Ending Junk Fees, the Most Annoying Thing in American Commerce
thebignewsletter.com
thebignewsletter.com
In the past, a utility had to come out to your property and physically disconnect a wire or close a valve with a lock if you didn’t pay your bill. Now with smart metering devices (for utilities) and computerized billing automation, the relay or solenoid is often integrated into the metering system or the service can be suspected electronically because there is no physical connection anymore.
The $15-$30 per cell phone line or $60 for power to be restored is an inconceivably expensive excuse to collect money from those who can afford it the least. Paying the reconnect fee doesn't forgive any past due balance - that amount is still due. It also puts increase pressure for customers to agree to payment that they have no hope of making because they just really need power on to be able to cool their home or cell phone to be able to do their job, which creates this cycle of disconnect/reconnect every month that becomes a tax for being poor.
A common one sees the restaurant charge you separately for the employee health benefits, cynically marketing it to consumers as “healthy SF” and “SF health mandate”.
What’s sort of fun is that like cryptocurrencies, you can always materialize new ones out of thin air. One popular establishment demands that you pay a separate “carbon offset fee”.
It's ok for business to tell their customers why prices are increasing via line item.
Nobody cries and moans publicly in front of customers when their business license fees rise 5% or when the cost of their utilities go up, but suddenly when there is a mandate to make their employees' lives marginally better, they weep their crocodile tears all over the customers' checks.
- rent of the restaurant building
- the water bill
- the pizza oven
- the owner’s BMW
List everything! Why not?
If it isnt that sounds pretty damn fraudlent to me.
We have a similar issue where I am from because businesses are not required to give tips to their employees. Most people dont know about this law and a reasonable person would think that the money would go to the employees because that's what the word 'tip' means.
So in my mind any restaurant that doesn't have a sign next to the tip jar spelling out who the money is going to in this situation is commiting fraud.
The name they're choosing is intentional and the purpose is to trick you into spending your money in a way you otherwise would'nt. That's a crime.
In terms of “SF Cares”, it sounds like its for the healthcare ordinance the city of SF passed.
which is, of course, an outcome of the current regulatory regime.
US prices are not advertised with taxes included either - even locally, where it is obvious what the nexus is. But this is not legal in the EU. We can outlaw random footnotes being an excuse for random fees too - there is a number on the menu, that should be the price of the item. Require all prices to be inclusive of fees/taxes etc so that people can see the full, final price before they get emotionally invested/etc.
Frankly this probably would result in lower total prices for consumers - people decide to buy based on the advertised number, people are not (reliably) rational/efficient about purchasing decisions, especially in situations with highly opaque information (is the other restaurant going to tack on an even higher fee? etc). Forcing all the fees to be rolled into the final price is, just like healthcare, a win for enabling people to have the most information to make the most accurate decisions, which helps drive costs down.
If the goal is keeping people informed, one can show various breakdowns, piecharts or any other creative infographic at the canvas of the bill.
Nobody forces you to buy cell service from AT&T. T-Mobile gives you all prices up front. Anyway, T-Mobile is more expensive, so I can’t say that’s a consumer positive.
Nobody forces you to buy AppleCare. I’ve probably wasted $3,000 on AppleCare. It’s a phone! I mean, who cares!
Nobody forces you to book on United after you discover they cost 20% more than advertised.
Nobody forces you to browse flights on Google Flights.
Nobody forces you to dine in restaurants in San Francisco, as people in this thread are complaining about. When Tartine started charging $8.00 for a croissant, I just stopped going there. It’s a croissant. Though if you really want to get back at restaurants, drink at home.
You talk about American business culture as this big homogenous thing. 60m-70m Americans are employed by bonafide small businesses. The owners are your neighbors, they live in your community. The landlords too! You live there. You’re that community. Nobody forces you to live somewhere with small businesses.
This is a stylized and comic comment: If the crazy conspiracy theorists are right, that a GLP-1 inhibitor is going to be a general over-consumption treatment, okay, greedflation is over. It’s an objective fact that like 10-20% of customers of all the consumables and depreciables (I don’t like “durables”) that keeps getting more expensive deliver 80-90% of the profits. We pay prices tuned for people who can’t control themselves, who may have a serious issue with agency. So it goes. It’s a free country. It’s a fantasy that this law is going to make prices go down.
This is cutting off your nose to spite your face. If you transition from someone who generally drinks out and doesn't drink at home, to someone who drinks at home to avoid paying to drink out, you find you drink a lot more at home, and therefore ultimately, you don't even end up saving much money.
It's better for your health and your wallet to let your local restaurant or bar take its 300% markup on alcohol.
[1] https://www.reddit.com/r/tmobile/comments/174uelk/megathread...
The Nobel prize in 2001 was awarded to 3 economists (including Joseph Stiglitz) who characterized market inefficiencies driven by asymmetric information. The price of a good or service is one of the most fundamental units of information in economic exchange. The idea that the normalization of hidden fees will not cause prices to go up for consumers (and other negative outcomes) is a more than a fantasy, it is at odds with the fundamental nature of economic activity.
“Resort” and “amenity” fees were occasional annoyances, but the number 1 purveyor of junk fees in hospitality is local government.
There were nearly always 1 - 3 junk taxes in addition to normal sales tax added on to the bill as a way to extort money from a group of people who have no franchise to contest the predatory taxes.
I’ll not hold my breath waiting for the government to do anything about that.
If your point is "tax bad", fair enough - but, off topic.
If your point is that the tax is a junk fee, please let us know how the government prevents vendors from disclosing the tax at the time of booking.
My point is not that all taxes are bad. I never said anything remotely like that.
My point is also not that the taxes in question are junk fees because they are typically hidden until checkout time.
They are junk fees because:
* the taxes are discriminatory in nature - they are only levied against hotel customers, nearly all of whom are not residents of the jurisdiction in question and who have no meaningful recourse to have the fees changed.
and
* the taxes are disproportionate to the local government services that out of town hotel guests might plausibly use. In other words, they provide no value.
These taxes are just a stealthy and dishonest way of lowering taxes for the local citizens at the expense of out of town guests.
It could also be said that hotels are the ones being taxed(it lowers demand and how much they can charge customers) and they are profitable businesses just like car dealerships and (can) have a lot of lobbyists that influence local governments.
> the taxes are disproportionate to the local government services that out of town hotel guests might plausibly use. In other words, they provide no value
Hotel guests profit a lot from good roads, police, regulations, fire departments etc. etc.
If your point is that out of state residents are taxed unreasonably, then the I-95 tolls in the small part of the highway that goes through Delaware is a better example.
Junk fees are generally referring to fees that are only shown at the very last point of purchashing, right before payment after you have already invested a lot of time picking your choices based on the lower cost it showed earlier. It makes comparison shopping harder. There's no reason why initial advertised prices couldn't include taxes, except the hotel's greed to make it look more attractive and then claim 'look, the govt also charges fees, ignore the ones we have tacked on'.
Funny, every time I've stayed at a hotel, they charged me those taxes. Trying to say the hotels are being taxed is semantics.
> Hotel guests profit a lot from good roads, police, regulations, fire departments etc. etc.
In my experience, not to the extent of the additional taxes. The additional taxes frequently add up to 10% above and beyond the base sales tax rate for every single guest, for every single room night.
> If your point is that out of state residents are taxed unreasonably, then the I-95 tolls in the small part of the highway that goes through Delaware is a better example.
I'm sure someone else could come up with an even more egregious example. I don't think that obviates my example, particularly when the source article specifically discussed fees at hotels.
> Junk fees are generally referring to fees that are only shown at the very last point of purchashing, right before payment after you have already invested a lot of time picking your choices based on the lower cost it showed earlier.
.... That's what these are ...
> There's no reason why initial advertised prices couldn't include taxes, except the hotel's greed to make it look more attractive and then claim 'look, the govt also charges fees, ignore the ones we have tacked on'.
Any of these fees can and should be disclosed ahead of time. I don't see why you think it is unreasonable to discuss whether or not these fees should even be charged in the first place, though, or point out that it isn't always big, bad businesses that are the source of all of these fees.
What you do see are the junk taxes as you put it. In NYC, there was a tax for the Javits expansion renovation even for hotels at the opposite side of the city and for years before I think the project was even approved.
Less common elsewhere although, as sibling comment noted, it can happen even at a perfectly average business hotel if they think they can get away with it.
While certainly annoying, I don't really mind unless it's not transparent when booking even if it does mean they're trying to be sneaky.
Something like:
Room rate - $224/night Taxes - $42.86/night Total - $266.86/night
(note: these are real numbers from a recent stay in metro Atlanta. They are charging a tax rate of almost 20% in an area where sales tax is normally around 9%.)
And it just seems like a common thing globally that hotel and event tickets are allowed to advertise wrong prices.
Why do they tend to get a free pass?
It’s less about harping on political ideologies and instead provided rationale as to why US prices aren’t transparent.
The commenter who brought up Sales tax variations is partially correct, and the lack of political will to adopt a progressive consumption tax is also partially to blame.
Not because we work our asses off, rather because it’s our duty as electorates (not to mention general good practice to watch your finances).
The focus on taxes is just a smoke screen so you don’t need to offend anyone by suggesting you actually cut spending on say national defense, GPS, weather forecasting, etc etc.
If you actually want lower taxes propose specific spending cuts. Let’s get rid of police and prisons and then see what happens, or no how about…
But hey leaching off other people is a time honored tradition.
The result is that business can do pretty much any ani-consumer thing they want and there is nobody to stop them.
So maybe we need some kind of federal agency to, you know, protect the environment.
And since 90% of these issues affect the nation as a whole, and this agency would have the most data, maybe it could, like, set some rules for everyone to follow so we have consistency. That way you don't have to figure out 50 different sets of rules to do business in this country. And 50 states wouldn't have to spend all their money just to re-learn the same lessons independently.
And then we are right back at the issue that strong federal regulation is the only efficient and effective way to run things.
The US doesn't have VAT, it has sales tax, which varies geographically by a great deal -- even between neighboring cities.
And advertised prices in the US virtually never include sales tax (in large part due to that variation).
Hotels and ticket brokers aren't getting any kind of free pass, they're advertising prices in the same way as everywhere else like grocery stores or Amazon -- at least as far as sales tax is involved.
Literally the only locations I've ever encountered that include sales tax in the price are a tiny minority of coffee shops (often cash-only) and budget pizza places (often the dollar-slice ones), which is to avoid having to deal with coins.
(The article is about other fees though, which is a different subject from sales tax.)
But the problem is that right now a supermarket chain can advertise in the newspaper that chicken breasts are $4.99/lb at all of its nearby locations.
If sales tax were included, you couldn't advertise prices at all, because they might be different at each store!
How could Apple advertise the price of a MacBook, when sales tax is 0% in New Hampshire, but 8.875% in New York City, but 4.5% in Yonkers just north of NYC? That's a price variation of around $100–200.
That may not be super sensible, but it is how it works. A business on one side of the street may have to collect taxes at a much different rate compared to a business on the other side of the street.
You already have to produce different ads in Spanish, Italian, German, etc. So it's not really any extra work to have different prices in each.
Plus you're only dealing with tens of countries. There are literally thousands of distinct sales tax geographical areas in the US.
Attempting to maintain the same final prices in one town with 3% sales tax and a neighboring one with 8% sales tax simply isn't workable.
I mean, sometimes it's fine for extremely high-margin electronics, or things like cell phone service where marginal costs are low, but it's definitely not the case in general.
Individual items can have >100% markup, there are items sold at a loss to ensure you can complete your trip at a single store or get you in the door or whatever, and the store absolutely has to consider how revenue (not just line-item profit) plays into things to balance out rent and wages and whatnot. 1-3% profits for the store don't imply much about what you need to charge to offset the effects of sales tax.
As a brief example of irrationality, last I checked, on like-new iPhones it made a 30% difference in total revenue to offer "free" shipping rather than split it out as a separate line item. People would really rather pay 1.3x with "free" shipping than 0.8x base price and 0.2x shipping.
Somehow this all works magically here but in the US it is impossible because.. reasons unknown
You're drawing an unwarranted conclusion that just because not all prices are coordinated, therefore none must be.
If you consider that, I believe your reasons unknown become reasons known. No need to resort to magical thinking :)
Also it's not just about the hotel location, but also changes depending on the buyer's location -- which of course often isn't known until the checkout process.
So maybe it's not quite so simple, with so cartoonish a villain, as you assume.
If European countries chose to have VAT that varied geographically within a country, they wouldn't be able to build it into the price either.
Why you think it has anything to do with "national intelligence" is quite beyond me.
That clearly shows rates varying between countries.
Not within a country.
Which is fine, because prices are generally advertised within a country, not Europe-wide.
If you think how we handle sales tax is odd, just wait until you see a medical bill from the US!
Bill to ban hidden fees in California signed into law (oag.ca.gov)
https://news.ycombinator.com/item?id=37817112 - Oct 2023 (463 comments)
Also discussed at the time when the California bill was first introduced 8 months ago:
California AG and state senators introduce bill to ban hidden fees (oag.ca.gov)
https://news.ycombinator.com/item?id=34870752 - March 2023 (377 comments)
Edit: Thank you @apsec112 for the correction. I've amended this comment accordingly. Cheers!
Undisclosed fees are fraud.
We need litigation and prosecution over fraud.
If a restaurant raises food prices by 10% to pay for healthcare, is that an undisclosed fee?
If they expect customers to magically know about the extra fee ahead of time, and add it to the bill after the meal, it is undisclosed.
If the prices on the menu are the same, but there's a note at the bottom of the menu saying "additional 10% fee to support our workers' healthcare" (or something similar) they are technically telling you, but this is certainly misleading (possible to miss the note, and it's harder to do math) and is very annoying. I've noticed several restaurants doing this. The new CA law explicitly bans this practice.
If the prices are the same and you aren't notified until you get the bill, this is highly unethical and IMO fraud. There's a restaurant near me that does this; they offer to remove the fee if you notice and complain, but also try to guilt you into paying. The new CA law bans this too.
No, a restaurant can charge whatever it likes. What’s fraud is if the menu says an orange juice is $3 but then when the bill comes it’s $3.30 because there’s a 10% healthcare fee the restaurant didn’t list on the menu.
If the restaurant did list the fee on the menu, it’s a gray area. Depends on how prominently, etc. In any event a dark pattern.
If the prices include the 10% increase and there’s a note that says prices were recently increased to cover healthcare, again perfectly ok. Good even.
Here's the principle: The price on the sticker (or menu, or display) is the price you pay. Period. Additional fees or calculations on above simple summation of the items ordered is anti-consumer. You're the business, calculate the total up front and don't make me memorize the tax rate in every locality and do a bunch of multiplications in my head while I'm browsing your store.
If I were cynical I'd say this whole charade is intentionally designed to exhaust the customer with math to make them give up and not think about the price until they're at the register and have to face the embarrassment of asking to take things off. Making the real price opaque is the point. It's gross even if it doesn't work 100% of customers. There's probably even a case to be made that this disproportionately disadvantages people with mental disabilities.
And don't bother making some stupid argument about adding up fractional pennies. If you need more decimal places then use them, and the customer will decide up front whether it's reasonable to make them calculate 3-4 decimal places for the product you're selling.
They don't do this nonsense in Europe. Taxes are pre-calculated on every item, so you can walk through the isles of the grocery store picking up items simply adding up the sticker price and know that the cash in your pocket will be enough to pay the total.
Why we tolerate calculating tax at the end of a transaction is crazy.
If I have $20 in my pocket, I have no idea if that will cover a $15 lunch deal(after taxes, service charges and tip). I have tried to ask at resturants before ordering what a meal will 'actually' cost me and only recieved a blank stare.
Of course, if you are a business, having your market tolerate obsfucated pricing models is a feature, not a bug.
What does "consolidation" have to do with this? A few sentences later the author brings up how consumers are using price comparison sites to choose between multiple vendors, which seems like the exact opposite of consolidation?
>Typically, consumers will buy tickets or hotel rooms based on price comparison sites, which show a list price.
My local municipality charges 5% to use a credit card to pay for automobile or property taxes. Insane.
Its not just the US either. Went to Italy on a biz trip recently, and to my surprise, I was forced to pay a daily tax for every night of hotel stay, which had to be paid for in cash.
"I also thought it was weird that I had to pay this tax directly to the desk clerk, and we had to meet in a bar down the street for me to hand it over."
5% is high, but so long as it is disclosed up front I don’t have a problem with this one. A merchant is entitled to demand a certain amount of money for what he’s selling, not 97% of that amount and then you and the credit card company split the other 3%.
I would gladly send a check instead (and yes, I'm aware the account number is on the checks), one of the only perks my bank has is the ability to send checks to pay bills easily.
Auto pay works well for orgs that don’t want to bother with their own payment portal. Unfortunately the USA doesn’t hav something like the online pay slips they use in Switzerland. There you just pay any bill directly from your own bank’s portal.
Shitty tippers get brought up to management. They can get banned from restaurants. It sucks to get stuffed on tips, and a lot of places pool tips to spread the impact so one person doesn't get screwed.
There are also shitty managers and servers have to deal with it when management doesn't protect them. But if you mess with the food you are done at every restaurant in the area. It gets restaurants shut down and charged large fines.
I'm sure whoever posted that meant it. But they are going to have a short and unhappy career.
https://pos.toasttab.com/blog/on-the-line/kitchen-appreciati...
Why not end visa? End the banks? End the regulatory capture?
Monopoly laws ensure that small business never becomes a new monopoly and can never even compete. That's why we have these fees.
Bitcoin is the credit default swap for fiat.
You'll understand too late. You deserve the cancer you'll get.