Fighting for honest pricing: Threat of hidden fees and how to avoid them

It happens to everyone: You scrounge around for the best deal and pour time into research. Finally, thinking you’ve found it, you eye your bank account, click that “BUY” button, and suddenly find that the total cost is more than the company said — a lot more. What the heck happened?

You got slapped with hidden fees.

And you’re not alone.

A Consumer Reports survey has found that 85% of Americans have experienced a hidden or unexpected fee, 64% are paying more now in unexpected or hidden fees than they were five years ago and 63% of people have avoided buying something new or signing up for a service out of fear of unexpected or hidden fees.

Data collected by the nonprofit show that hidden fees are responsible for taking billions out of American bank accounts every year:

  • Airline fees: $7.6 billion in 2018.
  • Bank overdraft fees: $11.5 billion in 2018.
  • Hotel fees and surcharges: $2.9 billion in 2018.

Those numbers are all up from 2017, Consumer Reports says, and they’re expected to get even higher in 2019.

The nonprofit writes in its July issue that, “The explosion of add-on fees may be an outgrowth of the rise of online shopping websites such as Expedia and Hotels.com, which allow consumers to quickly compare prices from multiple sellers and to zero in on the cheapest options.”

The downside of that digital growth is that companies have started labeling portions of their true costs as “fees” in an effort to appear to be the cheapest.

“When disguised as fees, these costs may not be picked up by online shopping portal engines, though some websites may eventually capture them,” Consumer Reports writes.

There’s another issue at hand as well: Roughly half of all consumers are bad enough at math that, when they’re shown complex disclosures with all the fees, they still chose the more expensive product.

“Up to a point, people prefer more complexity in disclosures, which they view as more transparent,” Shannon Michelle White, a researcher with the Consumer Financial Protection Bureau, told Consumer Reports. “But that preference can lead them to paying higher fees because they are also overconfident about their ability to do math.”

That doesn’t mean consumers can’t or shouldn’t fight back. The first step in fighting back is finding those sneaky fees.

Consumer Reports is leading that charge online (no pun intended), asking for people share hidden fees they’ve been hit with, big or small.

They also say they’re pushing for reform to make the marketplace more fair, and are providing consumers with multiple guides:

Learn more at WhatTheFee.com.

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