(The Center Square) — As the Pennsylvania House has moved to eliminate junk fees, the less-than-transparent charges are getting more national attention as well.
Junk fees are mandatory fees or charges added to the price of a product, unexpected by consumers and usually revealed alongside taxes near the end of a purchase. They’re commonly labeled as service fees or convenience fees.
“These fees have been spreading like wildfire,” said Nidhi Hegde, managing director of the American Economic Liberties Project, during an event Thursday on junk fees and what actions state legislatures have taken.
In Pennsylvania, the House passed a bill in October by a 172-31 margin to include all fees in the price when potential buyers see the product or service. The bill applies to rental or hotel bookings like Airbnb and Expedia, food delivery services like GrubHub and DoorDash, and ticket platforms like Ticketmaster and StubHub.
The bill sits in the Senate Consumer Protection and Professional Licensure Committee awaiting action. Advocates argue that the bill, if it becomes law, would be a win for transparency and fairness.
“The predatory junk fee industry has pervaded a lot of the different things that we purchase and pay for on a regular basis to the point where we just accept it as the cost of doing business, but it doesn’t have to be that way,” said Rep. Nick Pisciottano, D-West Mifflin, who sponsored the House bill.
The forced disclosure would cut down on unfair business practices, he argued.
“Sunshine is the best disinfectant; our idea was if you basically force these fees to be disclosed, you really disincentivize the use of fees at all,” Pisciottano said. “People understand and recognize it’s a big problem that we need to tackle; (I’m) optimistic that we can keep the legislation moving in the Senate in 2024 and keep up the fight to make sure that our economy works a little bit better for everyone.”
Pat Garofalo, director of state and local policy at the American Economic Liberties Project, argued the fight against junk fees is about fairness.
“This is a fairness question,” he said. “This is about not pretending that your products cost one thing when they really cost something else.”
Arizona has an even more expansive bill against junk fees, pushed by Rep. Analise Ortiz, D-Maryvale, which would target rental fees. A number of other state legislatures have seen junk-fee bills proposed as well.
In October, the Biden administration made the fees a national issue. FTC Commissioner Linda Khan and Consumer Financial Protection Bureau Director Rohit Chopra announced a crackdown on the banking industry for overdraft fees and other penalties.
Jon Donenberg, deputy director of the National Economic Council in the White House, compared the removal of junk fees to nutritional labels letting customers make easy comparisons.
“These things can really add up. The fees are purposefully deceptive,” Donenberg said. “Hidden junk fees don’t simply raise prices — they also make it harder for a consumer to accurately comparison-shop and they distort competition.”
