Research/Study
Tens of millions of Americans are inundated by credit card junk fees — and now right-wing media are rallying to defend this price gouging
Biden's price gouging “strike force” is cracking down on credit card fees and other consumer junk fees that cost more than 45 million Americans over $10 billion annually
Written by Zachary Pleat
Published
Some in right-wing media are criticizing the Biden administration for creating an interagency strike force to crack down on what it described as “unfair and illegal pricing” schemes, including enforcing a new federal rule that would cap credit card late fees for major credit card companies at $8 and save tens of millions of Americans billions of dollars annually.
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The Biden administration is cracking down on “unfair and illegal” price gouging by major corporations
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- On March 5, President Biden launched a “Strike Force on Unfair and Illegal Pricing” co-chaired by the Federal Trade Commission and the Department of Justice. Biden launched an interagency strike force to tackle “unfair and illegal” price increases by large corporations, which according to CNBC “Biden sees as a major reason why consumers are not yet feeling the impact of cooling inflation rates and a strong economy.” FTC Chair Lina Khan announced to reporters that the strike force “builds on the FTC’s far-reaching work to promote competition and tackle unlawful business practices that are inflating costs for Americans.” [The White House, 3/5/24; CNBC, 3/5/24]
- The strike force's launch coincides with a new CFPB restriction that caps credit card late fees at $8. Citing CFPB data, the New York Times reported that such late fees “have become a major profit source for credit card issuers, generating more than $14 billion in 2022.” According to the Times, the bureau also indicated that credit card issuers have been exploiting a loophole in a 2010 Federal Reserve rule that allowed credit card issuers to adjust late fees based on inflation and raised “their fees far beyond the actual costs they incur when payments arrive late." NPR noted that “by law, the fees are supposed to be tied to a credit card issuer's own costs associated with the late payment,” but the bureau “found that even as banks have adopted cheaper processes for dealing with late payments, the fees have continued to climb.” [The New York Times, 3/5/24; NPR, 3/5/24]
- CFPB: An estimated 45 million Americans who incur late fees will save an average of $220 each year — a total savings of $10 billion annually — by capping credit card late fees. “For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers,” CFPB Director Rohit Chopra said of the bureau’s move to cap late fees. “Today's rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines.” The bureau's press release stated that the rule applies “to the largest credit card issuers, those with more than 1 million open accounts," which “account for more than 95% of total outstanding credit card balances.” [Consumer Financial Protection Bureau, 3/5/24]
- A February 2023 poll found “overwhelming bipartisan support” for capping credit card late fees to $8. According to the poll conducted by progressive research group Navigator, 79% of registered voters supported the Biden administration “lowering the limit credit card companies can charge per late fee from $41 to $8.” Those numbers included 74% of independents and 68% of Republicans. [Navigator, 3/2/23]
- Potential Trump VP pick Sen. Tim Scott (R-SC) is trying to block the rule capping credit card late fees. Bloomberg reported that “Senator Tim Scott, a potential Trump vice presidential pick and the top Republican on the Banking Committee, said Tuesday he would push the Senate to take action to block the new regulation” through a Senate vote via the Congressional Review Act. “It will decrease the availability of credit card products for those who need it most, raise rates for many borrowers who carry a balance but pay on time, and increase the likelihood of late payments across the board,” Scott argued in a public statement. [Bloomberg, 3/5/24]
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Conservative media responded to Biden's efforts to save Americans money by attacking him and the new CFPB rule
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- Fox Business anchor Maria Bartiromo repeatedly accused Biden of prioritizing reducing credit card late fees over other issues. On March 5, Bartiromo criticized Biden for “what the president is spending his time doing.” Bartiromo said, “This morning he's [President Biden] talking about late fees, and he's talking about corporate America, and it's companies' fault that people are facing inflation.” The next day, Bartiromo continued this line of attack: “We have so many serious priorities,” she said. “I mean a woman is dead because she was murdered by an illegal migrant in Georgia and now we're talking about late fees.” [Fox Business, Mornings with Maria Bartiromo, 3/5/24, 3/6/24]
- On Newsmax, conservative economist Peter Morici accused Biden of initiating the cap on late fees as a scheme to buy votes. At first, Morici downplayed the number of Americans the new rule would help, before adding: “Think about who's always paying late fees. They're probably the kind of folks that would vote for Democrats. This is a way of motivating them to go out and vote,” he said. “This administration is now getting desperate looking at the polls, and they're looking at every conceivable way to buy a vote.” Morici later compared the rule to Soviet-era price fixing. “If you want the government setting prices, then let’s resurrect the old Soviet Union," he said. [Newsmax, The National Report, 3/5/24]
- Outkick host Tomi Lahren: “We have an invasion at our southern border that is costing our country billions, and your sleepy President is going after junk fees. Unbelievable.” [Twitter/X, 3/5/24]
- WSJ editorial: “The Biden ‘Strike Force’ Is Coming for You.” Instead of blaming credit card companies for charging consumers exorbitant fees, The Wall Street Journal's editorial board characterized the CFPB rule as a “burdensome government regulation,” adding that “such fees have proliferated under Mr. Biden because business costs have increased.” Even though the new rule is expected to save consumers billions, the editorial board concluded that “The Biden Presidency is becoming more expensive for Americans by the day.” [The Wall Street Journal, 3/5/24]
- Fox's The Five mockingly described the new initiative as Biden’s “shrinkflation” strike force. After The Five co-host Jeanine Pirro opened a segment by criticizing Biden for the new strike force, co-host Dana Perino piled on, saying, “This is a brainless decision.” She added: “The market is the strike force. But if Biden is interested in doing this, you could look at all of the issues that we're talking about in terms of where he is polling badly. Why is there no strike force to go after the border? How about, could we have a strike force to bring home hostages who are being held in Gaza? What about a strike force on fixing COVID learning loss? I mean we could go on and on.” [Fox News, The Five, 3/5/24]
- Fox's The Story portrayed the Biden administration’s attempt to rein in illegal and unfair price increases as an attempt to “squash capitalism.” “I was reading a piece this morning about how capitalism is the defining characteristic that sets this country apart from all of our enemies,” Fox host Martha MacCallum said. “So if you squash capitalism, you're going to put that into remission.” Fox Business host Brian Brenberg added, “This is the anti-rich, anti-wealth crusade that they're [Democrats are] on.” [Fox News, The Story, 3/5/24]