How ‘Junk’ Fees Secretly Invaded The U.S. Economy (And How Pres. Biden Wants To Stop Them)

Americans are collectively spending nearly $65 billion on sneaky fees, according to the White House. “It really seems like companies have become addicted to junk fees,” Lina Khan, chair of the Federal Trade Commission, told CNBC. Junk fees are making companies billions of dollars richer.

“I think part of the reason that a lot of companies are doing this is that investors and shareholders really like it. It’s another way to pull in more revenue without really competing,” Rohit Chopra, director of the Consumer Financial Protection Bureau, told CNBC.

CNBC sorted some of the biggest junk fee offenders into three separate buckets.

Bucket No. 1: Banking fees

This includes overdraft charges, late fees, account maintenance fees or fees to pay a bill, according to the CFPB.

“We estimate that the credit card industry levies about $120 billion in fees and interest each year, and that number might be even going up given the rise in interest rates,” Chopra told CNBC.

The CFPB also estimates that fees worth $23.6 billion were charged by card issuers in 2019, and $14 billion of that total came from late fees alone.

Bucket No. 2: Fun fees

These are the extra costs consumers may encounter when they’re hopefully doing something fun, like buying a concert ticket, booking a flight or reserving a hotel room.

“I stayed at a hotel that I quickly booked. I asked, ‘Are there any extra fees?’ They said no ...The hotel then slid the bill under the door to a room on the last night and we were charged a $40 a night amenity fee,” Lauren Wolfe, founder of Kill Resort Fees, told CNBC. “But even crazier, [there was] a $1 mandatory charity donation. I looked up the charity. It’s a charity that goes back to the hotel.”

For example, resort fees may be tacked on for your use of amenities during your stay, even if you’re not using the gym or the pool.

“Junk hotel fees and these ancillary fees are bringing in about $3 billion a year for the hotel industry,” Wolfe told CNBC, citing a Consumer Reports estimate.

Bucket No. 3: Home fees

Buying a house and having a car can result in surprise charges to American households.

This includes closing costs and other fees that arise when buying a home, including fees for document preparation or title insurance.

There are also cable and internet junk fees.

“If you look at the fine print, [it may say] to ‘maintain our high-speed fiber network,’” Jonathan Schwantes, senior policy counsel at Consumers Reports, told CNBC. ”[So,] you have to charge me an extra seven bucks for the internet infrastructure fee to maintain your high-speed fiber network? But, what about the $75 I’ve already paid you?”

Watch the video above to learn more about where junk fees hide, details of proposed changes, where policy may fall short and whether increased regulatory oversight may be enough to squash junk fees once and for all.

Chapters:
0:00 Introduction
1:26 Defining ‘junk’ fees
5:34 Squashing fees
7:52 Policy problems
10:02 The future of fees

Produced, Shot and Edited by: Andrea Miller
Additional Camera by: Carlos Waters, David Soltis
Animation: Mallory Brangan
Supervising Producer: Lindsey Jacobson
Additional Footage: Getty Images

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How ‘Junk’ Fees Secretly Invaded The U.S. Economy (And How Pres. Biden Wants To Stop Them)

[kevmmmmmmmmmmm]

They forgot to mention the fees consumers pay for renting an apartment. Why do I need to pay a convenience fee to pay my rent online and why wasn't it mentioned in the listing price?

[berto]

A Bank Maintenance Fee is a scam when you consider that the banks take our money and then lend it out to make more money.

[anthonygomez-ledezma]

Ticketmaster be like:

Face value: $50
Venue fee: $25.34
Access fee: $20.87
Paperless fee: $15.11
Seat fee: $10
Fee fee: $8.80
Fee Fi Fo Fum fee: $6.01
Cuz we can fee: $0.98
Wtf are you gonna do about it fee: $100

[roshelltannen]

I can't help but laugh at my girl forced to donate a dollar to the hotel's "charity." 😂😂😂😂 These corporations have gotten used to openly stealing.

[shinnam]

Haven't lived in the US in +25 years, I am always suprised by all the hidden fees. I always book my hotels and car rentals from my adopted country, Sweden. Consumer protection laws require companies to state all fees and give the total price. When I bought an apartment, I didn't have any closing costs nor did I have to pay any deposits to the homeowners association. Part of the reason I don't go to the US very often, always feel like I am being ripped off.

[jerrik-]

Just give me a "Advertised price is total price" law, and make it include all fees and taxes, and fine violators per violation so they stack up. The computer age of finance is a half century old, there is not one excuse for companies to not be able to tell us what their product or service costs up front.

[unsolvedintexas]

The worst fee of all is the fee to pay for the fees on the bill

[TimothyNeu]

I hate convenience fees. Like WHY AM I BEING CHARGED A FEE IF IT MAKES IT EASIER TO PAY THE BILL THAT'S ALREADY FILLED WITH FEES?!?!

[katerinesantana]

We should also talk about all the junk fees universities and colleges charge students.

[james.atkins]

My greatest concern is how to recover from all these economic and global troubles and stay afloat especially with the political power tussle going on in US.

[rileelake]

My favorite is when I have to pay a fee to pay my rent online, and there are no other ways to pay rent

[TheGamingCanadian]

The fact CNBC called out they're own cable company. Respect!

[vladrazym]

I have never understood all of this hidden fees in US: not ordered services, tips, not mentioning TAX in prices and etc. Here in Europe we have much less unexpected payments in our bills

[davidstufflebean]

They forgot to add tipping. They want you to tip them, and everyone expects a 25-30% tip. My mom was a waitress and lived off tips I get it but it is crazy how out of hand the tipping culture is. Cashiers have a tip jar, the hostess has a tip jar, the server wants a tip, the girl at 7/11 has a tip jar on the counter, the person at Starbucks has a tip jar, everyone has a tip jar or wants a tip, hell the people getting an item they have locked up and I can't access wants a tip.

[marcusmoonstein]

I live in South Africa and here it's a legal requirement that all fees, service charges, taxes, penalties and interest charges must be clearly laid out in the initial contract. Basically there's no such thing as a hidden cost in our contracts.

[Reezy]

An account maintenance fee is the dumbest thing I’ve ever heard of.

[LChiuy]

Door Dash fees... you have the sales tax, tips, emergency response fee, county fee, long-distance fee, service fee, delivery fee, regulatory fee, and there is even a small order fee. Your $12 suddenly becomes $30. And don't forget that some restaurant's food cost on the menu is higher instead if you were to go into the restaurant.

[axeldt]

it feels like americans are just skimmed out of money to keep a small group of companies and people insanely rich. such a bad place to try to start a family and grow as a person imo

[dennisthegreatest]

I would like to commend CNBC for reporting on a topic that is detrimental towards its parent company. This is the kind of open and fair reporting that we need. Awesome job.

[luisotaviomc]

As not an American and someone who doesn’t live in the US I get shocked on how many junk fees come up in all sort of businesses.
This makes everything lose credibility. Mandatory gratuity fees in big parties in restaurants (no tip when that happens). Resort fees. It’s a hotel for gods sake!! When renting a car, booking tickets…. It’s a joke.