You are 100% free to disagree with this but this is the one of the better rebuttals I've seen to the proposed legislation (and better than I can state it). If you disagree with this I'm open to hearing why if you desire to share.
How The Biden Administration’s ‘Junk Fee’ Policies Will Hurt Consumers
In his State of the Union address last week, President Joe Biden touted his policies against “junk fees,” vowing to save Americans billions by eliminating hidden charges across a variety of industries. Two days earlier, his administration launched a new Strike Force on Unfair and Illegal Pricing, co-chaired by the Department of Justice and the Federal Trade Commission, to crack down on illegal corporate behavior that keeps prices high.
By interfering with companies’ pricing structures, the administration risks creating a host of unintended consequences that could lead to higher prices and reduced access to services for many Americans.
First, it’s important to understand that what the White House deems “junk fees” are often far from arbitrary charges. Many of these fees serve important economic functions, such as deterring risky behavior and enabling firms to offer lower upfront prices. Overdraft fees, for example, help banks manage the costs and risks associated with customers who overdraw their accounts. Banning or capping these fees could lead to higher minimum balance requirements or monthly fees, effectively locking out lower-income consumers from the banking system.
This is not mere speculation. As part of the Dodd-Frank Act of 2010, the Durbin Amendment capped interchange fees. Merchants saw reduced fees on credit card transactions, but banks responded by cutting back on free services, including free checking accounts. The result was an increase in the unbanked population, by as many as one million consumers, with millions more becoming underbanked. Many of these were low-income consumers priced out of traditional banking services.
Similarly, early termination fees for services like cable and internet allow companies to offer lower installation and hardware prices, making these services more accessible to budget-conscious customers. Eliminating these fees could result in higher upfront costs, reducing broadband access at a time when policymakers in Washington are trying to expand it.
One recent example of the Biden Administration’s junk fees policies is the Consumer Financial Protection Bureau’s rule to cap credit card late fees at $8, down from the current average of $32. The CFPB claims this will save consumers $10 billion annually, but the reality is more complex. Credit card companies rely on late fees to offset the risks and costs associated with extending credit to borrowers who may not pay their bills on time. By capping these fees, the CFPB is effectively forcing credit card issuers to find other ways to mitigate their risk, such as tightening lending standards, reducing credit limits, or increasing interest rates. This could lead to reduced access to credit for many Americans, particularly those with lower incomes or less-than-perfect credit histories.
The lower fees also won’t help those who always pay their bills on time, which is about 82 % of card holders. The CFPB even admits in the final rule notice, “cardholders who never pay late will not benefit from the reduction in late fees and could pay more for their account if maintenance fees in their market segment rise in response.”
This brings us to a crucial point: what the administration sees as market failures are often examples of the exact opposite: businesses taking action to address market imperfections and to price risk accordingly. Many aspects of human well-being, such as convenience, flexibility, and peace of mind, are not easily quantified or traded. Likewise, many aspects of business activity pose risks that are not easily insured against.
By segmenting markets and pricing various attributes of a product or service individually, companies can price attributes according to the specific value consumers place on them, as well as the specific risk the attributes expose a business to. By forcing businesses to price in terms of bundles of attributes, instead of individual components, consumers end up cross-subsidizing one another more and the end result is a less efficient marketplace.
Consider the airline industry, where the White House recently took aim at baggage fees and charges for family seating. By unbundling those services from the base ticket price, airlines can offer lower fares to price-sensitive travelers while still catering to those willing to pay for additional amenities. Airlines have been raising baggage fees in recent months to cover costs. Forcing airlines to include these services in the base ticket price will likely result in higher prices for everyone, reducing accessibility and ultimately, consumer welfare.
The administration’s efforts to dictate pricing models to companies threaten to undermine the very market mechanisms that drive efficiency and create value for customers. Instead of targeting companies pricing practices, policymakers should educate consumers about the benefits of segmented markets and differentiated pricing strategies.
https://www.forbes.com/sites/jamesb...unk-fees-will-hurt-consumers/?sh=19c6712e7711
