[ad_1]
President Joe Biden will announce efforts Thursday to crack down on “junk fees” — hidden or obscure fees that surprise consumers when they’re buying everything from airline and concert tickets to booking hotels and Airbnb rentals.
Executives from Live Nation
LYV,
Ticketmaster, Seatgeek , Airbnb
ABNB,
and other companies will join Biden at the White House to discuss steps they have taken to make fees — and the booking process — more transparent.
“This is a multi-pronged initiative from the Biden administration,” Liz Zelnick, director of economic security and corporate power at Accountable.US, a government watchdog, told MarketWatch.
“Instead of forcing consumers to read the fine print on every purchase they make, the question is how we can crack down on these companies,” she said. “Until corporate America is doing this voluntarily, it’s really going to take regulation to force companies to change their practices.”
“‘Instead of forcing consumers to read the fine print on every purchase they make, the question is how we can crack down on these companies.’”
Live Nation, the parent company of Ticketmaster, pledged Thursday to start showing consumers all of the fees associated with a ticket purchase at the start of the buying process, with a new “all-in pricing experience” starting in September.
That still won’t be enough to fully protect customers, who often face a bundle of extra charges right when they were checking out after thinking they would pay a lower up-front sticker price for live events, said Morgan Harper, director of policy and advocacy at the American Economic Liberties Project. Though all-in pricing is a positive for consumers, especially when combined with efforts from federal regulators to crack down on junk fees overall, the companies still hold a lot of power over their customers, she said.
“When we’re looking at the live events space, that is an anti-competitive market where Live Nation, Ticketmaster, dominate,” Harper told MarketWatch.
“Transparency is not going to solve the problem,” she added.
A spokeswoman for Live Nation, the entertainment company that owns and operates live venues and Ticketmaster, said fees collected by Ticketmaster go toward operating costs for its technology and employees, in addition to expenses for venues, insurance, suppliers, and fees for artists, and more. She said artists and their teams keep the majority of ticket-sale revenues.
“Consumers also get hit with fees when they rent apartments, overdraw their checking accounts, purchase cable services, or fall behind on credit-card payments.”
Jack Groetzinger, co-founder and CEO of SeatGeek, said in a statement issued to MarketWatch: “We have been promoters of increased price transparency in ticketing since we started SeatGeek. Today’s White House announcement is an encouraging step forward, but there is still more to be done.
A spokesperson for Airbnb said it introduced a new “total price display tool” last December that allows U.S. consumers to see all fees before taxes.
Buying concert tickets is just one of many transactions where junk fees pop up. Consumers also get hit with fees when they rent apartments, overdraw their checking accounts, purchase cable services, or fall behind on credit-card payments.
While these fees are typically small, they can quickly become a financial burden, especially for lower-income households. “These fees fall on low-wage workers and low-income families,” Zelnick said. “If it’s a $30 fee on a $7 gallon of milk, there needs to be more regulation. Some people just can’t avoid it because they are struggling to make ends meet on a weekly basis.”
Zelnick said a proposal by the Consumer Financial Protection Bureau to cap credit-card late fees at $8 would save American families $9 billion every year. Steps taken by banks to reduce these fees have already helped save consumers $4.25 billion from 2019 to 2022.
Though banks including Bank of America
BAC,
and Wells Fargo
WFC,
have eliminated or reduced overdraft fees amid pressure from the CFPB, banks and credit unions amassed an estimated $9.9 billion in fees from overdrafts and nonsufficient funds last year, down 6% from $10.6 billion in the prior year, the Financial Health Network said earlier this month based on its own survey data and other third-party projections.
How to avoid junk fees
So how can you avoid junk fees? The U.S. PIRG Education Fund, a nonprofit organization, recently outlined a series of steps consumers can take before making purchases, so they can — in theory — avoid any last-minute surprises.
“Read everything before you pay, sign, initial or agree,” Teresa Murray, consumer watchdog at U.S. PIRG Education Fund, wrote in an online guide. “Don’t sign or agree to anything that you didn’t actually read. If there’s something you don’t understand, ask what the fee is for.”
“Getting a clarification in writing (or via email) is better,” she added. “Don’t be afraid to walk away or from the transaction if you don’t like the extra fees. Pay by credit card. Never by debit card. Undisclosed fees are easier to dispute with a credit card.”
“Note the names of anyone you talk with,” Murray wrote. “Put a note in your calendar or send yourself an email of the day and time of day when you talked with the person. It helps you fight a fee if you can document that you talked with this person on this day and were told this.”
“Keep copies of all receipts, agreements, emails, texts,” she added. “If you’re hit with an undisclosed or misleading fee, complain to the company and file a complaint with your state attorney general’s office of consumer protection or the Federal Trade Commission.”
But it can be tremendously difficult for consumers to navigate their way around fees that can be hidden, highly inflated, and designed to arrive as a last-minute surprise during the check-out process, said Chuck Bell, programs director for advocacy at Consumer Reports.
In markets where junk fees are a component, it’s a lot of work for customers to be able to price shop and compare choices when they’re not provided all the information until they’re nearly done shopping.
Consumer Reports conducted a survey earlier this year that found 49% of respondents had faced fees in the past two years when purchasing telecommunications services like cable, 45% had faced similar fees when shopping for live events tickets, while 35% came across such fees in booking air travel, too.
Economists on the Federal Trade Commission website have explained how consumers feel under pressure to make purchases even after they have seen these 11th-hour fees, Bell said.
Their thinking, Bell said, goes something like this: “Now that I’ve invested all this time, I’m going to agree to the fee because there seems to be no way to avoid it, and otherwise the time I’ve spent is lost, and it’s a sunk cost, and my daughter will be disappointed if I don’t take her to Taylor Swift.’”
[ad_2]
Source link
