Hidden Fees Are Costing Us Billions

5 actions you can take to cut the risk of being legally overcharged through hidden fees: Internet Scambusters #757

Hidden fees could be costing you an extra 25% on your phone and cable bills.

But that’s only part of the story. Unexpected charges now come as a nasty surprise on all sorts of bills — and more and more firms are imposing them, as we report in this week’s issue.

We also have a warning from the AARP about a surge in grandparent imposter scams.

Before we begin, you may want to spend a moment looking at this week’s most popular articles from our other sites:

Three Top Home Improvement Myths: Take a look at these home improvement myths before you break out your ladder and hammer.

A Low Carb Barbecue Sauce Recipe: It’s still possible to create a low carb BBQ sauce that’s a delight to the taste buds, and in this exciting episode, we’ll show you one way to do it!

It’s Time to Discuss Swimming Pool Safety: Swimming pool safety needs to be priority number one so let’s talk about how to keep everyone safe.

5 Tips for Avoiding Identity Theft While On Vacation: This year while taking time to relax, remember to follow these identity theft tips to avoid an unpleasant surprise when you get back home.

Now, here we go…


Hidden Fees Are Costing Us Billions


There’s an old but well-used saying in the consumer world that “you get what you pay for” — but what about hidden fees?

These are charges you didn’t realize you’d have to pay, so you end up paying a lot more for what you get!

Surprise or hidden fees are being added to more and more bills these days and, while they may not be illegal, they can leave victims feeling like they’ve been badly ripped off.

That’s because, often, these charges are not made clear upfront. For example, so-called “resort fees” are sometimes tacked onto hotel bills, regardless of whether the guest uses any of the resort’s facilities.

Concert organizers, airlines and many other businesses that accept payments online or over the phone may charge a “processing fee” and perhaps a further fee for letting you use your credit card.

In one recent experience, a member of the Scambusters team faced a $32 “credit card surcharge” on a $1,000 flight and hotel package provided by a cut-price airline. The bill also includes a $58 fee for selecting seats, and another $52 for an unspecified “carrier usage charge.”

It’s true that these appeared on the bill before it had to be paid, but they certainly didn’t appear in the promotional material for the cheap airline seats, which suddenly didn’t seem so cheap!

During the past few months, two reports on hidden fees have been published, including one that suggests four communications companies are using these fees to overcharge their customers by around $60 billion a year.

A White House report, produced under the previous (Obama) administration declares: “(I)n a number of consumer-facing sectors, the real prices of things are now being hidden or muddied by the addition of mandatory fees (or effectively mandatory fees).

“Quoted prices don’t reflect what things actually cost — the real prices are hidden by fees.”

The comment followed publication of a report from the National Economic Council (NEC) which warns that hidden fees and their “clouding effect” on pricing are a big worry because they undermine competition.

The report specifically highlights the case of airlines charging surprise fees and the need for travel companies to show all-in-one fees upfront.

Hotels Net $2 Billion

It adds that mandatory resort fees are netting hotel operators more than $2 billion a year and are growing at a faster rate than inflation. Service fees added to event ticket prices account for another $1.6 billion.

People are being tricked into paying for things they otherwise would not buy if they knew the full cost, the NEC says, accusing the perpetrators of deception and exploiting the way people look at deals.

“In other words, people are more likely to buy something that appears to cost $80 with $20 added later, than something that is priced at $100 up front,” it says.

“The most straightforward explanation is that some or many consumers do not focus on the full price, but rather buy on the basis of the lower price, and are therefore deceived.”

The report also points a finger at auto dealers who sometimes charge new car buyers many thousands of dollars more than listed prices for things like documentation fees, floor plans fees, dealer preparation fees, advertising fees and destination delivery or processing fees.

Students are also on the receiving end of unexpected charges such as entry fees to allow them to begin their studies, and charges for using technology or sporting facilities, which, in the past, would have been included as part of the tuition cost.

But the biggest criticism is reserved for phone and cable companies who disguise some charges to make them look like official fees they have to pass on — using terms like “regulatory programs fee” or “mobility administrative fee.”

“Despite the titles of the services, which suggest that the money is charged for an official purpose, these fees are kept by the carrier and can be considered additions to the price of telephone service or a means of raising prices without changing advertised rates,” the NEC accuses.

Its view are echoed in a recent report from the Consumer Federation of America (CFA) whose research director Mark Cooper claims that 25% of phone and cable bills relate to hidden fees.

And the CFA’s director of consumer protection, Susan Grant, says: “Consumers are being deliberately fooled by advertised prices that fail to include the full amount they’ll have to pay, not just for cars but for an increasing number of goods and services.”

What Can You Do?

Unfortunately, beyond being aware of the problem, there’s not a lot that consumers can do to avoid these deceptions.

Even so, where there’s an opportunity, here are five things to try:

1. Ask service providers — whether they be airlines, ticket agents, car dealers or hotels — if there are any additional charges beyond the listed price.

2. Then, do the math to see if the deal makes sense. If not, see if you can negotiate a fairer price.

3. If you think you are being tricked, check the prices of competitors to see if you can get a better deal.

4. Spread the word among friends and family when you find yourself the victim of hidden fees.

5. Complain to local consumer protection agencies and the Federal Trade Commission when you’re the victim of deceptive practices.

Alert of the Week

AARP — the American Association of Retired Persons — is warning of a sudden, big surge in grandparent scams.

These are calls made to seniors from fraudsters claiming to be a grandchild or other relative in desperate need of money — for instance, to post bail or pay a fine.

They always want the money to be paid untraceably — by wiring or through the purchase of gift cards.

AARP is particularly concerned that dementia sufferers and some other older folk are easily taken in by these scams.

If someone in your family has dementia or is easily deceived, see what you can do to protect them. For example, you can take steps to set a daily withdrawal limit on their bank account.

That’s all for today — we’ll see you next week.