EDITORIAL: Throw junk fees out with the trash

In a classic case of insult added to injury, Americans are having to put up with old-fashioned inflation in the prices of goods and services and on top of that the new inflation wrinkle of junk fees.

The garden variety inflation that has vexed consumers for the past two years is caused by factors well known by economists, primarily increases in production costs along with rising demand. Junk-fee inflation can’t be explained in economists’ lingo. Suffice it to say it looks a lot like greed.

Basic inflation is waning, according to government data. Junk-fee inflation is gaining.

Junk fees are mandatory extra charges added to bills without the prior knowledge or consent of customers.

The hotel industry started the junk-fee fad by adding “resort fees” to lodging bills. These extra charges have to be paid, even for services that are not used by customers or are already included in the basic room rate. Travelers book rooms at advertised rates, and then at check-out find those rates were a fiction, dwarfed by real prices inflated by fees.

Consumer Reports estimates that travelers in the U.S. pay $3 billion a year in hotel junk fees.

Junk fees have spread to so many other sellers of services and products that the Federal Trade Commission is working on a rule to prohibit them. The agency better get going. Consumers are being bilked.

Reports of egregious junk fees accumulated during the FTC comment period. A “beef cost  surcharge” added to a restaurant bill, even though the diner’s meal didn’t include beef. A $30 per day “urban fee” added to hotel bills, which was unexplained until challenged, and then said to be for a newspaper and internet service. A $2 surcharge added to fast-food bills for no reason employees could give.

Junk fees have spread beyond travel and entertainment pricing to essential services. Internet service charges by many providers are inflated by fees disguised as government-mandated add-ons to bills.

The nonprofit Consumer Reports organization found that junk fees of up to $10 a month are added to internet bills with such official-sounding descriptions as “deregulated administration fee, internet infrastructure fee, network enhancement fee.”

Internet bills paid by Wisconsin customers were included in the 22,000 internet bills analyzed by Consumer Reports.

Junk fees are so numerous that it is difficult to single out the most obnoxious, but a leading contender for the title is the credit card transaction fee.

This fee, increasingly applied by restaurants, hotels and other businesses, forces customers to pay for the “privilege” of paying their bills with a credit card.

Sellers pay a small processing fee on credit card sales—less than the 3% typically charged to their customers—but this expense is a reasonable cost of doing business, like electricity or insurance. And like those overhead costs, it’s included in the basic prices. Credit card transaction fees charged to customers are in effect an added sales tax with the revenue harvested by the seller.

What’s particularly galling about those fees is that the now nearly universal use of credit and debit cards is a benefit, not a burden, to businesses. Charge cards make payment instant and guaranteed, eliminate the risk of checks and avoid the hassle and cost of securing, counting and depositing cash. A discount for paying by card would make more sense than a surcharge.

One could envision protesting a credit card transaction fee on, say, a hotel bill by insisting on paying with cash. Unfortunately, it probably wouldn’t be worth the fuss. To have the desired effect, it would mean traveling with a suitcase full of one-dollar bills. What’s more, some of the same businesses that charge a fee for credit card use have a policy of not accepting cash.

The FTC has been talking about its proposed Rule on Unfair and Deceptive Fees long enough. It’s past time for the federal government to get this junk off the public’s back.