Odds are you’ve been asked to pay a small convenience fee when making an online transaction or credit card payment. But these economic annoyances could be coming to an end.
Several ticketing and travel companies, including Airbnb, Live Nation and SeatGeek, are committing to get rid of surprise fees at checkout amid pressure from President Joe Biden’s Administration to make it easier for consumers to see the full price of tickets before purchasing.
The changes come after Live Nation Entertainment, the California-based parent company of Ticketmaster, faced criticism over hidden fees and widespread glitches during sales for Taylor Swift’s latest tour. Live Nation said Thursday that it will begin providing customers with upfront all-in pricing by September at the 200-plus venues it owns—a small portion of all the venues that Ticketmaster sells tickets for, such as large sports stadiums where artists often have concerts.
SeatGeek, a major New York-based vendor for reselling tickets, said it would begin introducing a feature at the end of the summer that would also reveal the actual purchase price including service charges and any other fees. San Francisco-based Airbnb, the online lodging company, switched to “all-in” pricing in December after Biden first called on companies to stop hiding fees.
Speaking at a roundtable discussion at the White House on Thursday with executives from several ticketing companies, President Biden framed the crackdown on so-called “junk fees” as part of his plan to win back working-class voters who are more sensitive to high prices. “These hidden charges that companies sneak into your bill make you pay more without you really knowing it initially,” Biden said. “Junk fees are not a matter for the wealthy very much but they’re a matter for working folks like the homes I grew up in.”
These fees, which about 85% of Americans have encountered, are often tacked onto credit card bills and the cost of concert tickets and air travel in the form of convenience or service fees at the time of purchase. They are a big money-generator for the firms that charge them, with consumers shelling out at least $29 billion each year in extra charges, according to the Consumer Financial Protection Bureau (CFPB). But Biden and his allies have argued that these fees are not clearly advertised to consumers—and they can drive up costs far beyond what people had expected.
A viral social media post in March, for example, showed ticket prices for a Drake concert costing $544, with another $541 added at checkout due to a service fee, facility charge, and order fee, nearly doubling the total cost. Many fans have complained that hidden fees have prevented them from buying tickets to live events.
Live Nation and SeatGeek did not commit to eliminating or reducing the actual fees, which are often set by venues, promising instead to disclose them upfront rather than in the final stage before payment. Live Nation’s pledge of transparency also only applies to venues it owns, meaning arenas and sports stadiums are not going to be impacted by the change.
Brett Goldberg, co-CEO of TickPick, a ticket marketplace that has used all-in pricing since 2011, says the changes are a good start, but more action is needed to create more accessibility in the ticketing space. “Part of the issue is it’s going to be even more confusing now for a consumer of Live Nation or Ticketmaster,” says Goldberg, who attended the White House meeting. “Some of the events are going to have all-in pricing and some are not.”
Still, the White House praised the companies for committing to upfront all-in pricing. “This is a win for consumers in my view,” Biden said, “and proof that our crackdown on junk fees has real momentum.”
The issue has become a popular topic in Washington, with several lawmakers raising questions of competition and consumer fairness in the entertainment industry. Sen. Richard Blumenthal, a Democrat of Connecticut who is a sponsor of a bill called the Junk Fee Prevention Act, offered a mixed review of Live Nation’s commitment on Thursday. “Live Nation-Ticketmaster’s announcement is a step in the right direction,” Blumenthal said in a statement, “but no substitute for legislation to provide consumers with transparency and prevent companies from imposing ridiculous junk fees.”
Biden told the group of ticketing executives behind closed doors that he is concerned Americans are losing trust in e-commerce because of hidden fees, according to Goldberg. Some ticketing executives including Goldberg have warned that vendors and resellers that comply voluntarily with upfront all-in pricing would be put at a competitive disadvantage if other ticketing services advertised lower prices, only to reveal surcharges once a customer completes a transaction.
But the surcharges do not just apply in the live events industry. They also appear when consumers purchase airline tickets and hotel rooms, and can be charged by banks and cable providers, prompting the Biden Administration to call for more transparent pricing across all industries.
The cable industry has been notorious for using hidden fees to raise prices and disguise the true cost of service, making an estimated $28 billion a year from charging company-imposed fees. Some cable providers impose fees for regional sports, broadcast television, network access and maintenance, and switching providers, which can add up to more than $40 per month in hidden fees.
U.S. hotels made more than $2.7 billion in 2018 for “resort” or “destination” fees that are often imposed for specific amenities, like free internet service, gym entry or pool access. The amount travelers pay for these fees varies by location and property, but typically costs around $40 or more per night. Many travelers find these fees frustrating because hotels often keep them hidden or charge for basic perks that should be included in the nightly rate of the hotel.
Banks have also relied on extra fees as a way to support free checking accounts, which are being increasingly offered. In recent years, late fees on credit card payments have surged as high as $41, with consumers being hit with $12 billion a year for late fees alone. That can be particularly harmful for lower-income Americans already dealing with record-high interest rates on their credit cards.
“Americans are tired of being—we’re tired of being played for suckers,” Biden said during his most recent State of the Union address. He urged Congress to pass a new “Junk Fee Prevention Act” that would get rid of “excessive” fees on tickets for online concerts, sporting events, and entertainment; ban airline fees for family members to sit with young children; put a stop to early termination fees for TV, phone, and internet service; and block surprise resort and destination fees.
The proposal has already garnered attention from members of Congress and other federal agencies. The Federal Trade Commission (FTC), for example, began examining last fall whether it needs to create rules against junk fees.
“It’s beyond frustrating to end up spending more than you budgeted because of random, arbitrary fees,” said FTC Chair Lina M. Khan in an October statement announcing the effort. “No one has ever felt that a ‘convenience fee’ was convenient.”
The Consumer Financial Protection Bureau (CFPB), which protects consumers from financial abuse, is also cracking down on junk fees. In September, the agency ordered Regions Bank to refund at least $141 million to customers who had to pay surprise overdraft fees—a now-illegal practice that charged for overdrawing a checking account at the time of purchase even if the bank showed the account owner had enough money.
CFPB director Rohit Chopra told reports in February that thousands of individuals shared stories with the agency about being charged fees for things that weren’t in their control, particularly over these surprise overdraft and late fees. “This loophole has morphed into a multi-billion dollar bonanza,” Chopra said. “We worry that credit card companies are actually hoping that consumers are a day or two late. While it might be fair to charge customers for extra costs that credit card companies are incurring, that’s not what we see here.”
But from the banking sector’s perspective, a ban on these fees would erase an easy source of profits. Lindsey Johnson, president of the Consumer Bankers Association, said after Biden’s State of the Union announcement that the President “mischaracterized” bank fees as junk. A potential ban on the extra fees, she said in a video posted on Twitter, would do “nothing to address the underlying reality that Americans today are paying higher prices for goods and services.”
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