to charge the fees then you how to track them".
Meanwhile in every other country I've been to, goods and services cost the posted price.