A few months ago, the Federal Trade Commission proposed a new rule to prohibit what they consider to be hidden and deceptive fees levied against American consumers. From the housing and telecommunications sectors to higher education and financial services, the FTC, through this rule, accuses several industries of tacking on back-end prices for financial gain.

President Joe Biden promoted legislation to accomplish this initiative in his 2023 State of the Union address, but he has failed to get Congress to agree. So, once again, he is resorting to executive action through bureaucratic rulemaking for a sop to a small, but noisy, anti-free-market segment of his base. 

Let me speak frankly: I hate being nickeled-and-dimed to death as much as the next guy. But, if anyone is guilty of promulgating endless “fees” (aka: taxes), it’s the government!

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In Colorado, the Democrat controlled legislature has invented or increased every possible “fee” to fund their inexhaustible appetite for more government spending. At least when a business itemizes an additional cost of providing a service or product, the consumer can decide to buy it or not, or take their business elsewhere. When the government layers on fees we typically have little if any opportunity to object, and virtually no other available option.

If government really wanted to do average Americans a money-saving favor, it could start by getting its own house in order tackling systemic excess and waste. Yet, here again is the heavy hand of government intervening where they are neither wanted nor needed. It is yet another example of Ronald Reagan’s often-cited quip: “Government is not the solution to our problem. Government is the problem.”

Scant evidence has been offered to suggest American families would see significant savings from this proposed new “junk fee” regulation. But many experts have raised an abundance of concerns. They believe regulations like what are outlined in the proposed rule would have a substantial impact on pricing decisions, disproportionately impact the ability of small businesses to survive and could even adversely impact consumers (see here and here). Government rules and programs are notorious for creating negative unintended consequences. As such, more analysis should be completed before any government regulation on “junk fees” is adopted.

We all know locally owned businesses have gone through tumultuous tests in recent years. Still recovering from COVID-19, many have been forced to contend with higher costs caused by inflation, supply chain and workforce shortages and the never-ending challenge to minimize the costs they pass on to their customers. A national survey shows 63% of small business owners said they’re “worried that the shaky economic environment could force their business to close,” and many Colorado businesses have been forced to walk a similar tight rope to keep their doors open. A one-size-fits-all rule prohibiting back-end fees would eliminate transparency in pricing for consumers and potentially exacerbate the financial squeeze already threatening a plethora of small business operators.

According to the U.S. Small Business Association (SBA), small businesses account for 99.7% of all U.S. businesses with paid employees, create 62% of new jobs and account for 44% of total U.S. economic activity. The federal government would be wise to not rush into yet another burdensome rule that would negatively impact such a critical large segment of our already fragile economy.

The Biden administration projects “hundreds of dollars a month” savings per American household from this proposal. Put that on the mountain of other government estimates that fail to come even close to original rosy “projections.” The Peterson Institute for International Economics gave the rule a thorough review and projected most fees would be rolled into upfront pricing — eliminating transparency — and would result in net savings per household of less than $10 per month, if any at all.

Admittedly there are some shameful examples of deceptive and unfair business practices. But, rather than more government intervention, the quickest and surest cure to marketplace wrongs is consumer outrage and media exposure. Many of the larger companies that have been criticized in recent years for extraneous fees are already restructuring their prices to improve consumer relations. For instance, Ticketmaster and Airbnb have already improved their upfront pricing to display fee-inclusive pricing for all of their customers. It’s important the FTC recognize this natural shift and consider the practicality of allocating scarce resources to fixing a problem that is already mending itself.

Malicious actors should be held accountable for defrauding consumers, and plenty of laws and regulations already exist to exercise justice when necessary. But, when small businesses institute more transparent pricing models, American consumers are not “being taken advantage of and being played for suckers” as President Biden has alleged.

If lawmakers and regulators in Washington want to truly look out for the small storefronts, restaurants, venues and other businesses that bring in critically needed revenue to communities across the United States, they would be wise to tread lightly and with great caution. When government intervenes and stirs the free-market pot, too often an unexpected sour taste is left in everyone’s mouth.

Congressman Bob Beauprez served in the House of Representatives from 2003 to 2006 and served on the Small Business, and Ways and Means Committees. He is a former community banker and currently owner of Eagle’s Wing Ranch.