In Biden’s war on junk fees, North Carolina’s senior senator pushes back

By: - July 31, 2023 5:55 am

Senator Thom Tillis (R-NC) (Photo: Screen grab from

In a hot housing market, prospective renters can’t afford to be indecisive. Decide to sleep on it overnight and the property may be snapped up by someone else. But today’s rental market can also place a burden on even the most expeditious renters with application fees, credit checks, move in fees and other “convenience” surcharges.

Earlier this month, the Biden administration announced plans to crack down on rental junk fees.

And last week, a subcommittee of the U.S. Senate Committee on Banking, Housing and Urban Affairs began examining how such fees were applied across multiple industries impacting American consumers.

“Not all fees are the same,” said Sen. Raphael Warnock (D-GA). “Some fees are excessively high. Some fees are unclear. And some fees exist solely so that large corporations can pad their bottom lines on the backs of hard-working families.”

Sen. Raphael Warnock (D-GA) (Photo: Screen grab from

The Georgia Democrat said junk fees affect poor people and people of color at a disproportionate rate, with one-third of unbanked households citing high fees as the reason that they remain without a bank account.

North Carolina Senator Thom Tillis (R-NC), however, said the problem with the president’s initiative is that it is exceedingly wide and vaguely defined.

Tillis took exception to the Consumer Financial Protection Bureau’s (CFPB) approach to addressing such fees.

“The CFPB at times has offered various definitions as to what constitutes a junk fee in their eyes, muddying the waters for honest good faith actors who are simply trying to comply,” said Sen. Tillis.

Tillis charged the CFPB engaged in ‘naming and shaming’ campaigns.

“In actions taken on overdraft and insufficient funds policy, the CFPB publicized list of institutions were all by any reasonable measure, clearly abiding by the law, but not the policy preferences of the CFPB. Unfortunately, these coercion-style tactics were only encouraged by the Biden administration.”

Buyer beware

Pennsylvania Attorney General Michelle Henry said the subcommittee was absolutely correct to focus on junk fees that prevent consumers from shopping for the best overall price.

Henry said her agency recently filed a multi-state lawsuit against Mariner Finance, a Wall Street private equity owned installment lender.

Pennsylvania Attorney General Michelle Henry (Photo: Screen grab from

“Our lawsuit alleges that Mariner charged consumers junk fees for hidden add-on products that consumers either did not know about or did not agree to buy,” Henry said.

“The cost of the junk fees is staggering. For a random sample of loans originated in Pennsylvania in December of 2020, Mariner charged each consumer an average of $1,085 in junk fees for an average of $3,394 in cash borrowed.”

Henry said her office also had a significant junk fee settlement in 2018 with Wells Fargo.

“Despite evidence that many customers already had the required car insurance, Wells improperly charged more than two million accounts for ‘forced place’ insurance. To resolve the multi-state action, Wells agreed to pay states $575 million,” Henry testified.

To add insult to injury, consumers told the Pennsylvania AG that many times the lender pushed them to borrow more than they wanted or needed.

In 2021, the Pennsylvania AG announced a landmark junk fee settlement with Marriott International.

For many years, travelers were misled by the published rates offered by hotels for a night stay, only later to be hit with the mandatory “resort fees” when they were checking in.

“Thanks to our settlement, Marriott now has a policy in place to be upfront and transparent in the disclosure of mandatory fees including resort fees as part of the total price of a hotel stay, allowing consumers to compare total costs for hotels and find the one that is the best fit for them,” Henry said.

Fee-upon-fee and a fear of homelessness

Lindsey Siegel, Director of Housing Advocacy for Atlanta Legal Aid, told the senators predatory and hidden rental fees are gouging families living in poverty.

Siegel shared the story of a single mother who found an apartment online in the fall of 2020 that rented for $1,400 per month.

Lindsey Siegel, Director of Housing Advocacy for Atlanta Legal Aid (Photo: Screen grab from

“She applied and paid $525 through the landlord’s online portal, which covered her $50 application fee, a $175 move-in fee, and a $300 screening fee. All of which were non-refundable,” Siegel said.

When her application was approved a few weeks later, the landlord charged her another $200 approval fee.

When the woman received and signed a copy of her lease, it was 50 pages long and contained eight different addenda.

“She had expected to pay her rent and for water. She didn’t expect to be responsible for a package locker fee, a trash removal fee, a pest control fee, a technology package fee, an insurance fee, and a credit reporting fee.

When the fees added up, $83 had been tacked on to her monthly rent.”

To make matters worse, the landlord did not accept the rent by cash, check, or money order.

The single mom was directed to use the landlord’s online portal where she was charged another $72 per payment as a “convenience fee.”

“The bait and switch Ms. Dixon experienced where the landlord advertised the rent as one price, only to raise it much higher with junk fees after she had spent hundreds of dollars up front, is a far too common practice of many investor landlords in the Atlanta area,” Siegel said.

And even with these burdensome fees, Siegel said in a tight housing market, her clients understand the risk of not paying rent.

“They will forgo food, medicine, clothing, and doctor’s visits. They will get a second job. They will apply for public benefits like food stamps. They will do whatever they can to avoid becoming homeless.”

The proliferation of these abusive fees, particularly common among investor landlords, demonstrates the need for specific protection for tenants.

“Stronger federal regulation could help define what is excessive and give states, advocates, and renters new tools to combat these fees,” Siegel maintained. “We are pleased the White House and the subcommittee are concerned about fairness and transparency in the rental market.”

Amid ‘scatter shot’ approach, signs of change

Brian Johnson, managing director of Potomac Global Partners, suggested to the subcommittee the root cause of these economic hardships was inflation.

“In the process, the White House and supporting agencies have dismissed broad categories of fees as junk without ever providing any consistent definition of the term, which has created uncertainty as to which fees can be assessed by institutions without undue reputational or regulatory risk,” said Johnson.

Tillis agreed with Johnson’s assessment and tried to steer the hearing back to inflation and what he called the “scatter shot, ill-defined regulatory approach” of the Consumer Financial Protection Bureau.

Sen. Catherine Cortez Masto (D-NV) (Photo:

But Sen. Catherine Cortez Masto (D-NV) dismissed the partisan argument to focus on a chief complaint from her constituents.

“Just last month, Southern Nevada had nearly 5,000 eviction filings,” she said. “I know that it’s not just the high rental costs and housing costs, but there were extra surprise fees that I heard from these families that were having an impact on them as well.”

And that’s the rub. Most consumers try to do due diligence and look for the best price, whether it’s for an apartment, a hotel, or even a vacation getaway.

But the Pennsylvania Attorney General said they click on the wrong link on the internet and find themselves down a rabbit hole where the end price is much larger because of junk fees.

“And at that point, they’re so far in or they never discover it. So, no, I don’t think they understand exactly what to be aware of.”

Pressure from the Biden Administration has prompted Zillow and to recently commit to showing all fees to prospective renters on their websites, which some see as a good first step in the housing market.

“If more federal agencies have the authority to address these hidden fees, how would that affect your office’s capacity?” Sen. Warnock asked AG Henry.

“It would help tremendously.”

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Clayton Henkel
Clayton Henkel

Communications Coordinator Clayton Henkel manages the NC Newsline website and daily newsletter, while also producing daily audio commentaries and the weekly News and Views radio program/podcast.