Senate Banking Committee members today painted very different pictures of so-called “junk fees,” with some committee Democrats claiming the fees drive up prices while Republicans argued the fees were a convenient scapegoat to distract from Biden administration policies that have failed to curb inflation. During a hearing on fees in the financial services and rental housing sectors, committee Chairman Sherrod Brown (D-Ohio) accused businesses of using “surprise” fees to increase their profits at the expense of consumers.
“Without junk fees, consumers would keep more of their hard-earned money, and they would be able to better find the lowest price—which is how you promote real competition that brings down costs,” Brown said.
Ranking Member Tim Scott (R-S.C.) countered that the focus on fees was to distract from what he said was the Biden administration’s failure to tackle inflation. “The White House has claimed that a ‘junk fee’ is a charge designed either to confuse or deceive consumers,” Scott said. “Ironically enough, two of the recent targets within the committee’s jurisdiction—overdraft and credit card late fees—are two of the most highly regulated and transparent business practices in any industry. The credit card late fees and overdraft fees we’re discussing here today are in fact not illegal and are heavily regulated.”
ABA: Misguided campaign against fees will harm consumers
Ahead of the hearing on so-called “junk fees,” American Bankers Association President and CEO Rob Nichols criticized the administration for engaging in a political campaign that he said was designed to denigrate legitimate, transparent and well-disclosed fees for banking services.
The Senate hearing “clearly seeks to perpetuate the myth that there are junk fees in financial services,” Nichols said. “There may be junk fees in the economy, but they are not in banking. National surveys have consistently shown that consumers value the wide range of banking services available to them today and acknowledge that banks are transparent about the cost of those services, most of which must be disclosed under existing federal law. The irony is that this misguided political campaign will ultimately harm, rather than help, the very consumers supporters claim to want to protect.”
ABA also submitted a statement to the committee emphasizing that the U.S. market for financial services is fiercely competitive, particularly when compared with financial services markets in other advanced economies and in other consumer-facing industries. “This ultra-competitive environment benefits consumers, who are free to choose from a wide variety of high-quality, convenient, innovative and competitively priced products and services.”
