policy

Gov. Maura Healey said Tuesday that she supports eliminating tenant-paid brokerage fees, which renters are sometimes required to pay when signing a lease along with first and last month's rent and a security deposit. Resistance to the fees is growing on the state and native levels, with Healey's comments only adding momentum.

At a performance by GBHs “Boston Public Radio“Healey was asked by an audience member about brokerage fees and how they could drive more people out of Massachusetts for affordability reasons.

“I think they should be abolished. I think they should go away. I fully support this and support taking action to achieve this,” Healey said.

Brokerage fees are one-off advance payments that typically amount to about one month's rent. Renters within the Boston area often pay the fees to agents they’ve never met and who’ve done minimal work to attach them with their latest apartment and the owner. Although Healey uses the word “abolish,” most efforts currently give attention to simply forcing landlords to pay agent fees, although the owner hires the agent. That appears to be what the governor meant.

“The landlord can make their own arrangements,” Healey said on GBH when asked about this distinction.

Healey repeatedly mentions the state's housing affordability crisis in interviews and tied the difficulty of brokerage fees to a broader defense of her actions in office to drive down prices for residents, similar to a recently expanded child tax credit.

In November, New York City Council coordinated making landlords liable for brokerage fees on most leases, prompting renewed discussion of the difficulty amongst Massachusetts officials.

Boston, one of the expensive rental markets within the country, can also be one among the last major markets where potential renters typically need to pay agent fees. Along with first month's rent, last month's rent and a deposit, tenants often need to give you the equivalent of 4 months' rent upfront to secure an apartment.

Last yr, the state Senate included a policy in a housing policy bill that may require landlords to pay brokerage fees, not tenants. But House negotiators didn't agree, and the policy didn't make it to Healey's desk. State House News Service reported.

Senate President Karen Spilka said during her speech Inaugural speech last week that the Senate “will once again seek to shift the burden of brokerage fees from tenants.”

State Representative Tackey Chan of Quincy said He helped file a bill Monday that states it’s the responsibility of the party, either the owner or the tenant, that hired the agent to pay their fee. Last month, The editorial board published an article arguing that tenants shouldn’t be forced to pay agent fees. Chan, Rep. Paul Schmid of Westport and Rep. Erika Uyterhoeven of Somerville agreed in a follow-up letter to the editor.

“In an already difficult housing market, adding this fee to the upfront rent ends up trapping people in poor housing conditions, preventing turnover in the housing stock, and discouraging low-income families, students, and seniors on fixed incomes from entering the market,” they wrote .

Locally, the Boston City Council will discuss the difficulty on Wednesday afternoon. Council President Ruthzee Louijeune and Councilwoman Liz Breadon filed a house rule petition This would lead to the party liable for engaging the broker also being liable for paying their fee.

Greater Boston's housing shortage allows property owners to pass brokerage fees onto renters, exacerbating inequality in who has access to housing, city councilors wrote. They pointed to studies that found “systemic housing discrimination by real estate agents.” The home rule petition would still should be approved on Beacon Hill if it passes the City Council.

“We’ll look at it all,” Healey said. “I understand that housing costs are high and we must do everything we can to reduce costs.”

By DEE-ANN DURBIN

The Federal Trade Commission said Tuesday that it should soon require hotels, vacation rental platforms and live event organizers to accomplish that disclose any fees upfront when prices are listed.

“People deserve to know in advance what will be required of them, without fear of being hit with mysterious fees later that they did not plan for and cannot avoid,” the FTC Chairman said Lina Khan said in an announcement.

The regulation is attributable to come into force in 120 days.

Ticketmaster said Tuesday it supports the brand new rule.

“Ticketmaster has long advocated for flat pricing as the nationwide industry standard and we are pleased that the FTC is mandating the necessary changes to make ticket purchasing more transparent for fans,” the corporate said.

The Associated Press left a message looking for comment with the American Hotel and Lodging Association on Tuesday.

Four of the FTC's five commissioners voted to approve the rule. Commissioner Andrew Ferguson— who’s President-elect Donald Trump to interchange Khan was the one dissenting vote.

The regulation requires accommodation and ticketing corporations to obviously and conspicuously disclose actual costs – including all mandatory fees – when displaying prices. Companies that exclude taxes or shipping costs from advertised prices must also disclose these before customers enter payment information.

The FTC estimates that the rule will save U.S. consumers 53 million hours per 12 months trying to find actual prices for accommodations or events.

The FTC began the rulemaking process in 2022 and invited the general public to comment on whether a fee disclosure rule could help eliminate unfair and misleading pricing. The agency said greater than 12,000 people commented.

Junk fees and misleading prices are also considered one of the explanations behind this Justice Department sued Ticketmaster and its parent company Live Nation Entertainment earlier this 12 months. The government asked a court to separate the businesses, saying that they had a monopoly on concert promoting and ticket sales, driving up prices for consumers.

The Biden administration has also targeted the charging practices of US airlinesBanks and online payment platforms.

Originally published: December 17, 2024 at 11:27 am PST

By MICHELLE CHAPMAN, AP Business Reporter

Some banks and banking groups are suing the Consumer Financial Protection Bureau over a final rule that caps overdraft fees charged by banks.

The rule is a component of President Joe Biden's administration's campaign to cut back junk fees that burden consumers on on a regular basis purchases, including banking services.

But banks argue that without overdraft protection, desperate consumers would as an alternative turn to inferior, unregulated services to ease their crisis.

Under the final rule According to data from the Consumer Financial Protection Bureau announced Thursday, banks can choose from three options: They can charge a flat $5 overdraft fee, they will charge a fee that covers their costs and losses, or they will charge any fee so long as they disclose the terms of the overdraft like every other loan, normally expressed as an APR or APR.

While banks have reduced their overdraft fees over the past decade, the nation's largest banks still collect about $8 billion in fees every year, based on the CFPB and public banking records. There is currently no cap on the overdraft fees banks are legally allowed to charge.

The final rule is scheduled to take effect in October 2025, but the brand new Trump administration has yet to tap anyone to guide the CFPB and has mentioned the concept of ​​abolishing the agency.

The final rule applies to banks and credit unions with greater than $10 billion in assets, including the nation's largest banks. Banks have previously sued the CFPB over these rules and caps on late fees on bank cards. Congress also has the choice to challenge or repeal the rule.

The Consumer Bankers Association filed the lawsuit together with the American Bankers Association, America's Credit Unions and the Mississippi Bankers Association, in addition to other banks. The group claims that the CFPB is exceeding its regulatory authority with the brand new rule.

“Research shows that during a short-term budget shortfall, overdraft services provide much-needed liquidity so consumers can put food on the table, keep the lights on and make other important payments on time,” CBA President and CEO Lindsey Johnson said in a press release. “Without overdraft services, marginalized consumers are more likely to turn to poorer, less regulated non-bank services to fill the gap.”

The lawsuit was filed Thursday within the U.S. District Court for the Southern District of Mississippi, Northern Division. CBA and its co-plaintiffs are also looking for an injunction prohibiting the CFPB from implementing the brand new rule until the court makes a final decision on the matter.

Originally published: December 13, 2024 at 8:40am PST

The Senate Judiciary Committee met on Tuesday for a hearing on the allegations visa–MasterCard The “duopoly” that committee members on either side say has left retailers and other small businesses without the flexibility to barter interchange fees on bank card transactions.

“This is a strange group. The most conservative and liberal members happen to agree that we need to do something about this situation,” said Dick Durbin, committee chairman and Democratic senator from Illinois.

Interchange fees, also generally known as swipe fees, are percentage fees that merchants pay to bank card issuers when customers use bank cards to make retail purchases. visa And MasterCard have a combined market cap of greater than $1 trillion and control 80% of the market.

“In 2023 alone, Visa and Mastercard charged merchants more than $100 billion in credit card fees, primarily in the form of interchange fees,” Durbin told the committee.

Durbin, together with Kansas Republican Sen. Roger Marshall, co-sponsored the bipartisan Credit Card Competition Act, which goals to eliminate market dominance by Visa and Mastercard by requiring banks with greater than $100 billion in assets to have no less than one other payment network to supply their cards, except Visa and Mastercard.

“In this way, small businesses would finally have a real choice: They could route credit card transactions over the Visa or Mastercard network and continue to pay interchange fees, which are often considered the second or largest cost, or they could choose a lower-cost alternative,” Durbin said the committee.

However, Visa and Mastercard are sticking with their swipe fees.

“We think of them as incentives, some might think of them as punishments. But if you can introduce new technologies that reduce risk, remove fraud from the system and streamline processing, then you would be entitled to lower interchange fees,” said Bill Sheedy. Senior advisor to Visa CEO Ryan McInerney. “It is very expensive to issue a product and offer a payment guarantee and online customer service without any liability. All of these things and more, Senator, will be taken into account in the exchange.” [fees].”

The executives also warned about the Credit Card Competition Act, with Sheedy claiming that it would “take control away from consumers over their very own payment decisions, reduce competition, impose technology sharing regulations, and pick winners and losers by favoring certain competitors over others.” “.

“Why do we know this? Because we’ve seen it before,” said Linda Kirkpatrick, president of Mastercard Americas, alluding to the 2010 Durbin Amendment to the Dodd-Frank Act, which required the Fed to cap fees on retailers for transactions on debit cards. “Since the introduction of debit regulation, debit rewards have been eliminated, fees have increased, access to capital has been restricted, and competition has been stifled.”

But current high credit card fees for retailers are leading to higher prices for consumers National Retail Association he told the committee in a letter before the hearing. The Credit Card Competition Act, wrote the retail industry's largest trade association, will bring “fairness and transparency to the payments system and relief for American businesses and consumers.”

“When we think of consumer spending, credit card fees aren't the first thing that comes to mind, but these fees account for a surprisingly large portion of consumer spending,” said Roger Alford, a law professor at Notre Dame University. “Last year, the average American spent $1,100 on swipe fees, more than they spent on pets, coffee or alcohol.”

Visa and Mastercard agreed to a $30 billion settlement in March that would reduce their swipe fees by four basis points for three years. But a federal judge rejected the settlement in June, saying they could afford to pay more.

Visa is also fighting against a Justice Department suit submitted in September. The payments network is accused of maintaining an illegal monopoly over debit card payment networks, which has affected “the price of almost everything,” in response to Attorney General Merrick Garland.

Local news

According to court documents, the town of Boston is fighting in court to avoid paying nearly $300,000 in legal fees for cops who were recently acquitted of time beyond regulation fraud charges.

Former Boston cops Timothy Torigian, Robert Twitchell and two others were acquitted of embezzlement charges in April last 12 months. Torigian and Twitchell, who were supervisors, were accused of submitting time beyond regulation sheets for hours they didn’t work. Their lawyers argued they followed standard practices.

Nine Boston cops pleaded guilty to time beyond regulation fraud, one was convicted, and one died before going to trial.

In June, an arbitrator ruled that the town of Boston must pay Torigian and Twitchell's legal fees under the Boston Police Superior Officers Federation's collective bargaining agreement.

If an worker accused of against the law “in the course of his or her employment” is found not guilty, the City of Boston is required under the agreement to reimburse attorneys’ fees.

That includes $115,119 for Torigian, $64,780 for Twitchell and one other $100,000 for Torigian's fee, in keeping with documents obtained through a public records request.

When the town rejected their grievance filed in June 2023, their case was heard by an arbitrator in March, in keeping with the arbitrator's decision. The arbitrator ruled in favor of the union and ordered Boston to pay the fees.

“The City's obligation to compensate them after an acquittal arises only as to whether the charges were brought in the course of their employment,” the arbitrator wrote. “By deciding not to reimburse the plaintiffs for their criminal defense, the City improperly substitutes its verdict for the jury's verdict.”

Arbitrator rules in favor of union, city goes to court

The city of Boston then sued the union in Suffolk Superior Court in July, asking the court to overturn the arbitration award. The city claims the lawsuit searching for reimbursement was filed too late, partially because Torigian and Twitchell each voluntarily left the department in 2020.

“The complainants were neither employees nor members of a bargaining unit after their voluntary termination of employment with the Authority, and the 30 calendar day period for filing complaints on their behalf expired 30 calendar days after their termination of employment with the Authority,” the town's grievance states.

The union argues the 30 days began on the day of its acquittal, in keeping with the arbitration panel's decision, which was obtained through a public records request. According to court documents, the union responded to the town's lawsuit, asking the judge to verify the $279,899 in damages.

The Boston Police Superior Officers Federation didn’t reply to a request for comment.

Inflation could deceleratebut high prices proceed to crush any hopes of savings for Californians living paycheck to paycheck.

Just this month, a brand new California law was passed Prohibition of so-called “junk fees” got here into force. Designed to Protect consumers from undisclosed costs When making purchases, it’s designed to stop firms from hiding additional fees, often until the tip of the transaction. Unfortunately, California's recent law will not be enough and doesn’t protect consumers from all fees they hold on.

Similar Federal Protection got here into force last fall. It ignores one among the essential culprits: the bank card firms.

Federal regulations on junk fees have thus far focused on concert tickets, lodging and airline fees. Exempting bank card firms when consumers are drowning in bank card debt — much of which is resulting from bank fees — is a large oversight. Millions of individuals across the country borrow money to pay for planned and unplanned expenses, but don't realize how much the fees increase the actual costs until it's too late.

Many Californians turn to traditional banking and financial solutions like bank cards to borrow money, but these firms don't at all times have their best interests at heart. Many of those credit products include hidden fees and an APR that could be misleading to consumers and doesn't truly disclose the prices. This goes far beyond late fees, which is why it's surprising that all the problem isn't being addressed. Junk fee rules won't solve the larger problem.

The amount of junk fees that accrue when consumers borrow money is staggering. Cash Poverty Report 2023 found that Americans pay greater than $25 billion in hidden fees annually. At the identical time, unplanned expenses cost the common family living paycheck to paycheck nearly $2,000 a yr. These are unavoidable, and financial firms shouldn’t be allowed to benefit from needy consumers. But they do it anyway.

The report found that subprime bank cards are by far the worst for consumers with low credit scores because they impose additional junk fees on borrowers. These cost consumers $11.5 billion annually in fees, including annual percentage rates, subscription fees, late fees, fees for processing fast payments, application fees, monthly account maintenance fees, recent card fees and ATM fees.

Payday Loans are the second costliest option, totaling about $6 billion in additional fees. And money advances by financial technology firms like Access to the wages you deserve and peer-to-peer lending offers cheaper solutions with total fees of $1.3 billion per yr.

It's clear that many Californians have been taken advantage of by the junk fees in the standard economic system. The standard industry-wide benchmark for comparing financial options shouldn’t be the APR, since it doesn’t represent the whole cost consumers incur after they borrow money. Borrowers must pay additional fees on top of the APR, creating much more confusion for people already in financial distress.

Regulators in California and Washington, DC have to transcend what they’re currently doing and address this inaccurate calculation through a distinct approach, which we call “Total cost rate.” It will not be intended to mislead the buyer, just like the annual percentage rate, but includes all the things a consumer pays along with the principal borrowed. The total cost ratio is the vital assessment of what the fee of credit really is when it includes all additional fees along with the principal and will not be limited to the annual percentage rate.

But it’s as much as California's local politicians, President Joe Biden, Congress and regulators to make finance fairer by moving to systems that will not be only cheaper, but additionally more convenient and accessible.

Introducing total expense ratios and involving bank card firms in regulating junk fees could help usher in an era of transparent pricing that makes life easier for Californians.

Originally published: July 31, 2024 at 5:30 am

Jonathon Yu shouldn’t be an expert developer, but he’s occupied with constructing recent homes.

In 2023, the 29-year-old product manager in Sunnyvale filed plans to demolish the modest 1,000-square-foot bungalow he had purchased a 12 months earlier and replace it with a three-story, five-unit apartment constructing.

He paid a couple of thousand dollars to an architect to attract up plans, after which one other few thousand dollars to town for application fees. His parents called him crazy for spending a lot, but Yu had the cash and he wanted to construct apartments.

He lacked the financial means to fulfill Sunnyvale's next demand: to get approval for the $3 million project, he would have needed to pay $300,000 in development fees. These one-time fees are levied by local authorities to finance infrastructure improvements akin to roads, parks and schools.

“What stopped me was the development fees,” Yu said. “If I had completed the building, it would have been the cheapest new construction in the area.”

Across the Bay Area, development fees just like the ones Yu experienced often exceed six figures per unit – and developers have had little room to challenge them.

However, a recent U.S. Supreme Court ruling could cap the event fees California can charge, which some say could lower barriers to recent housing construction.

The case involved California landowner George Sheetz, who challenged the $23,420 fee El Dorado County charged to finance the road improvements the county said were mandatory for the small house he wanted to construct. Sheetz sued on the grounds that the Constitution's Expropriation Clause limited the federal government's ability to expropriate property without adequate compensation.

Previous cases have required such fees to be “roughly proportional” to a project's impacts, but California courts have required local agencies to fulfill lower standards.

In a unanimous decision, the Supreme Court found that was not true and sent the case back to state court for reconsideration. It is unclear what recent standards the California court will impose on cities, however the fees will likely be reduced.

“California cities have historically been exempt from the requirement to demonstrate work to justify their fees,” said Dave Lanferman, an attorney at Rutan and Tucker who focuses on development fee cases. “That is no longer the case.”

California has collected among the highest property taxes within the country for many years, dating back to 1978, when voters passed Proposition 13, which limited the property taxes local governments could collect. With their ability to boost revenue limited, local governments began in search of recent ways to fund services akin to schools, parks and transportation projects.

Ever since these fees were introduced, developers have criticized them, claiming that each dollar that increases the associated fee of a project makes it harder to finish..

“These fees cost us a lot of housing – housing that is never proposed,” said Dylan Casey, executive director of the California Housing Defense Fund, which sues cities and counties to force them to comply with the state's housing law.

Many developers understand that such fees are mandatory to finance growth. They might help cities acquire recent land for parks, expand their libraries or construct recent fire stations, allowing a city to take care of its level of service even when recent residents are a burden.

Critics, nonetheless, say that cities haven’t needed to justify the fees for too long – and that Sheetz can now finally force them to accomplish that.

“There is no connection between the fees cities charge and what they spend the money on,” said Matthew Lewis, spokesman for the housing policy organization California YIMBY. “This creates legal risks for cities and economic risks for developers.”

Fees like those Sunnyvale charges for parks – which range from $34,121 for a single-family home to $114,498 per unit in an apartment constructing – are unreasonable, he said.

Sunnyvale claims its fees haven’t hindered development in town. In an announcement, a spokesperson identified that town exceeded its market-rate housing goals between 2015 and 2023.

Most often, it's small housing developers like Yu who are suffering from the high fees, since developers of enormous projects already negotiate their fees with cities. (Earlier this month, Cupertino said it will waive $77 million in fees for the developers of The Rise, town's largest housing project on the previous Vallco Mall site.) Cities that don't negotiate willingly could possibly be taken to court by developers to barter a lower fee.

Lowering these fees to what developers call “more reasonable” levels could help make projects each small and enormous more profitable and stimulate housing construction. Even if cities lose short-term fees, recent housing construction could provide them with long-term revenue streams – akin to higher property and sales taxes.

“If you do nothing, that's the worst case scenario,” said Erik Schoennauer, a development consultant in San Jose. “You get no fees or housing.”

Others dispute that lower environmental fees would make a big difference within the profitability of a project. Depending on town, the fees only account for 4 to eight percent of the full cost of a project.

A study commissioned by San Jose in October 2023 showed that even when town completely eliminated development fees and other local construction taxes, most planned projects would remain unfeasible because of high construction and borrowing costs. Despite this, town in June prolonged a program that waives all municipal construction taxes and half of parking development fees for brand new high-rise buildings downtown — and it’s considering similar incentives that may apply citywide.

“The real question is what conditions do we need to create to create more housing? I don't think this is just a question of whether we raise or lower these fees,” said Jean Cohen, executive director of the South Bay AFL-CIO Labor Council. “It's a multi-pronged approach.”

“There is a fine line between whether a city is getting the fees to support the services needed for this new development and whether the fees can overwhelm a project and prevent it from being implemented,” Hudacek said.

Yu admits that the event fees were just certainly one of many obstacles he faced – financing would even have been difficult and construction costs could have skyrocketed – however the fees were what stopped him from going ahead.

“Many of these fees are death by a thousand cuts,” Yu said. “Every little dollar counts.”

Originally published: July 21, 2024 at 6:15 am