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.