‘Drip Pricing’ Is Turning Checkout Into a Nasty Surprise

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As if inflation isn’t bad enough, consumers are getting slammed by drip pricing, the sneaky extra fees that get tacked on right before a purchase is closed.

You’ve no doubt become familiar with the drill: Airlines, hotels, concert ticket sellers, telecom companies and others will advertise a lower price, but then reveal additional, mandatory charges often after buyers are invested and about to click the “purchase now” button. It’s an unfair practice, but unfortunately nothing new. And it’s becoming even more rampant as companies look for quieter, less visible ways to pass on higher costs to consumers.

Besides being incredibly frustrating, drip pricing feels deceptive, though it’s perfectly legal in many cases. It’s impossible to comparison shop for the best deal when you don’t know what the actual cost is. Studies show the tactic exploits cognitive biases: People get excited about the initial offer and then don’t want to go to the trouble of starting over or having to re-enter all their information. They wind up spending more than they would have if they had known the true cost at the outset.

So what can you do to fight back? First, be aware of the latest tricks so you can avoid falling for them. Second, don’t just give up. You can still exercise your consumer power by walking away, or protesting fees you view as particularly onerous.

The airline industry has been a pioneer in drip pricing — it prefers to call it “unbundling” — starting with the rise of flight aggregator websites back in the early 2000s. Airlines routinely tick on fees for checking bags or selecting seats. Since the pandemic, things have become worse. Many carriers have imposed or increased fuel surcharges, and tickets bought with mileage rewards have become more expensive.

For those who have been issued a voucher recently for a delayed or canceled flight, prepare to be particularly outraged. You’ll be told you have to call an agent to use the voucher — and then get hit with a phone booking fee for doing so, according to Brian Kelly, founder of travel website The Points Guy.

The hotel industry isn’t much better. Guests have complained for years about resort fees, which are daily charges for hotel amenities and are typically added after you’ve already committed to paying a particular price for a room. Nowadays, the most annoying part of the resort fee is that guests are being charged for things they aren’t even able to use, either because of pandemic restrictions (such as limiting access to the hotel gym) or because of understaffing. Be wary of extra charges imposed for Covid cleaning, too. Hotels have been slow to roll them back, even though they may not be taking the same precautions anymore.

It goes far beyond travel. At home, keep an eye on your cable, internet and phone bills. Telecom companies were cited as the worst industry for hidden fees, with 70% of respondents in a 2018 Consumer Reports survey saying they’d experienced an unexpected or hidden fee from a telecom company in the previous two years.

Cable providers are notorious for luring consumers in with promotional rates, but then adding on fees for miscellaneous things, which is where they bury their price increases. Companies were inventing new fees and hiking existing ones even before inflation, and will only continue doing so, says Jonathan Schwantes, senior policy counsel for Consumer Reports, who focuses on telecommunications and competition issues.

Merchants are also charging consumers a fee at checkout for credit-card purchases. Visa and Mastercard recently raised some of the fees they charge retailers, and instead of swallowing it or adding it in their pricing, some are imposing a surcharge. About 10 years ago, the ban on credit-card surcharges (where merchants pass the fees imposed by payment networks such as Visa and Mastercard to consumers) was lifted, but it’s only more recently that states have followed suit, opening the option for retailers.

In addition to drip pricing, consumers should watch out for dynamic pricing. That’s where you think you’re saving money by agreeing to “subscribe and save” for automatic deliveries on Amazon, but check the fine print: You’re agreeing to subscribe to a fluctuating price, not a set one. Sure, Amazon will send you a notification ahead of delivery to confirm you’re OK with the price, but many consumers say they’ve missed the alert.

Finally, if you do wind up paying more than you bargained for — whether it’s for a tube of toothpaste or a ticket to Rome — you don’t have to just accept it. The Consumer Reports study showed that only 30% of people who were stuck with a hidden fee fought against it. But more than 65% of those who complained were successful in getting it refunded or waived. With your money not going as far as it used to, it’s even more vital to pay what you were promised.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Alexis Leondis is a Bloomberg Opinion columnist covering personal finance. Previously, she oversaw tax coverage for Bloomberg News.

More stories like this are available on bloomberg.com/opinion

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