Biden administration proposes rule to crack down on junk fees

President Joe Biden's administration has announced actions to further advance his agenda of promoting competition in the American economy. The President has called for Congress to pass a Junk Fee Prevention Act that cracks down on four types of junk fees that cost American consumers billions of dollars a year. These include :

Late fees that are protected by an expansive immunity provision are profited major credit card issuers, according to the CFPB. Credit card companies have relied on this provision to hike fees with inflation even if they face no additional collection costs. The proposed rule would help ensure that over-the- top late fee amounts are not illegal. The proposal could reduce late fees by as much as $9 billion per year, according to the estimates of the CFPB.

President Biden pointed out in his tweet that hidden junk fees that include additional charges while buying airline or concert tickets add up. My Administration is cracking down on these fees, giving hard-working Americans more breathing room, he said.

The proposed rule would lower the immunity provision for late fees to $8 for missed payments and end the automatic inflation adjustment. The proposed rule would ban late fee amounts above 25% of the consumer's required payment. Companies charge people as much as $41 for every missed payment, CFPB pointed out.

Read Next: Fed's Powell Says Only One Way To Resolve Debt Crisis - And Any Deviations 'Would Be Highly Risky'