Biden's beef with bad customer service

0:01NPR.

0:12Out of curiosity, where are you speaking to me from today? I'm speaking to you from my office in the West Wing of the White House. Oh, nice. That's a pretty big office for the West Wing. It's a pretty good job. That's Neera Tanden. And the pretty good job she's talking about, it's her role as domestic policy advisor to President Biden. As part of that job, Neera heads the White House Domestic Policy Council. Which oversees a variety of issues for the president, healthcare, education, consumer protections, which is why we are engaged in this work. And by this work, Neera is referring to a new initiative aimed at trying to serve and protect American consumers.

0:54They're calling it the Time is Money initiative. It's an array of actions the Biden-Harris administration is taking to stomp out corporate shenanigans that waste consumers' time and money. Like, for example, making it unnecessarily difficult to cancel a subscription, get an airline ticket refund, or file an insurance claim. Classic economic theory suggests that in a competitive market, companies will want to treat their customers well, or else they'll lose their customers to competitors. So why does the White House want to intervene in this area of the free market? This is The Indicator from Planet Money.

1:29I'm Waylon Wong. And I'm Greg Rosalski. Today on the show, why the White House wants to regulate how companies treat their customers.

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2:42AI promised intelligence, but it also exposed everything people couldn't see, like scattered data and hidden risks. Now there's a new way forward where protection, governance, and AI trust move together. With Veeam plus Security AI, you can see your entire data estate in real time. Because when resilience, security, governance, and AI trust come together, innovation moves safely and faster. Learn more about accelerating safe AI at scale at Veeam.com. So recently, I put on a nice colored shirt in anticipation of a Zoom interview with White House Domestic Policy Advisor Neera Tanden. You don't have to be on camera if you don't want, but I do want you to know that I did dress up for this.

3:28I work from home, so I'm normally very schlubby. Greg, were you wearing Bermuda shorts with your nice collared shirt? Definitely sweatpants. So the reason I was talking to Neera, the White House has a new initiative called Time is Money. I'd love to get the backstory on this initiative. I'm imagining like President Biden being like fed up with how hard it was to cancel his Netflix subscription or something. Please tell me it was something like that. I feel like I could make up a story like that. But what really happened in this arena is that, you know, we as an administration have been doing a lot of work on junk fees.

4:07Junk fees, as in like those surprise charges that companies tack onto your bill when you book a hotel or buy concert tickets. We did an episode about the administration's efforts to clamp down on this practice last year. It was around that time that Neera and her team met with the president. We had a meeting with the president where, you know, he talked about this work overall. And really what animated him is he thinks that sometimes companies are really kind of playing consumers for suckers. President Biden instructed Neera and her team to look at the shady business practices that go beyond just junk fees and see what sort of actions the administration could take to try and help consumers.

4:44The result? The Time is Money initiative. It has a bunch of different targets. For example, it's aiming to make a rule that will make it as easy to end a subscription as it is to start one. I had a newspaper subscription where it was literally three clicks to subscribe. And then to end my subscription, it was 45 minutes on the phone. The Department of Transportation has issued a new automatic cash refund rule for airlines. If your flight is canceled or significantly delayed and you don't want to rebook, you will now automatically get your money back. In all of this and more, the Biden-Harris administration seems to be rejecting a storybook version of the free market.

5:25Waylon, you know all about that storybook version. Yeah, my parents read me this every night before bed as a child. Basically, consumers are almost always well-served by companies because of the wonders of competition. Yeah, if a company makes your life like a living hell by wasting your time, this story goes, then you could just shop somewhere else. Now, we reached out to the U.S. Chamber of Commerce for its thoughts. It said, quote, imposing heavy handed regulations that micromanage business practices and pricing is the wrong approach, inevitably raising costs for consumers. This whole initiative does raise a fundamental question.

6:02Like, why does NERA think the government needs to stick its nose in this area of the free market? I think this is a really important point. So I think there's been a lot of academic research that shows that when people are shopping for a product, they basically look at the price of the product. And there isn't transparency on the range of services that companies provide, right? In other words, consumers don't have full information about company practices when they're shopping. When they click subscribe, they may not foresee bad practices that will annoy them later. And Neera says there are many instances where the consumer has already bought a product or subscribed to a service, and it's only after that that they encounter these shady practices.

6:47Facing the prospect of losing a customer or having to give them a refund or a payout, companies are incentivized to make it hard for a consumer to make the choice they want. And that's why we actually think all of this is creating a better functioning market. It really aligns with free market principles where consumers should be able to make the choices they want. But she says it is sometimes profitable for companies to block these choices. And she says companies who treat their customers well may lose out to competitors who adopt these shady practices. She says this can lead to a race to the bottom.

7:23And what we're really trying to do is essentially even the playing field. So companies that want to do the right thing can do the right thing because they won't lose money to other companies that are basically holding on to your dollars when they shouldn't. A core concept behind this initiative is fighting something that the behavioral economists Richard Thaler and Cass Sunstein have called sludge. Sludge is when companies or governments adopt systems that make it hard for consumers to make a choice. I spoke with Richard Thaler, the Nobel Prize winning pioneer of behavioral economics, for the Planet Money newsletter back in 2021.

7:57we talked about the concept of sludge. And he made clear sludge is not just about the private sector. In fact, quite the opposite. Here's the biggest piece of sludge in our economy, the US tax system. In Sweden, the way you file your tax returns is you get a text message from the government saying, we think we owe you 7 ,000 kroners if you agree, press one, and the money appears in your bank account. That's it. One click. This conversation was back in 2021. And Thaler told me here in the US, we have to deal with piles and piles of paper when we file our taxes, or we have to pay lots of money to accountants or companies like TurboTax to get our taxes done.

8:43And so I was curious, why does the Time is Money initiative seem to focus so much on the private sector when the government is such a sludge fest? Well, it's I mean, it's not just it's not just focusing on the private sector. So first, I am proud to say that this White House issued an executive order on consumer experience in the federal government way back in 2021. And in that space, we focused on things like high friction points with your government filing taxes. And there's been a whole body of work from that EO. Neera says, for example, because of this executive order, plus a provision in the Inflation Reduction Act that provided funding for reform, the IRS is now rolling out nationally something called direct file.

9:31It will allow Americans with uncomplicated tax situations the opportunity to directly file their taxes online for free with a simple form. We believe it's as important to walk the walk as talk the talk. Could the Fed work on the states to, like, sort out the DMV? Please. So, yeah, I must say there was this awkward moment during the interview when it sort of hit me that we at Planet Money have our own premium subscription service, Planet Money Plus. What if the White House targeted us? Well, I'm sure Planet Money isn't making it exceedingly difficult. Your phone's ringing right now, Greg, and it's Neera calling to complain that you can't cancel your Planet Money Plus subscription.

10:18It's like, no, our salaries. Now, I should say that Planet Money Plus is completely honest and above board when it comes to shady sludge practices. We're a sludge-free zone. But if that were ever to change, we now know the federal government could target us. And you know what, Greg? We would deserve it. We would.

10:40This episode was produced by Angel Carreras with engineering by James Willits. It was fact-checked by Sarah Juarez. Kate Kinkannon edits the show and the indicators of production of NPR.

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