A “convenience fee” for your flowers. A “resort fee” for your bare-bones roadside motel. A mysterious “cost of business” surcharge on your dinner bill. A “handling fee” for your mobile tickets, which no one but you will handle. These kinds are things typically aren’t optional upgrades or extra amenities; they are required as part of the original purchase but aren’t disclosed upfront.
If you are anything like me, such fees probably left you somewhere between irritated and enraged — by the deception; by the fact that you can’t opt out of silly and superfluous charges (what exactly is an “impact fee”?); by the sometimes substantial increase in costs (more than one-quarter of the price, for many live-event ticket sales); and by the obstruction of your good-faith efforts to responsibly comparison shop.
After all, even if you suspect unavoidable fees might be coming, the precise amount of those fees charged varies so much from vendor to vendor that it’s impossible to calculate apples to apples upfront. Making an informed decision about which of several competing options is cheapest can thus require a huge investment of time. Sales taxes are also annoying — and, in my dream world, would be included upfront, too — but at least they’re predictable and applied consistently across a given product category.
In some markets, this kind of hidden fee scheme has become so common, it’s inescapable. Once a few hotels figure out that obfuscating their pricing on a popular travel aggregation site can make their rooms look artificially inexpensive, for example, any hotels that price more transparently will be at a competitive disadvantage. That’s true even if the latter group actually offers a better, cheaper deal.
As a result, more and more hotels in the market will opt into, or get sucked into, more duplicitous practices.
Fortunately, some policymakers are working to break this cycle, and give diligent consumers and honest vendors a fighting chance.
This week, the Federal Trade Commission proposed a new rule to ban such “junk fees,” defined as “hidden and bogus fees that can harm consumers and undercut honest businesses.” The rule would prohibit sellers from advertising prices that hide or leave out mandatory fees, and would require companies to disclose upfront the amount and purpose of any fees and whether they are refundable.
One thing the rule would not do: It would not dictate or limit prices. It would not even ban the use of mandatory fees. It would merely require greater transparency about them, so consumers can make more informed decisions.
This is as things should be. Companies should be competing on price and quality — not on how good they are at tricking customers.
The rule is still in the proposal stage and has a ways to go before it would take effect. But President Biden has been advertising his administration’s plans to tackle junk fees for a while. Federal lawmakers have also introduced bills aimed at these unpopular practices, and California just enacted a similar law last week. Multiple lawsuits, filed by states and pro-consumer groups, have targeted bad actors, too.
As a result, some vendors and shopping platforms have apparently seen the writing on the wall.
Back in June, Ticketmaster and Live Nation pledged to disclose full pricing to consumers upfront, ending the practice of dropping in surprise fees at the end of the online checkout process. Airbnb recently began allowing travelers to more easily sort listings inclusive of cleaning fees, which had been a notorious means for hosts to mask their pricing. And some of those lawsuits I mentioned have resulted in big hotel chains amending their practices.
In the grand scheme of things, resort fees and the like might seem like a minor issue. But they matter to consumers, they distort markets and they’re an easy thing for policymakers to remedy. This is good government at its most boring, pedestrian best.
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