Biden unveils measures to protect consumers

Burdensome payments: Biden says unfair credit card late fees will add up and mobile app stores should prepare for more competition. — AP

WASHINGTON: President Joe Biden has announced efforts to slash 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 ways that harm consumers and inflate prices.

The Consumer Financial Protection Bureau (CFPB) will formally propose a rule to cap late payment credit-card fees at US$8 (RM34), from an average now of roughly US$30 (RM128), and estimates the move will save consumers a total of US$9bil (RM38bil) a year.

The fees are applied to payments made even a few hours late and appear to be a source of profit rather than cost recovery, White House officials told reporters.

“Folks, 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 top aides assembled to ease the grip of corporate consolidation in key industries.

“These unfair fees add up. It’s a basic question of fairness.”

The credit card rule could go into effect in 2024 after a comment period and finalisation.

“At the end of the day, we want to see a marketplace where Americans are treated fairly, prices and risks are clear upfront and where companies compete hard to win their customers’ business,” CFPB director Rohit Chopra told reporters.

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 large provider of store credit cards, plummeted 9.2% to US$37.26 (RM159) in New York.

Biden also called on Congress to pass a law regarding 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, telephone and television services.

“These fees can be incredibly frustrating,” National Economic Council director Brian Deese said.

“They cost consumers billions of dollars a year, they make it harder for people to comparison shop but they also reduce competition.”

In a separate report set for release Wednesday by a Department of Commerce branch, regulators concluded that Google and Apple have created overly burdensome rules 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 globally.

In a July 2021 executive order, the president asked the National Telecommunications and Information Administration (NTIA) to study the mobile app market.

The agency said it had received more than 150 public comments as part of its study, including from tech platforms such as Apple and Meta Platforms Inc.

Apple and Google’s “practices and policies hinder a competitive app ecosystem,” NTIA head Alan Davidson told reporters.

“The current mobile app ecosystem, and especially the current app store model, is harmful to consumers and to app developers.”

Google disputed how the report described its Android operating system, which allows alternate app stores and direct downloads of apps. — Bloomberg

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US , Biden , creditcard , latefees , rules , Congress , CFPB , mobileapp , competition


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