26 July 2023- Attorney General Michelle Henry today testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs that “junk fees” are becoming more pervasive in Pennsylvania and are damaging the competitive marketplace by inflating costs for borrowers, renters, travelers, and ticket buyers.
So-called “junk fees” are surprise charges that do not appear in initial price advertisements, but often inflate the final purchase price by hundreds and thousands of dollars. Attorney General Henry testified that junk fees are becoming more common in consumer financing, landlord/tenant arrangements, and hotel and ticket sales in Pennsylvania and beyond.
“Junk fees prevent consumers from effectively shopping for the best overall price. Honest businesses lose out to competitors who charge junk fees because the competitors’ prices appear — at first — to be a better deal,” Attorney General Henry testified. “While the phrase ‘junk fees’ is a relatively new way of describing surprise charges, our work in combating these practices goes back many decades. The Pennsylvania Office of Attorney General is committed to battling junk fees to protect not only consumers but also honest businesses.”
The Office of Attorney General has taken on businesses that charge these “junk fees” several times over the past few years.
In August 2022, the Office filed suit against Mariner Finance. Mariner charged Pennsylvanians more than $27 million in junk fees and interest for add-ons from 2015 to 2018 and another $120 million in 2019. This case is in active litigation in Federal Court in Philadelphia, with the Office of Attorney General requesting that Mariner refund all junk fees and associated interest, pay penalties, and stop charging junk fees, among other relief.
In April 2022, sixteen Attorneys General– including Pennsylvania– called on the CEOs of some of the biggest banks in America – JPMorgan Chase, Bank of America, U.S. Bank, and Wells Fargo – to eliminate harmful junk fees including overdraft fees and non-sufficient fund fees.
“Junk fees” are also a problem in the rental housing market, especially in college towns where tenants are often first-time renters. The Office of Attorney General settled such a case last year in State College where a landlord was illegally charging a 15 percent administrative charge on top of charges assessed for damages.
In 2021, the Office reached a landmark settlement with Marriott International regarding their mandatory “resort fees” being charged when a customer checks into the hotel. Many travelers have been misled by the rates offered by hotels due to the “junk fees” that were added later. Marriott now has a policy in place to be transparent in the disclosure of all mandatory fees, including resort fees, as part of a hotel stay. The Attorney General also testified that “there is still more work to do in the short-term rental market, where consumers are often surprised by the size of the fees that inflate the total cost far above the nightly rate.”
“Our fight against junk fees is one we cannot win on our own,” Attorney General Henry testified Wednesday. “We are working closely with our fellow states and federal law enforcement partners. By ensuring that prices are truly transparent, we protect businesses from being undercut by cheaper or faster competitors that rip off consumers with hidden fees.
“We are fighting for basic fairness and transparency. Consumers deserve to understand what a loan, a house, or a vacation will cost– and exactly what terms they are agreeing to. At the same time, all businesses deserve to compete on an even playing field, where the price is the price, with no hidden or surprise fees.”