New Jersey Orders Review Of 'Junk Fees,' Eyes New Consumer Protections
By CU Today Staff —
TRENTON, N.J.—New Jersey Gov. Mikie Sherrill has ordered state agencies to review industries under their oversight for so-called "junk fees," directing regulators to recommend ways to curb hidden or excessive charges that increase consumer costs, according to POLITICO.
Sherrill signed an executive order Monday requiring executive branch agencies to examine fees they regulate and propose potential responses through regulation, legislation or enforcement. The governor framed the initiative as part of her broader affordability agenda and criticized recent federal actions affecting consumer protections, POLITICO reported.
Under the order, agencies will evaluate fees defined as "hidden, surprise, or excessively overpriced," including charges that provide little or no benefit to consumers. Sherrill pointed to examples such as excessive credit card surcharges at restaurants, apartment cleaning fees and car rental charges, while consumer advocates cited subscription cancellation fees, earned wage advance fees and other processing charges, according to POLITICO.
State departments and agencies have until Sept. 14 to report their findings and recommend ways to address problematic fees. Sherrill said one possible solution could be requiring "all-in pricing" that discloses the full cost of a product or service upfront, POLITICO reported.
“While we appreciate Governor Sherrill’s desire to address affordability concerns facing New Jersey families, DCUC is concerned by efforts that begin with the assumption that credit union fees are inherently abusive or constitute so-called ‘junk fees," stated Defense Credit Union Council Chief Advocacy Officer Jason Stverak.
Stverak emphasized CUs are fundamentally different from large, for-profit financial institutions.
"As member-owned cooperatives, credit unions exist solely to serve their members, not outside shareholders. The vast majority of fees charged by credit unions are clearly disclosed, designed to recover costs, and often support services that members voluntarily choose to use," he said. "Unfortunately, the term ‘junk fees’ has increasingly become a political label applied to legitimate financial services rather than a careful examination of whether a particular practice is deceptive or harmful. We have seen similar efforts at the federal level, where regulators sought arbitrary fee caps and restrictions without adequately considering the impact on consumers’ access to financial services."
Stverak reminded that defense credit unions serve military families, veterans, and communities across the country.
"These institutions provide overdraft protection, payment processing, fraud mitigation, and account services that carry real operational costs. Limiting the ability of credit unions to recover those costs can ultimately reduce consumer choice, restrict access to important financial tools, and create unintended consequences for the very people policymakers seek to help," He said. "DCUC strongly supports transparency and clear disclosures. Consumers should understand the costs associated with financial products and services. However, transparency should not be confused with price controls or government efforts to dictate how member-owned financial cooperatives manage their operations.
"As New Jersey reviews these issues, we encourage policymakers to engage directly with credit unions and recognize the significant distinction between community-focused, member-owned institutions and the large financial actors that are often the target of these debates," continued Stverak. "Rather than pursuing broad assumptions about ‘junk fees,’ policymakers should focus on identifying genuinely deceptive practices while preserving the flexibility credit unions need to serve their members safely, effectively, and affordably."
Steverak said DCUC is ready to work with Sherrill and state leaders to ensure that any policy discussions are "grounded in facts, recognize the unique credit union model, and avoid unintended harm to military families, veterans, and consumers who rely on credit unions every day.”
Originally reported by CU Today.