Nickel-and-dimed: Sen. Bob Casey goes after corporations over junk fees

Americans’ budgets are being squeezed by large corporations tacking on excessive last-minute fees to everyday purchases such as internet plans and ATM withdrawals, U.S. Sen. Bob Casey said in his most recent “greedflation” report.

The Democratic senator’s report, released Wednesday and titled “Additional Charges May Apply: How Big Corporations Use Hidden Fees to Nickel, Dime and Deceive American Families,” explores how junk fees such as bank overdraft and credit card fees are hurting people across the country.

Corporations are using those fees not to offset inflation, which continues to ease in the United States, but rather to increase their own profits, Casey said.

“From cable bills to rental cars, greedy corporations are ripping off hard-working American families with excessive fees to pad their bottom line,” Casey said in a press release. “It’s sinful, and one of the reasons Americans are feeling squeezed when it’s time to pick up the check or pay off their credit card.”

Casey’s fourth “greedflation” report explains the impact of these hidden or last-minute fees through the lens of a Pennsylvania family that encounters junk fees added to everyday purchases, such as an out-of-network ATM fee and an activation fee for signing up for new internet service. The senator notes Consumer Reports found in 2019 that at least 85% of Americans have encountered such unexpected or hidden fees.

“Junk fees are pervasive—appearing on everything from basic necessities to luxury purchases — and they’re negatively impacting families in Pennsylvania and across the nation,” Casey’s report states. “These fees make it almost impossible for working families to budget when they are constantly blindsided by undisclosed costs tacked onto the base prices of goods and services. Corporate executives know they can deceive Americans and profit off the backs of working families by tacking on superfluous fees with confusing names at the tail end of purchases.”

The Pennsylvania senator’s criticism comes as President Joe Biden’s administration has also worked to crack down on junk fees. The president called on federal agencies to come up with plans to lower or disclose junk fees during a White House Competition Council meeting in September 2022. Biden also vowed to fight junk fees during his State of the Union speech in February 2023.

“Junk fees may not matter to the very wealthy, but they matter most to folks in homes like the one I grew up in,” Biden said during last year’s State of the Union. “They add up to hundreds of dollars a month. They make it harder for you to pay the bills or afford that family trip.”

On Wednesday, the Biden administration proposed a ban on a type of junk fee that banks charge when a transaction is declined due to insufficient funds, called overdraft fees. The Consumer Financial Protection Bureau’s proposal this week follows the proposed rule it issued on Jan. 17 to rein in banks’ overdraft fees. That proposed rule could reduce overdraft fees to as little as $3.

“For too long, some banks have charged exorbitant overdraft fees—sometimes $30 or more—that often hit the most vulnerable Americans the hardest, all while banks pad their bottom lines,” Biden said in response to the overdraft proposal. “Banks call it a service—I call it exploitation.”

House Republicans criticized the proposed overdraft rule, saying it would limit consumer choice and stifle innovation. Democratic Sen. Sherrod Brown, chair of the Senate Banking Committee, praised the proposal.

“I’m glad to see the CFPB continue its work to eliminate junk fees so that Americans can keep more of their hard-earned money,” Brown said in a prepared statement.

In addition to the White House’s efforts to tackle junk fees, Casey earlier this month urged the Government Accountability Office to investigate the impact on Americans of corporations using inflation as a cover for unnecessarily raising prices for consumer goods.

“The American people should not have to tolerate corporate executives squeezing them for every last nickel and dime,” Casey wrote in a Jan. 10 letter to the Government Accountability Office.