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Biden administration is asking state leaders to help fight junk fees

STEVE INSKEEP, HOST:

The Biden administration is asking state leaders to help fight so-called junk fees, extra charges people pay on everything from internet bills to airline tickets. Let's discuss this with Rohit Chopra, who is director of the Consumer Financial Protection Bureau. Welcome to the program.

ROHIT CHOPRA: Thank you so much.

INSKEEP: Why is now the time to address this?

CHOPRA: Well, I think we've seen it, how junk fees are really creeping across the economy. I think we've all experienced them, where we're charged for a service that we never even wanted. Or it's charged at a level that is way beyond the cost to provide. And the net effect is it makes competition worse off, harder to comparison shop. And it really chips away at family budgets.

INSKEEP: Who's a specific offender you'd call out?

CHOPRA: Well, I think across industries we see big problems. The CFPB polices financial firms. And we have uncovered even illegal junk fees at major institutions, including Wells Fargo. And it's billions and billions of dollars. And we really are pushing for reforms so that pricing and all the key terms are up front, and people can avoid these fees in a fair and transparent manner.

INSKEEP: I think if we had Wells Fargo or some other company here, they probably wouldn't call them junk fees. They'd call them a service charge. They would have reasons that they think it is justified. Are you arguing that this is just pure profit that they peel off of consumers who can't quite tell it's even happening?

CHOPRA: Well, here's the thing. I think many people know about so-called overdraft fees.

INSKEEP: Sure.

CHOPRA: And, you know, what we have found in certain situations is that the order of transactions is switched around so that instead of one overdraft fee, you get three or four. We find in the credit card industry that they're building a business model, in some cases, of late fees. You know, it should be that you borrow, they charge interest. But we have found there's $12 billion of late fees assessed every year. So what we're trying to do is make sure that people are paying for a legitimate service and that penalties are reasonable in accordance with existing law.

INSKEEP: So I think you're telling me that you have identified companies that you believe are not only charging people extra but telling them, it's your fault. You screwed up. You had an overdraft. But really, it's creative accounting on the bank's part.

CHOPRA: Well, there's all sorts of things we've uncovered. Yesterday, we released a report about fees across the financial sector - auto, mortgage, student. Many times, a fee is charged for a service that was never even provided. And many times, a consumer can't even see what is happening behind the scenes. So at the end of the day, we think a competitive market is one where you can see the real costs up front. And you can compare. So many people, whether it's airline tickets, concert tickets, see these fees tacked on late in the process. And that's not the sign of a competitive market.

INSKEEP: In a few seconds, why would you be asking states to address this instead of the federal government doing it?

CHOPRA: Well, the federal government is. But I see this as an all-hands-on-deck way to make sure that consumers are protected and that our laws are working fairly. So state attorneys general, state lawmakers, all of us can work to go after this.

INSKEEP: Rohit Chopra is director of the Consumer Financial Protection Bureau. Thanks so much.

CHOPRA: Thank you for having me. Transcript provided by NPR, Copyright NPR.

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