Trump Talks About Prices. Lina Khan is Lowering Them

A guest post from Samuel Levine, former head of consumer protection at the FTC.

Samuel Levine is a Senior Fellow at the UC Berkeley Center for Consumer Law and Economic Justice. He was the Director of the Federal Trade Commission’s Bureau of Consumer Protection under President Biden.

This week, something rare is happening in Washington: a federal rule is going into effect that should actually lower prices for American consumers. And here’s the irony: While Donald Trump has promised to lower prices, the most meaningful price-cutting policy to take effect during his watch is this one – a rule proposed, championed, and finalized by former Federal Trade Commission Chair Lina Khan.

It’s the ban on junk fees.

The new Junk Fees Rule takes aim at one of the most maddening features of modern commerce – those gotcha surcharges that show up only after you’ve clicked through a half-dozen screens or squinted at fine print. As of Monday, hotels, vacation rental platforms, and sellers of tickets for live events ranging from concerts to sports will need to display the full price minus taxes and shipping charges upfront. No more “resort fees” for hotels that are hardly resorts, or “convenience fees” that add only cost and confusion. Companies will now need to compete on actual costs, rather than their ability to obscure them.

These junk fees and other pricing tricks aren’t just annoying. They are a multibillion-dollar transfer from consumers to corporations – a tax on our wallets, our time, and our ability to comparison shop. But they also reflect a deep policy failure. Four decades ago, leaders of the “Reagan Revolution” claimed markets were “self-correcting,” and they weakened government watchdogs created by Congress to make markets more fair. Agencies like the FTC stopped using key tools – especially rulemaking – to protect consumers, and predatory practices like junk fees, subscription traps, and telemarketing scams flourished.

This era of hands off-governance was built on a set of myths – myths that the Junk Fees Rule is helping to dismantle.

First, the myth that government agencies like the FTC can’t deliver big wins for Americans. For decades, Democrats and Republicans alike perpetuated a myth that the FTC could not write rules attacking corporate greed, as the process was too slow, too risky, and too politically fraught.

Yet under Chair Khan’s leadership, the Junk Fees Rule went from proposal to final rule in under three years. And junk fees were hardly the only corporate abuse the agency confronted head-on during Khan’s tenure. The agency also finalized rules to end non-compete clauses, fake reviews, subscription traps, health privacy abuses, car dealership scams, impersonation schemes, and “Made in the USA” fraud. These initiatives demonstrate that agencies can deliver big wins when led by someone with the vision and focus to challenge economic exploitation using every tool.

The Junk Fees Rule also gives lie to the idea that bold consumer protection initiatives can’t earn bipartisan support. Just as strong antitrust enforcement has generated momentum across the political spectrum, so too has the crackdown on junk fees. The FTC’s Junk Fees Rule was approved on a bipartisan basis. And we now see bipartisan action at the state level too. Earlier this month, Virginia’s Republican governor signed a bill outlawing junk fees across the state. The message is clear: whatever your politics, people don’t like being lied to about prices.

The Junk Fees Rule also busts the myth that protecting consumers is bad for business. In fact, it levels the playing field for companies that are honest with their customers. Until now, companies that were upfront about prices lost out to firms that hid that information until it was time for the consumer to pay. This placed competitive pressure on all firms to obscure prices. The new Junk Fees Rule reverses that incentive – triggering penalties for firms that conceal costs, while rewarding those who actually offer lower prices.

In short, the Junk Fees Rule is a big win for consumers and honest businesses. But we cannot rest on our laurels. There is much more work to do to protect American consumers.

First, we need to keep pace with new ways corporations are finding to rip people off. Even as the Junk Fees Rule restores transparency in one corner of the economy, a darker trend is accelerating elsewhere. Companies are increasingly experimenting with surveillance pricing, charging different people different prices based on such factors as income, browsing history, zip code, and online behavior.

It’s not hard to imagine this leading to a world where prices are higher when people are most desperate, where comparison shopping is made impossible, and where colluding to fix prices is all too easy. Today there are bills throughout the country to crack down on these practices before they become ubiquitous. Passing these laws should be an urgent priority.

We also need to defend the public institutions that have led the charge in challenging corporate greed. The Trump Administration is openly trying to dismantle the Consumer Financial Protection Bureau, the agency that – under Director Rohit Chopra – took on overdraft fees, credit card late fees, and junk bank charges, all while returning billions of dollars to American consumers. If efforts to destroy the CFPB succeed, it will be working families that pay the price – in higher fees, diminished accountability for corporate cheats, and fewer tools to fight back.

Finally, with the Trump Administration all too frequently siding with corporations over consumers, states should carry on the fight against junk fees. The federal rule is a critical first step, but it covers only two industries – short-term lodging and live events. States can – and increasingly do – go further. California, Colorado, Minnesota, and Virginia have already passed laws cracking down on junk fees across the economy. More states should follow suit.

While much work remains, today we can celebrate a hard-fought victory: the junk fee ban is now in force, and momentum for similar reforms is spreading nationwide. It’s proof that the era of do-nothing government is over, as is the era when corporations could rip people off with impunity. And just as important, it shows that smart policies – driven forward by determined leaders – can still break through even in these cynical and polarized times.