Biden Targets Credit-Card Fees, App Stores to Aid Consumers

(Bloomberg) – President Joe Biden announced efforts to cut billions in credit card late fees and called on Congress to open up mobile app stores to greater competition, alleging that Apple Inc. and Alphabet Inc. act as gatekeepers in a way that harms consumers and inflates prices.

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The Consumer Financial Protection Bureau will formally propose a rule to cap late-payment credit card charges at $8, up from the current average of around $30, and estimates the move will save consumers a total of $9 billion per year. The fee is applied to payments made even a few hours late and appears to be a source of profit rather than cost recovery, White House officials told reporters.

“People, that’s a junk fee if there ever was one,” Biden said Wednesday at a meeting of his “competition council,” a group of cabinet officials and senior aides. together to ease the grip of corporate consolidation in key industries. “These unfair fees add up. It is a fundamental question of fairness.

The credit card rule could come into force in 2024 after a comment period and finalization.

“Ultimately, we want to see a market where Americans are treated fairly, prices and risks are clear from the start, and where companies compete to win their customers’ business,” the director told reporters. from the CFPB, Rohit Chopra.

Shares of major credit card issuers, including Discover Financial Services, Synchrony Financial and Capital One Financial Corp., fell in New York after Chopra’s announcement. Bread Financial Holdings Inc., a major supplier of store credit cards, fell 9.2% to $37.26 at 2:37 p.m. in New York.

Biden also called on Congress to pass legislation addressing consumer fees, or so-called junk fees, in four categories: online ticket sales for concerts and sporting events, airline seat fees for families who want to sit together, surprise resort fees and excessive termination fees for internet, phone and TV services.

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“These fees can be incredibly frustrating,” said National Economic Council Director Brian Deese. “They cost consumers billions of dollars a year, they make it harder for people to compare prices, but they also reduce competition.”

Airlines for America, a trade group representing major carriers, said the White House’s proposals on the aviation industry “are short-sighted and would inevitably lead to increased costs and reduced consumer choice”.

“A4A member airlines make every effort to accommodate customers traveling together, especially those traveling with children, at no additional cost, and consumers are offered a range of choices when purchasing the ticket. , including various seating options,” the band said in a statement. Wednesday. “A4A passenger carriers do not charge a family seat fee, unlike some ultra-low-cost carriers.”

In a separate report released Wednesday by an arm of the Department of Commerce, regulators concluded that Google and Apple have created rules that are too burdensome for app developers, making it harder for them to reach consumers. Apple’s iOS and Google’s Android smartphone operating systems run on more than 99% of mobile phones in the United States and around the world.

In a July 2021 executive order, the president asked the National Telecommunications and Information Administration to study the mobile app market. The agency said it received more than 150 public comments as part of its study, including from technology platforms such as Apple and Meta Platforms Inc.

The “practices and policies of Apple and Google hinder a competitive app ecosystem,” Alan Davidson, director of the NTIA, told reporters. “The current mobile app ecosystem, and in particular the current app store model, is harmful to consumers and app developers.”

Google took issue with how the report described its Android operating system, which allows for alternative app stores and direct app downloads.

“We disagree with how this report characterizes Android, which allows for more choice and competition than any other mobile operating system,” Google spokeswoman Julie Tarallo McAlister said.

Apple also said it disagrees with the report’s findings and that its policies have created a “robust app economy that includes millions of apps and supports hundreds of thousands of state jobs.” -United”.

The report urged lawmakers to pass legislation that would make it easier for consumers to change default apps on mobile phones and tablets and allow direct downloads from third-party apps or app stores. Congress should also consider allowing developers to use payment methods other than those provided by Apple and Google, which often reduce digital sales by 15 to 30 percent, according to another recommendation in the report.

The recommendations reflect legislation presented to the last Congress. The Open App Markets Act would require Apple and Google – of which Google Play is the most popular app store on Android mobile phones – to make it easier to download from other app stores and change the default apps on Android mobile phones. phones.

While a Senate panel pushed the bill forward, the full chamber did not consider the bill. The Justice Department opened an investigation into Apple over its app store policies under the Trump administration, an investigation that continued under Biden.

–With help from Steve Dickson and Alan Levin.

(Updates with reaction from Airlines for America, beginning at the ninth paragraph. An earlier version corrected the spelling of McAlister’s name.)

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