Is Money “Dripping” From Your Wallet Because of Drip Pricing?

Beware of hidden fees

When Shelle Santana was planning to fly to Atlanta to visit friends and family, the New Yorker was excited. What she wasn’t so excited about was being bombarded with fees that weren’t in the original price quoted on the airline’s website.

There were additional fees for checked bags, extra leg room, preferred seating, and upgrades for earlier boarding. Those costs were revealed as Santana went through the buying process. Santana wisely opted out of the extras. Instead, she packed one carry-on bag, eliminating the need to check baggage.

“It’s easy to see how consumers get pulled into that process,” says Santana. What Santana encountered is known as “drip pricing,” which the U.S. Federal Trade Commission defines as “a pricing technique in which firms advertise only part of a product’s price and reveal other charges later as the customer goes through the buying process.”

Businesses known to use this practice include airlines, hotels, rental car companies, furniture stores, cell phone companies, and cable TV service providers. Hotels often charge mandatory fees, sometimes called “resort fees,” for amenities such as newspapers, use of exercise facilities, Internet access, and towel rentals. The mandatory fees can be up to $30 per night, the FTC says.

In fact, in response to complaints from consumers at a drip-pricing conference last year, the FTC sent letters to 22 unnamed hotel operators in November warning them that their reservation websites might violate the law by advertising a deceptively low price compared to what consumers will really be charged for their hotel rooms.

“Drip pricing leaves a bad taste in consumers’ mouths,” says Larry Mogelonsky, president and founder of LMA Communications Inc., a Toronto-based communications agency focused on the hospitality industry.

“I don’t believe in drip pricing. I think it’s a substandard approach for hotels,” says Mogelonsky.

He advises consumers to educate themselves about fees by calling hotels directly before making a purchase.

The National Foundation for Credit Counseling and the Better Business Bureau share these tips on how to fight drip pricing:

  1. Educate yourself. Read the fine print before paying. Know the difference between estimated price and actual price.
  2. Confirm the details. Call to confirm the price of whatever you are purchasing.  If calling a hotel, ask specifically about any “resort fees.”
  3. Fight the charges. If you were charged fees that were not disclosed in advance, ask to speak to a manager to determine if they can be removed.
  4. Boycott companies. Tell a company you plan to discontinue doing business with them and that you will let others know why.
  5. Carry your own insurance. Often your own car insurance will provide coverage for a rental. Check with your insurance company before purchasing insurance from the rental agency.
  6. Pack light. Fewer bags mean fewer fees for baggage checking.
  7. Cancel in time. The U.S. Department of Transportation enacted rules allowing a passenger to cancel their airline reservation within 24 hours of making it as long as the reservation was made a week before the trip date.
  8. Report abusers. File a complaint with the FTC by visiting /www.ftccomplaintassistant.gov or calling 1-877-382-4357. File a complaint with the Better Business Bureau by visiting www.bbb.org/us/Consumer-Complaints, or call (703) 276-0100 for more information.

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