- Hey, babe, you ready to go?
- We can't go out there.
- Why not?
- They're everywhere, invisible,
waiting for their next victim.
It's not safe.
- Julia, we talked about this.
We're vaccinated, Austin's only in stage three.
As long as we mask up, it should be fine.
- I'm not talking about COVID.
- Then what?
- Hidden fees.
(jolly music)
- According to consumer reports, between 2017 and 2019,
85% of Americans encountered hidden fees.
Of these people, 96% found them annoying.
That's right, 4% of people are either super zen
or super rich.
- Hidden fees are common in many industries.
You've likely seen them if you've bought tickets online,
booked a hotel room, bought a house or a car,
signed up for internet or cable,
or done anything with a bank.
While you can opt out once you see the real price,
many people don't have the time or energy to do so.
They either don't want to go through the process again
with another seller,
or they assume these charges are inescapable.
- This gradual reveal approach
is what economists called drip pricing.
Sellers advertise a deceptively low price
to lure in customers.
Then, once they're about to pay,
the hidden fees come out and swarm their prey.
- Why do so many companies employ this shady practice?
Surely they don't want to offend potential customers, right?
Well, whether or not they feel morally conflicted about it,
from a business point of view,
they don't have much of a choice.
This was demonstrated
in a 2015 experiment conducted by StubHub.
- The experiment consisted of showing one group
of shoppers their full ticket price upfront, including fees.
A second group only saw the fees at the end,
when they were on the verge of making a purchase.
The results found that people who saw the fees
at the end spent over 20% more
than those who received the total price upfront.
- In other words, hidden fees work.
The only way for a seller to stay competitive
is by hiding fees like everyone else,
otherwise their listed price will seem much higher
than the competition,
even if the total costs ends up being less.
The current system practically incentivizes hiding fees.
To not do so is to lose money,
not just a little money either.
Large banks pulled in $11.5 billion
in overdraft charges in 2018.
The hotel industry made nearly three billion in fees
during that same year,
which included fees for amenities like pools and gyms,
whether you used those services or not.
And the airline industry in 2018 earned
a combined $7.6 billion in baggage fees
and reservation change fees.
The most frightening part about all of this,
these numbers continue to go up.
- Sadly, this is a problem
the market likely won't fix on its own,
which is why a petition is in place
to get drip pricing banned.
The Federal Trade Commission has been warning companies
to stop this practice for years,
but hasn't really done anything about it.
Drip pricing has been banned at the local level before,
but the only federal ban
was from the Department of Transportation,
aimed specifically at the airline industry.
- That doesn't mean we're doomed, though,
about 2/3 of people who fight hidden fees are successful.
Winning this battle is not guaranteed,
but if you're willing to get in the ring,
it's not impossible.
So put on your gloves and let's look at five ways
to defeat hidden fees.
- The first way to destroy hidden fees
is to actually notice that they're there.
A lot of hidden fees stay hidden,
which can easily happen if you have auto-pay.
You can protect yourself from these thousand little cuts
by reviewing your statements periodically.
If that sounds too overwhelming,
maybe choose a once a month review.
- Now that you've spotted the fee,
the second step is to just ask.
That's right,
sometimes all it takes is picking up the phone
or marching in there
and asking whether they'll waive the fee.
You'd be surprised how often this works.
Hotels are frequently willing
to remove the safe warranty fee if you don't use the safe.
You may be able to get car dealers
to remove the advertising fee,
which is the fee they charge for marketing the car.
Some people have even gotten home sellers
to cover some of the closing costs themselves.
It's worth a shot.
- If you can't get a fee removed,
you can try finding a different seller.
It may be frustrating to start the purchase all over again,
but at least you'll know in the future
which sellers you can trust.
- The fourth way to avoid fees is to simply not use
the optional services.
For example, if you're flying
and you don't want to pay the baggage fee,
you can just pack a smaller bag that will fit on the plane.
- And the fifth and final way to escape fees
is by seeing if the seller has some sort of loyalty program.
Some hotels, for example,
will waive fees if you sign up for their credit card.
Yes, there is some risk involved,
especially if you lack self-control,
but if you're disciplined enough,
you can earn rewards and get fees waived.
Pretty cool deal.
- If you're like us,
you're in the 96% of people
who find hidden fees annoying and deceptive.
While there are ways around them,
they're not always avoidable.
And until the FTC steps in, we're kind of stuck with them.
- But if you really wanna fight them,
you could support ethical sellers, write a review online,
file a complaint, or send a letter to the FTC.
Together, we can defeat these pesky beasts once and for all.
And that's our two cents. - And that's our two cents.
- Before you go,
our friends over on Its Lit are launching a podcast.
- Hosted by the amazing Princess Weekes,
It's Lit, the Unabridged edition,
features all of your favorite literature topics
and thoughtful, funny conversations from amazing authors.
It's basically like joining the best book club ever,
but without having to actually read anything.
- Check out the It's Lit podcast
in the link in the description below.
- [Julia] Thanks to our patrons
for keeping Two Cents financially healthy.
Click the link in the description
to become a Two Cents patron.
(jolly music)
- To hear more about how airlines got so fee happy,
check out our video, "Why did airlines get so stingy?"