Stuck With Your Cable or Phone Provider Due to Early Termination Fees? The Biden Administration Wants to Help

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Why pay junk fees if we don’t have to? 

President Joe Biden has made no secret of his administration’s desire to promote competition in the U.S., thereby driving down the prices paid for consumer goods and services. To that end, the President’s Competition Council has announced actions designed to spur robust competition. As you’ll see, the White House is coming at the problem from several different directions.

Termination fees

Imagine that a start-up mobile phone carrier begins offering service in your area. The new company provides all the bells and whistles you need, but at half the price charged by your current carrier. You would like to make the leap. The problem is that your current mobile phone company has you locked into a contract, and buying your way out would cost hundreds of dollars.

This, in a nutshell, is the type of situation the Competition Council would like to eliminate. In essence, the big providers of cell service, cable TV, and internet hold customers financially hostage until they can afford to either buy out their contract or wait for it to end. If a newer, better competitor comes along, the consumer is stuck paying for a service they no longer want.

According to the White House, early termination fees are costly for consumers. Internet, cable TV, and cell service providers charge hefty fees when consumers are most vulnerable. For example, if someone is forced to move due to a job loss or other financial downturn, they may be slammed with hundreds of dollars in fees.

Eliminating such fees means companies must truly compete with one another on the basis of price and quality.

Over the past two years, other government agencies have gotten in on the battle against business practices that drain American bank accounts, too.

Credit card fees

The Consumer Financial Protection Bureau (CFPB) is proposing a rule that would slash excessive credit card late fees. The rule is expected to reduce the typical late fee from roughly $30 to $8. This may save consumers as much as $9 billion a year.

Mobile app barriers

According to the Department of Commerce’s National Telecommunications and Information Administration (NTIA), there are barriers to competition in the mobile app store ecosystem. Removing those barriers would give app developers of all sizes an opportunity to get their apps to market, giving consumers greater control over their devices.

Junk fees

The White House reports steady progress in the administration’s attempt to eliminate or limit junk fees. While Americans have come to consider hidden junk fees a part of life, the administration says that reducing or eliminating these fees would accomplish three things:

Make Americans more aware of the fees that are hidden in their bills.Potentially save households hundreds of dollars a month. This is money they can invest for the future, save, or put back into the economy.Encourage competition. Currently, companies dedicate time and money to finding increasingly sophisticated tools to disguise their true prices. That may not be an expense a start-up company can afford to cover.

Depositor fees

In October 2022, the CFPB issued guidance about two unfair junk fee practices.

Surprise overdraft fees. This includes fees charged when an account holder had enough money in their account to cover a debit charge at the time the bank authorized the debit.Hitting depositors with bad check fees. Let’s say you sell a sofa and accept a check for the purchase. If that check bounces, some banks will charge you as the depositor.

The CFPB let financial institutions know that these fees “likely violate the Consumer Financial Protection Act” and may lead to penalties.

Hidden airline fees

The Department of Transportation (DOT) proposed a rule that will require airlines and online booking services to reveal the full price of a plane ticket upfront. This includes baggage and any other fees tacked on.

In July 2022, the DOT issued a notice stating that children who are age 13 or younger are now to be seated next to an accompanying adult at no extra charge. At this time, airlines continue to charge a fee to guarantee that families sit together, but the DOT plans to launch a rule banning the practice. President Biden is calling on Congress to fast-track the ban.

Flight glitches

The DOT also published a list of what airlines should do when flights are canceled or delayed due to issues under the airline’s control. This has already led to nine airlines changing their policies to guarantee hotel coverage, and 10 airlines guaranteeing meal coverage.

Broadband ‘nutrition labels’

Effective next year, broadband providers will have to use “nutrition labels” similar to those used for food. These labels must convey key information to consumers in a way that is easy to understand, including price, speed, data allowance, and additional fees.

Expensive entertainment fees

When consumers want to attend a concert, sporting event, or other entertainment venues, they are often directed to an online ticket seller. Currently, many online ticket sellers impose massive service fees. These fees are not disclosed until the consumer is at check out. Junk fees — like processing, delivery, and facility — can make up to more than 50% of the cost of the ticket.

Few online ticket sellers have access to these tickets, meaning a lack of consumer options. For example, one company has exclusive partnerships with 80 of the top 100 arenas in the U.S. Without fear of competition, they can charge anything they want. The President is calling on Congress to prohibit this practice.

Surprise resort and destination fees

At the end of a lengthy online reservation process, consumers often learn that their hotel is going to cost much more than anticipated due to junk fees. These fees can run $50 or more per night. This is another junk fee President Biden is urging Congress to ban.

Consumers waste billions of dollars a year on junk fees. While the problem hasn’t yet been solved, it’s encouraging to know that the issue is being addressed.

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