Hidden and fraudulent fees are costing American consumers billions of dollars a year.
And it’s only getting worse…
Undisclosed and deceptive fees are becoming commonplace in today’s competitive world.
Here are some examples:
Hotels are charging guests hundreds in “resort fees” for items that were once all part of the service…
Communication companies are cramming little “monthly usage fees” onto your bill for no apparent additional benefit or service.
Perhaps the worst culprits of all…Airlines.
With the rise of “Budget” airlines, most large airlines are now playing the Fee Game – to maintain profit margins.
Instead of being upfront with prices; they are listing “cheap” tickets…
…with a laundry list of additional fees.
For example baggage, meal charges, insurance fees, fuel surcharges, added taxes and more.
Consumers are catching on
More and more savvy consumers are educating themselves and fighting the unlawful and unethical collection of fees.
For example, just recently, communications giant, Comcast, received the blunt end of a class action lawsuit because of its sneaky fees.
And…
It looks like they are losing the battle. (A win for millions of consumers around the US.)
Market Trends
With such a large number of companies adopting hidden fee tactics, a growing market gap of fed up consumers is being met by ethical businesses entering the most “hidden fee riddled industries”.
How they are competing:
By using fair and transparent pricing as their unique marketing differentiator.
What’s next?
The battle for the buck is far from over. Consumers need to know what’s going on and learn to protect themselves from fraudulent hidden fees.
That’s why…
I have collected some of the best resources on the net about the top 13 hidden fee riddled industries, to help you be better prepared. That way you can protect yourself, save money and share a tip or two with your friends.
If you want to skip ahead to any particular industry, use the links below.
Industries and their hidden fees
MortgagesShippingAirlinesBanking Services Cable ProvidersCar DealershipsCar Rental AgenciesHotels & ResortsMedical ServicesPhone ProvidersRetirement FundsTicketing Services Universities
What’s so bad about hidden fees?
(Apart from the obvious)
Deceptive pricing damages a brand’s image and its customers’ loyalty over time.
Nobody likes being nickel and dimed.
However, there are nationwide ramifications. In an economic report directly from the White House:
- Hidden fees deter customers from making accurate pricing comparisons. This results in a higher likelihood of making “wrong” shopping choices.
- Deceptive pricing raises the barrier to entry for legitimate cost saver businesses. This is because expensive options initially look cheap at face value when the full cost is hidden.
- Undisclosed or hidden fees support collusion, the working together of large companies with regards to price fixing, which is in direct violation of antitrust laws.Once one larger player starts using hidden fees to maximise profits, others in the industry will follow suit until the fees become standard pricing practice. (e.g., hotel resort fees).
However, although hidden fees offer certain short-term gains, studies indicate that they are bad for business over the long term.
Hidden fees create market imbalances and poor customer experience.
Next…
Types of Hidden Fees
Drip Pricing
“A little now, a sprinkle later“.
Sometimes vendors create slowly accumulating costs as you progress through check out.
For example:
Pens”R”Us.com advertise a pen for $1.00 on their site.
But once you click the Buy Now button, a new window says that you also need to choose what color ink you want, at an extra 50 cents.
Then there is an upsell for two pens…
Next, they tell you there is a pen tax and that shipping and handling will be an additional $5.00
By the end of it all…
You may be $7 out of pocket for a $1.00 pen.
Default Upgrades
This is where an online retailer has boxes automatically ticked for product or shipping upgrades, by default.
This is especially sneaky, as many customers do not pay close attention:
This leads shoppers to accidentally purchase items and upgrades when it wasn’t their intent to do so.
Surcharges
Surcharges are additional fees which are added to a product or service. Shipping and travel are industries frequently include these in the form of fuel surcharges.
Transaction fees
Most transactions incur additional fees.
But…
Most of us never really know how much they are until we have already paid them.
This all becomes especially confusing once moving money overseas.
However, with a limited number of options for consumers…
…Most are faced with unavoidable and costly fees.
(Shouldn’t everything be cheaper if it is done automatically by computers?)
Undisclosed fees
Undisclosed means they didn’t notify you beforehand.
They are commonly known as hidden fees. They can be legal, or in some cases – such as falsely advertised price discrepancies – illegal.
When are hidden fees illegal?
Hidden fees are illegal when they are deceptive, fraudulent or the result of false advertising. If you feel that a company has charged you fees illegally, contact your attorney for advice.
Mortgages
Owning your own home is the American dream.
But…
Everyone wants a piece of the pie, too. Where large sums of money are moved around, hidden fees are sure to follow.
Take for example…
Loan origination fees.
Most lending institutions ask for origination fees, but the amounts can vary anywhere from .5% to 2% of the total value of the mortgage.
That means origination fees can vary by up to 400%!
What most home buyers don’t realize is that: These are fully negotiable fees.
So, before you hand over $4,000 for a $200,000 loan, try to shop around or negotiate a lower fee. You will be happy you did.
Buying a house can be expensive.
General closing costs, attorney’s and lender’s fees, inspections, escrow fees and bridging loan interest payments can cost you up to an additional 5% of the purchase price.
All in all:
If you buy a new family home at a modest $200k:
You could end up spending an extra $10,000, just to walk in the door.
Next time you want to buy a home or refinance your home, do not let the mortgage broker or realtor get away with giving you quotes of “estimated fees”. Get the exact numbers and question every cost. A little due diligence can quickly save you thousands.
Resources you need to be prepared for property transactions
The $15,000 in hidden fees for selling a home
Common Hidden Costs faced when buying a house
3 Top Fraudulent Home buying Fees
Mortgage Fees You Should Not Pay
Shipping
You have seen the ads on Facebook:
“Get a Free [insert cheap trinket]! Just pay shipping!”
You may have even ordered one.
Then you start to wonder…
Why does it cost $14 to ship a trinket?
The truth is, it doesn’t – or shouldn’t.
It is a marketing tactic called excessive costing.
This is where a company makes you “an offer you can’t refuse”, then covers manufacturing and profit by hiding them under the banner of “shipping & handling”.
Which is why:
Along with drip pricing, hidden surcharges, and added fees…
…shipping cost tactics are creating significant market imbalances.
But…
You can do something about it.
Firstly, check out the resources below to be well informed and know how the industry works.
Secondly, if you have been a victim of predatory shipping charges, let us know.
Shipping Fees: A few Good Resources
Airlines
We all want the best deal when traveling.
But:
Not only do Airlines have many hidden fees of their own, 3rd party booking agencies don’t always disclose all the extra fees you may face once booking, either.
This makes the whole process of finding the best deal:
Tiresome and confusing.
The fees are not going away soon either…
Ancillary costs (baggage, priority seating, etc.) has become a huge source of revenue for airlines around the world.
In fact :
Airlines made over $40 Billion dollars in just auxiliary fees in 2016.
That is a lot of money taken out of travelers pockets. Here are some resources to help you cut through the clutter and find the real deal when traveling.
Airline Hidden Fees: What You Need to Know
Airlines are making 40+ Billion dollars each year in additional fees
Common hidden Airline Fees to look out for:
15 Tips on avoiding Hidden and additional Airline fees:
The Top Airlines with the most hidden fees:
Banking
Banking is full of fine print and confusing jargon.
And apparently… hidden fees.
In a 2015 study:
They looked at the activity on over 160 million credit card accounts. What they found, may surprise you:
There are six fees you pay on your credit card which slowly melt away your card’s balance.
The annual fee only makes up roughly 11% your total costs. (We have added the six fees below in the resources) Other than credit cards….
Banks have other ways to “squeeze for fees.”
In fact:
In 2016 US banks racked up $6.4 Billion in ATM & overdraft fees alone.
Here are other common bank fees to look out for:
- Overdraft protection
- Transaction fees
- ATM fees
- Exchange rate fees
- Paper Statement fees
Many of these are negotiable or avoided by shopping around when choosing a bank. With a little savvy shopping, you can save yourself over a hundred dollars a year in fees.
Find out more about Hidden Bank Fees
Watch out for these credit card fees
How credit card companies hide fees.
How to Avoid the Top 6 Common Hidden Bank Fees
How to Avoid Bank Fees and more
Car Rental
When traveling domestically or even overseas, it’s nice to have your own way to get around.
But, the car rental industry is infamous for its extra surprises at checkout…
Some people experience up to a 200% higher final cost than originally advertised.
When you are in a foreign country, the process all becomes a step harder to control.
Have you ever tried negotiating a car rental agreement – after booking, in French?
Some of the most common hidden rental include:
- Additional Insurance
- Age surcharges
- Other driver fees
- Overcharged toll fees
- Fuel charges
- Drop off fees
Not to mention taxes and airport charges which can quickly make any budget car rental, an expensive exercise.
Avoid Hidden Car Rental Fees with these Resources
What Can Go Wrong? A Disastrous Car Rental Case Study to Learn from
A Quick Guide to Hidden Car Rental Charges
10 Hidden Car Rental Fees and How to Avoid Them
Car Dealerships
If you have ever gone shopping for a new car, you know what is coming:
You see a nice new car at a price you like.
Next, you sit down, to have a chat with the salesperson about the bells and whistles.
However, once it gets to the paperwork, this happens:
You find a slew of additional fees and charges added to the “sale” cost before handing you the keys.
- Advertising fees
- Documentation Fees
- Dealer prep fees
- Extended warranties
Of course…
Some are legitimate taxes. But, there are many flexible fees which can be avoided. When buying your new car, do your research first and negotiate every point. If one dealership does not give you what you want, go to the next.
Make sure you aren’t being taken for a ride:
Here’s are useful resources to help you drive away with the best deal:
21 Tricks Car Dealers Use and How to Avoid Them
Cable Providers
Cable is no longer considered a luxury…
It is a part of life.
Without it, a “Purge” style chaos would surely ensue.
Moreover, cable providers know it.
All too often we hear about cable companies taking advantage of their customers with hidden fees and additional charges for…
…what may seem no extra value provided?
Some States are now thankfully cracking down on rogue cable billing tactics.
However, we have got a long way to go nationally. To make sure you can enjoy your home entertainment with peace of mind that you are not being ripped off:
Here are some great resources to stay one step ahead of the cable companies.
A visual guide to understanding Comcast bills
What happens when Cable Companies are caught using fraudulent advertising
Do you suspect that your being charges unfair fees?
Let us know.
Hotels & Resorts
One of the biggest frustrations for corporate and leisure travelers are the surprise “resort fees” hotels like to pin to your bill.
But what are resort fees exactly?
Originating as far back as 1997, resort fees are an additional mandatory charge for hotel amenities and services – that customers rarely hear about until after booking their room.
They are a big deal too. In 2015, resort fee revenue totaled over $2 Billion dollars for hotels around the US
What’s more:
According to an economic report by the Federal Trade Commission, they are not only damaging to the economy; they are on the rise.
Resort Fees can be expensive:
At $10 – $100 a night – depending on the hotel – resort fees add 25% or more to the cost of your stay.
In the most extreme cases:
Resort fees surpass the advertised room rate.
So, what do resort fees cover?
- “Free” wifi
- The “Complimentary” bottled water in your room
- Gym
- Swimming pool
- “included” breakfast
- Housekeeping
- Towels
- And more.
(most hotel goers innocently think these are included in the advertised room rate)
Don’t get mislead when booking your next trip away from home. Do your research and ask hotels how much their resort fees are before making your final decision.
Learn more about hotel’s hidden fees:
The Most Common Hidden Hotel Fees
13 International Hotel Fees to Keep in Mind
The Universal “Resort Fee” Checker Tool
How to Get out of Paying Hotel Resort Fees
Phone Fees
There is a trend emerging:
When companies lower advertised prices or provide “budget” options, hidden fees tend to follow.
This is certainly the case for the most popular phone carriers.
In recent years…
You’ve probably seen lots of phone deals offering lower minute fees, phones “included” in long-term plan pricing and more baited marketing ploys.
However…
After signing up for such great deals, customers once again:
Receive bills riddled with:
- additional service fees
- surcharges
- Ambiguous taxes they had never heard of before.
(By the way, did you know that you may be entitled up to $1,000 for illegal “hidden fees” on your bills? – contact us to find out more)
But perhaps the most heinous of bill surprises is what is commonly known as “cramming”.
This means:
“To add a fee to your phone bill for a service you didn’t sign up for from either your service provider or even a 3rd party provider.”
They are often small amounts, added to your bill, which helps them slip by unnoticed.
Here are a few common cramming fees:
- Additional Service fees & charges
- “Other fees.”
- Voicemail fees
- Mail server fees
- Membership fees
- Minimum monthly usage fees
- Premium text messaging fees
Although cramming is legal, that does not mean you have to put up with it. As a customer, you have the right to call up ask the company why they are charging you the additional fees and negotiate a better deal.
However, if you see items on your account which you think could be fraudulent, let us know.
Here are some great resources to better understand what you’re paying.
FCC Guide to Understanding Your Phone Bill
Interactive Map to know how much you pay in State “Wireless Tax”
7 Ways Cell Phone Providers are charging you More
8 Sneaky Charges the Phone Companies Put on your Phone Bill
Pension Funds
Did you know:
It has only been five years since the 401k industry has legally been required to publically disclose its fees?
Think about it…
401k started in 1978. So for 35 years, 401k companies never had to tell you how much they were charging you!
Imagine that?!
Now the industry is more transparent. However, it is still confusing to most and far from perfect.
In fact, current estimates believe hidden, and back-end 401k fees are still costing millions of Americans a total of $17 Billion dollars per year.
That is the last thing you want to hear after spending your whole life working hard to save every penny.
These added costs are taking a severe toll on pensioner’s lifestyles. Fees, rising living costs, longer lifespans and increasing medical costs are all serious problems many retirees are facing. No matter your age, career or culture, this is an issue we will all face.
Educate yourself with these great resources about hidden 401k fees
Study finds pensions funds paying billions in hidden fees
[Video] Tony Robbins talks about hidden retirement fees
Tips from Forbes on How to Reduce Hidden Fees in Your Retirement Plan
How to make sure you’re paying the absolute minimum for your 401k
Medical
A nurse hands you two Tylenol:
“That will be $30 for the pills and $6.25 for the service, thanks.”
What?
No, we’re not kidding.
It is no secret:
The medical industry is full of the most overpriced charges.
It is almost sickening how much it costs to be ill (pun intended).
To make things worse…
There is an increasing trend in the medical industry to charge hidden fees and patient payments, which have seen an incredible 700% jump in the overall proportion of hospital’s revenue in just the last two decades.
Plus…
Although practically unheard of in the past, doctors’ offices are now starting to charge “facility fees.” These were previously only ever seen in hospitals and just there to raise revenue.
Although most medical costs are entirely within their legal (although perhaps not moral) rights, it is good to know what is going on.
Resources to keep you up to date with hidden and rising medical fees
Overinflated hospital costs – Readers Digest
A trending increase in “Facility Fees”
The 5 Hidden Fees of Hospital Visits
Real Hidden Fees Law Suit Case Study against Blue Cross hospital
University
It’s a shame…
Almost 4,000 university seniors may drop out of school this year.
It is not because of their grades. It is their school debt.
Over the past 20 years…
Student fees at public campuses have almost doubled. This is even faster than college tuition. (college tuitions are already increasing at 3x the inflation rate)
The sharp increase in fees means that many middle and lower class Americans – looking for a brighter future – cannot afford to finish college.
This is bad news for the entire economy:
America is already suffering an estimated loss of $2.3 Trillion (with a T) dollars in GDP because of underperforming, undereducated workers.
They forecast that by 2025, there will be a huge skill gap in America. Over 18 million US job candidates will be “under qualified”.
Knowing and understanding college fees is more important than ever and affects the future of our entire nation.
Check out the resources below to know more about growing university fees.
How to Avoid College Application Fees
Sneaky Fees Colleges are Charging Students
Tips on how to avoid certain Sneaky College Fees
A deeper look at Hidden College Student Fees
A student’s story of hidden university fees
Ticketing & Events
It was the fight that nearly broke Pay per view…
When Mayweather entered the ring to punch it out with McGregor…
People in the front row seats had paid up to $16,000 for the blood, sweat, and tears.
But perhaps the biggest knock out was the event’s “ticket service fee”.
One attendee tweeted being charged over $1,200 in service fees!
This isn’t an isolated incident either. Ticketing company service fees and hidden charges are coming under more frequent scrutiny in recent times:
Consumer watchdog services in both Canada and the US are urging their respective governments for closer regulation of ticket vendors and providers.
Going so far as citing that:
Drip pricing hidden fees on certain event tickets are raising the final ticket costs to consumers by up to 56% of the initially advertised price.
Know what you’re paying for your entertainment.
Here are some resources about ticket vendor’s hidden fees.
Ticket Master’s Class Action Lawsuit against their hidden fees
Why the industry should end fees altogether
Conclusion
No matter the industry. Hidden fees, drip pricing, and undisclosed charges are a part of the modern marketplace.
But…
That doesn’t mean you can not do something about it.
As an educated and well-informed consumer with facts, you have the power to negotiate and even save yourself from paying many of these unwanted fees.
Before signing a contract or making a high priced purchase, do a little digging first. Find out what to expect and you’ll be much less likely to be disappointed.
And…
If you ever feel that a company has charged you a fraudulent hidden fee or engaged in false advertising (when the advertised price is vastly different from the actual price), let us know.
We, here at ZPLLP, specialize in consumer law. We know your rights and are here to help you protect them from unethical business practices/
