Remarks as Prepared for Delivery by NEC Director Lael Brainard on Protecting Consumers at the National Consumer League Trumpeter Awards
I want to express my appreciation to the National Consumer League (NCL) for the important work you do on behalf of consumers. I also want to thank you for recognizing the Biden-Harris Administration’s leadership in fighting for American consumers and workers.
NCL has a distinguished 124-year history of fighting for protections for consumers and fair and safe working conditions. In the words of the great reformer and NCL leader Florence Kelley, “To live means to buy, to buy means to have power, to have power means to have responsibility.”
President Biden is proud to carry forward that tradition of fighting for American consumers by bringing costs down, increasing competition, and empowering workers. I want to start by talking about why the President cares so deeply about kitchen table economics. The President is all too familiar from his own experience of how it feels for a family to sit around the kitchen table having to choose which bills to pay each month because there isn’t enough money to cover them all. This is the reality for too many American families.
Bringing Costs Down
At the heart of the President’s kitchen-table economics agenda is bringing down costs to create more breathing room for hard working Americans. One of the biggest costs for many American families is prescription drugs and other health care costs. Americans pay two to three times more than people in other countries for the same drugs.
So, it was a big victory for the American people when President Biden secured passage of the Inflation Reduction Act (IRA). As a result of the IRA, seniors now only pay $35 a month for insulin, down from $400 a month. And many more Americans will get access to $35 a month insulin as a result of private sector voluntary commitments applauded by the President.
Just recently, drug companies agreed to negotiate drug prices with Medicare on the first ten drugs under the IRA. And starting in 2025, out of pocket prescription drug costs will be capped at $2000 for seniors – saving 18.7 million people hundreds of dollars a year – with many saving thousands a year.
We are also working to ensure that medical debt is no longer a burden on the credit scores of millions of Americans. Last month, the Consumer Financial Protection Bureau (CFPB) announced a forthcoming rule proposal to block consumer credit reports from including medical debt, which is expected to improve credit scores for millions of Americans, making it easier for them to get affordable mortgages and potentially saving them thousands of dollars.
Through the Competition Council, we have made promoting competition the mission of every agency. And we are seeing results for everyday Americans: As one example, millions of Americans now are able to purchase hearing aids over the counter, saving as much as $3,000, as a result of an FDA rule that introduced more competition into the hearing aid market.
Cracking Down on Junk Fees
We are also cracking down on the junk fees that are hidden away in our payments for so many services and that really add up. Now some people may ask why the President of the United States should be concerned about a $50 fee here and a $35 fee there. Those sneaky fees might not matter a lot to the wealthiest Americans. But for hard working Americans sitting around a kitchen table trying to stay on top of their bills, these hidden junk fees really add up. In fact, the CFPB’s crack down on overdraft and bounced check fees is estimated to save American consumers $5.5 billion a year.
Research show that consumers can pay upwards of twenty percent more when there are hidden fees than they would have paid if they had been able to comparison shop by seeing the actual all-in price up front.
I was struck by the experience of Marc from Arizona. He wanted to buy tickets to take his son and brother to a baseball game in Phoenix. After picking the cheapest ticket – at the price he could afford – he discovered that there was also a service fee, a facility charge, and a processing fee on top of the ticket price. With $50 in added fees, it turned out in he couldn’t actually afford to go to the game. We heard a similar story from someone who wrote to share an experience of paying nearly $400 in add on fees when buying airline tickets for a family trip.
These fees are a burden on middle class Americans who are fed up with them. In fact, surveys show that 75 percent of American, on a bipartisan basis, support action to crack down on junk fees.
And when some companies use hidden fees to post prices that are below what consumers actually have to pay, it makes it hard for honest companies that want to show the all-in price up front to compete because it looks like their prices are higher, when in fact they are just more forthcoming about how much customers will have to pay in total.
Today, the President stood with CFPB Director Rohit Chopra and Federal Trade Commission (FTC) Chair Lina Khan in the Rose Garden and delivered remarks announcing additional actions to address junk fees. The FTC is proposing a new rule to require businesses across the economy to provide consumers with the all-in price right up front and to disclose any mandatory fees, what they are for, and whether they are refundable. The requirement to disclose an all-in price and all mandatory fees clearly up front would apply to event tickets, hotel and lodging, apartment rental applications, car rentals, and more.
And the CFPB announced that it will issue guidance to ensure that banks with more than $10 billion in assets cannot impose fees for providing basic services. Consumers shouldn’t have to pay special fees to check their balance on a loan, get records on their own account, of check their account balance at another bank’s ATM. Too many banks charge these fees now, which can be as much as $20 or $30 for some services.
The CFPB expects soon to propose a rule that would make it easier for consumers to switch banks. It would require banks to allow customers to move their banking transaction data securely and easily to another bank. This will increase competition among banks to attract customers by offering better and cheaper services and is one of the signature initiatives in the President’s Executive Order on Promoting Competition in the American Economy.
These announcements build on the actions we have taken so far. We have already seen a reduction of 86% in bounced check fees in less than two years, saving consumers nearly $2 billion in these fees alone.
The President and the Department of Transportation called out airlines for charging parents just to sit next to their child on a flight. Now four major airlines offer that service for free, and DOT plans to issue rules to make it mandatory.
The Federal Communications Commission has created one standard label – like the simple nutrition labels on food products, but for broadband – that shows all the key information consumers need to know about the cost and quality of their internet service up front.
And it’s not just the federal government that is taking action. We’ve seen proposals in states across the country as well as bipartisan bills introduced in Congress to address ticketing and hotel resort fees. Companies are taking notice. In addition to airlines, we’ve seen ticket companies, hotels, rental housing, and food delivery apps all make proactive steps towards all-in up-front pricing.
Middle Out Bottom Up Economics
The last few years have been hard on American consumers, workers, and small businesses due to the high inflation and shutdowns associated with the pandemic and Putin’s oil and food price spikes. The President is focused on giving families more breathing room because he knows kitchen table economics is at the heart of growing the economy from the middle out and bottom up. And it is working. Even though the pessimists predicted that many Americans would not return to work following the pandemic, the share of working age Americans in the labor force is at a 20 year high. Job satisfaction is also at a multi-decade high – at a time when real incomes are up and inflation is down. Fewer households are behind on their mortgages and entering bankruptcy than before the pandemic. More than two thirds of Americans are satisfied with their personal finances. Outside experts are calling attention to the step change improvement in small business formation over the last two years.
So much of the progress we have made would not be possible without the advocacy and analysis of the people in this room – on everything from prescription drugs to junk fees to competition. NCL has been a trailblazer on these issues since it was founded. Many of you in the room have been on the frontline of the fight for consumers for years and even decades. Together, we are making historic progress.
Thank you for all that you do. I look forward to our continued work together.
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