Joe Biden’s antitrust adviser has warned of a “profusion of junk fees” in the US economy, as he pushes to expand the war on hidden costs to include those affecting investors in the securities market.
In an interview with the Financial Times, Tim Wu, the Biden administration’s adviser on competition policy, said there was a “sense there has been a profusion of junk fees across the economy, things that confuse people, coercive fees, deceptive practices”.
He added that this was a “perfect area for a whole government. . . approach” to surprise charges that unexpectedly inflate prices.
Wu’s comments come as the White House has begun working with the Securities and Exchange Commission to bring junk fees in the securities market into the “broader mandate” of the competition council, which was launched by Biden to help reduce market concentration.
Formed by the heads of several federal agencies including the SEC, the council is responsible for implementing the executive order signed by the president last year to curb corporate power across the US economy, from transportation to technology and banking.
Wu, an architect of the order, is part of a new generation of progressive antitrust officials — including Jonathan Kanter, head of the Department of Justice’s antitrust division, and Lina Khan, chair of the Federal Trade Commission — appointed by Biden to fight anti- competitive conduct in corporate America.
Among the competition council’s tasks is understanding how junk fees manifest across different industries and cutting these hidden costs, an initiative championed by Biden in a speech just days before the midterm elections.
After presenting new guidelines from the Consumer Financial Protection Bureau, which has focused on unfair pricing, to curb illegal “surprise” bank fees, Biden warned: “We’re just getting started. There are tens of billions of dollars in other junk fees across the economy, and I’ve directed my administration to reduce or eliminate them.”
An SEC official said the agency has presented several initiatives to the competition council, adding that the regulator is more focused on expanding fee disclosure than imposing outright bans.
The measures include SEC proposals unveiled in February to increase disclosures on fees charged by private funds to investors, and rule amendments adopted in October requiring funds to clarify shareholder reports and present transparent and balanced information in advertising material, the official said.
The SEC was working with brokers and advisers to be more cost-conscious in their recommendations to retail investors, the official said, for instance considering account fees and transaction costs when making recommendations to clients.
Wu said securities regulation offered “low-hanging fruit” to improve pricing, a sign that the White House is broadening its fight against junk fees from companies facing consumers, such as airlines and banks.
But he added that there are “other possibilities” to challenge hidden costs in the securities market beyond existing SEC initiatives. He said the White House was in the “early stage” of assessing what constitutes junk fees and potential remedies in the securities space.
Wu pointed to healthcare and ocean shipping as other areas in which pricing should be reviewed. “The main problem in healthcare is you don’t really have many prices. . .[but rather issues]like surprise billing where people suddenly have a $15,000 bill that they didn’t expect show up.” In the shipping industry, meanwhile, regulators have proposed rules requiring carriers and marine terminal operators to clarify billing practices.
“The overall idea is to try to clean up pricing in the United States,” said Wu. “We want to develop almost a jurisprudence of pricing or junk fees that agencies understand and have a playbook to work from.”