President Biden went to war against hotel resort fees and other consumer fees this past fall. He directed federal agencies to find a way to clamp down on or ban them.
Now, however, the CFPB is prepared to limit credit card late fees to $8 but as for the rest of junk fees the President criticized, agencies will do nothing more than continue to “prioritize them” and he’s instead calling on Congress to act. That’s akin to doing nothing, but is also potentially better for the President politically.
There are (4) categories of fees the President is calling out.
- Online ticket fees: service fees for buying an event ticket, which raise the cost compared to the headline price of the ticket. Raising the total cost of the ticket and compensating the ticket broker on the back end would mean more transparent pricing, not lower pricing.
- Family seating fees: Suggesting parents shouldn’t have to pay more to sit with their children on a flight. The DOT plans to require clearer disclosure of such seat assignment costs which represent less than one half of one percent of DOT consumer complaints (and often when families are separated it’s during irregular operations which won’t be addressed here).
- Early termination fees for TV, phone and internet service. That may limit the availability of upfront discounted plans, since it leads to greater consumer churn. When the up front value of a customer is lower, it doesn’t make sense for a business to invest as much to acquire a customer.
- Resort and destination fees: requiring these be included in the advertised cost of the room, and of course since these are not optional in any way they are indeed part of the price. Not including them is fraudulent and deceptive. In addition resort fees make it harder to comparison shop. They aren’t generally shown when shopping for a rate, each of the properties you might consider appears with a price that is less than the full price (and frequently not even by the same amount).
At a minimum government could start by removing incentives that encourage resort fees in the first place (differential treatment of hotel room rate versus add-on fee taxes at the state and local level).
Much major policymaking has happened through direct federal agency action over the past several years. Nearly a decade ago President Obama declared “I’ve got a pen and I’ve got a phone.” Congress largely stopped legislating (though continued appropriating to some extent), and so Presidents have acted alone, by stretching the meaning of agency authorizing statutes and at times in contravention of the Supreme Court’s ‘major questions doctrine’.
However President Biden didn’t take the path followed with the employer vaccine mandate, CDC eviction moratorium, or student loan forgiveness. He either couldn’t do this on his own through a regulatory agency, or has chosen not to. He’s calling on Congress to act, which is different than acting.
- He prefers this as a middle class voter issue than as a policy that actually happens
- It’s going to be very difficult to get any of the President’s desired policies passed through a Republican-controlled House and with a razor-thin majority in a Senate that often requires 60 votes for action.
- By ‘calling for legislation to pass’ Biden is effectively saying “I am signaling support but nothing will happen, which is good because I can tar my opponents as against middle class consumers who vote.”
- While kicking the issue to Congress opens up corporate checkbooks to provide campaign cash, with affected industries lobbying against action.
By calling on Congress to act, Biden is declaring that no action will be taken. Campaign cash will be raised in Congress, and the President’s party can grandstand on the issue. And they’re not even touching the scammiest fees in travel.
(HT: @crucker)
Your arguments are sound although your headline makes it look like this is somehow Biden’s fault. That brings to mind a statement by JFK about how he didn’t realize the limitations of the office of President until he was elected into it himself. If Biden had the power to fix these problems without congress, he’d do so.
Geeze brother, you seem upset that Biden isn’t legislating-by-regulating.
I seem to recall you trumpeting the evils of government regulation in the past. Often. Loudly.
Or is it that you think this should be regulated? And it’s ok to crow about regulations you don’t like?
In any case, “major questions” it may be. You see, the current Supreme Court is hell bent on handcuffing the President. Biden know this. He knows if Congress passes a law outlawing the things you mention, SCOTUS can do little. He knows what he is promoting is popular with the people. He knows Congressional Republicans will bend over backwards to do whatever their major donors (airlines, hotel chains, Ticketmaster) ask of them.
Biden isn’t the sharpest crayon in the drawer, but he is politically savvy. And with the Republicans holding just the slimmest majority in the house, maybe he thinks he can peel off 8 Republicans to support a popular bill that will give Biden another “Bipartisan victory”.
Also curious that you mention Obama’s Executive Pen. Trump signed 55 Executive Orders a year as President. Obama signed 35 a year. That the fewest EOs per year of any president since Grover Cleveland.
Anyhow, let’s flag this post for the next discussion about Executive Overreach.
Peace and Love.
If he can cap credit card late fees at $8 that will simply mean a slightly higher interest rate for those that carry a balance, other fees will be increased or benefits will be cut. He really doesn’t seem to understand economics that this is just part of the revenue generated by the credit card companies and if one revenue stream is cut then others will be changed to ensure the overall profit and margin aren’t adversely impacted. Like when swipe fees on debit cards were cut dramatically that basically ended cash back and other benefits on debit cards. Duh – you free lunch Joe.
Does anyone really believe that Biden will succeed in this? Resort fees into themselves is a viable cost that can be carried forward, resort fees for the sake of charging is another. At the end of the day lose one fee it will pop up somewhere else, make book on that.
@Clark D – I’m describing what Biden is doing here, and contrasting it with other actions, where do I write that I want him to act more unilaterally?
Good analysis about Republicans war on voters to enrich corporations. Time to throw those bums out.
I dunno, I think Spirit has some pretty scummy charges e.g. “online booking fee” (as if it costs more than burdening airport staff with ticketing) “boarding pass print fee” (who even uses paper BPs anymore) etc.
And while we are at it the worst fee is the “SF mandates” fee that is added to almost all restaurant bills in San Francisco. When you buy gas or groceries the merchant doesn’t add a surcharge for employee health care, and restaurants shouldn’t either.
It’s time for the voters to tell congress what to pass instead of lobbyists. Fee’s need to be regulated, or we need to stop allowing mergers and require competition. There is too much consolidation and too much collusion going on. The GOP says let competition dictate, then turns around and eliminates the competition. We either have healthy competition, or we have regulation. The GOP seems to want neither so their buddies can make more money.
Rental cars …. hello
How about “regulatory cost recovery fee” or other BS fees like ‘administrative fee’ that telcos love to add? Those are just add-ons that are 100% and should be part of the pricing. It’s just a sleezy method that companies use to use false advertising. “Hey look it’s only $25/month for [fill in the product name…] Plus taxes and fees.” And the fees can often be higher than the base cost. Look at the cable tv industry. Broadcast fee, admin fee, recovery fee…all bogus. I’m all in for someone at least attempting to do SOMETHING. Probably won’t go far, but it’s a start at least.
“at times in contravention of the Supreme Court’s ‘major questions doctrine’.”
This doctrine didn’t exist at all at SCOTUS until approx the year 2021. It was never mentioned during any other presidential administration, nor is it mentioned in any law or constitutional amendment. As far as I can tell, it was just completely made up by the Republican “umpires calling balls and strikes.” So Biden should tell SCOTUS “Fine, you’ve made your ruling, now go ahead and enforce it” whenever they raise Major Questions.