The Federal Trade Commission’s proposed junk fee ban is a one-size-fits-all proposal that is overly broad and has an untenable scope. This sweeping legislation aims to clamp down on a wide range of fees and surcharges imposed by industries. Still, in doing so, it misses the mark.
The sheer breadth of the rule is unworkable. It needs to account for the nuanced and complex nature of modern business practices. This ban would cast an indiscriminate net over various legitimate and necessary costs that companies incur to operate effectively.
The proposed legislation demonstrates a fundamental misunderstanding of the realities facing businesses. The legislation misses the mark by failing to distinguish between “junk fees†and reasonable, industry-standard charges.
Instead of addressing the country’s inflation, the administration appears preoccupied with political posturing, such as scrutinizing hidden fees. This approach will likely backfire, leading to higher prices and reduced competition, further limiting the services available to consumers.
The American people deserve real solutions, not gamesmanship. The president should start prioritizing policies promoting economic prosperity and support middle- and lower-class Americans. Necessities have become increasingly expensive. Eliminating “junk fees†may seem like a helpful measure, but it risks adding further financial strain on struggling consumers and businesses.
The proposed rule is overly broad and fails to recognize the vital role that back-end fees play for small businesses. These seemingly minor fees are crucial for providing the resources and support that allow smaller enterprises to thrive.
America’s 28.8 million small businesses, 19% of which are family-owned, operate with much tighter profit margins than larger corporations, leaving little room for error. By charging these fees, these businesses can cover essential costs like processing payments, shipping or handling costs, administrative expenses and maintenance — helping to offset higher overhead and keep prices competitive while generating enough revenue to stay afloat.
These supplementary fees can be the difference between a business thriving or having to close its doors. Rather than categorizing these fees as bogus, policymakers should acknowledge the many critical situations where fees are necessary for businesses to survive.
Additionally, these supplementary fees and charges offer consumers a wider range of pricing options and flexibility when purchasing products and services. Rather than a one-size-fits-all approach, these additional fees allow businesses to offer tiered pricing and customized packages. This empowers consumers to select only the specific features and add-ons they need without paying for unnecessary extras. Contrary to the administration’s portrayal, these back-end charges ultimately give consumers greater control over their purchasing decisions and expose them to a wider range of providers.
A blanket ban on back-end fees risks undermining the industries that drive innovation and economic growth while failing to protect consumers from harmful practices. Instead of adopting a one-size-fits-all approach, policymakers must prioritize collaborative engagement with stakeholders to discern and tackle specific exploitation cases.
Focusing on targeted, solution-oriented strategies, we can foster a regulatory environment that safeguards consumer interests while preserving the market’s dynamic nature. Let us advocate for a balanced approach that promotes transparency and fairness, securing consumer protection and the vitality of our economy for the future.
Palmer Schoening is the chairman of the Family Business Coalition. He wrote this for InsideSources.com.
