Ticketmaster and Airbnb Help White House Effort to End Hidden Fees

President Joe Biden's campaign to eliminate "junk fees" -- those hidden surcharges businesses tack on to purchases -- has gained newfound support after Live Nation, Airbnb and other companies announced that they will make all of their service fees transparent to customers. 

Biden laid out his plan for eliminating junk fees in his 2023 State of the Union address. The first notable reaction to Biden's campaign was from airlines that eliminated fees for family seating.

The biggest overall change from the junk-fee campaign could come for credit cards and their dangerous late-fees trap. According to the Consumer Finance Protection Bureau, credit card late fees cost Americans $12 billion in 2020.

Read more: Best Credit Cards With No Annual Fee

Learn all about "junk fees" and how the White House proposes to regulate them to put money back in the pockets of Americans.

For more money tips, check out the biggest credit card mistakes and learn if debt consolidation will hurt your credit score.

What are 'junk fees'?

"Junk fees" is a colloquial term referring to payments for services that are notably expensive and often unexpected, such as hidden charges for a hotel room or concert.

The term formerly was confined to the real estate industry, referring to extra costs that arise during home sales. A May 1996 article in the Chicago Sun-Times describes several closing-cost "junk fees," such as a "document processing fee," "underwriting fee," and "escrow service fee."

With junk fees, the universal theme is that you're paying much more than what it actually costs to provide the service.

In his State of the Union speech, Biden specifically called out certain junk fees:

• Hidden airfare costs
• Bank overdraft fees
• Credit card late fees
• Resort fees
• Internet and mobile phone switching fees
• Service fees for concerts and sporting events

What is the White House planning to do about 'junk fees?'

In the major address, Biden said that "Americans are tired of being played for suckers." He also urged Congress to "pass the Junk Fee Prevention Act so companies stop ripping us off."

Here are the key elements of the proposed plan from the White House:

• Airlines must show the full price of tickets upfront
• Flight cancellations and delays get refunds
• Prohibit fees for families sitting together on airplanes
• Cut credit card late fees by 75%
• Reduce or eliminate switching fees for mobile phones and internet
• Cap service fees for concerts and sporting events

The Junk Fee Protection Act hasn't been introduced in Congress yet, however. Biden has provided a public outline for the bill, but the legislation itself has not been formally entered into the record.

What are Ticketmaster and Airbnb doing about hidden service fees?

On June 15, President Biden recognized several companies that are taking steps to be more transparent about their service fees. These businesses include Airbnb, SeatGeek, TickPick, DICE and Live Nation, the company that owns Ticketmaster. 

Although Biden's State of the Union speech asked for a cap on service fees for concerts and sporting events, the companies recognized by Biden don't go nearly that far yet. Instead, the businesses have agreed to adopt "all-in upfront pricing," meaning all charges will be displayed and explained before a customer makes a purchase.

Ticketmaster plans to make the upfront pricing changes by September for all "Live Nation-owned venues and festivals across the country." Airbnb already made a change in Dec. 2022 to display fee-inclusive pricing for all of its customers. 

Biden says that the changes in transparency are part of the "first step towards addressing junk fees in the economy." He continues to encourage Congress to "pass legislation that mandates up-front all-in pricing for all ticket sellers." 

How does the Consumer Finance Protection Bureau want to change the rules for credit card late fees?

Another plan for ending junk fees comes from the Consumer Financial Protection Bureau, and it's in regard to credit cards. On Feb. 1, six days before the State of the Union, the CFPB released its plan to "rein in excessive credit card fees."

The CFPB notes that credit card fees for late payments can start as high as $30 for an initial late payment and go up to $41 for subsequent late payments. The agency now recommends lowering the "immunity provision" for late charges to $8, the limit that credit card companies could charge without further explanation and documentation.

That's why Biden said, "We're cutting credit card late fees by 75%, from $30 to $8."

Most importantly, the CFPB's proposed rules would eliminate the yearly inflation adjustment for fees. That $8 limit would not be adjusted based on inflation next year.

The new CFPB rules would also prohibit any credit card late fees totaling more than 25% of the required minimum payment. Currently, they can be as high as 100%.

Why is the Consumer Finance Protection Bureau considering rule changes for credit card late fees?

The Consumer Financial Protection Bureau sets and enforces the rules of federal consumer financial laws. CFPB Director Rohit Chopra said credit card companies are exploiting a "regulatory loophole that has allowed them to escape scrutiny for charging an otherwise illegal junk fee."

The agency contends that the cost-of-living increases that have pushed late fees up above $30 violate the spirit of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), which requires such fees to be "reasonable and proportional." The new rules are aimed to bring credit card late fees back in accordance with those guidelines. 

The proposed rule changes from the CFPB were open to public comment until May 3, 2023. The agency will now review the public comments to the rule change and make its final decision this summer.

For more money tips, learn about the benefits of converting to a Roth IRA or how to rent your car online.