Recently, I went shopping for a new washer. I tried to be a savvy shopper, studying all my options and reading reviews before heading to the appliance store. Still, I was caught off guard.
Some washers, I discovered, came without a drainage hose. The extra cost for it: $21. Then there was an additional $69 installation fee, plus a $10 charge to haul away the old washer. Add in taxes, and that $712 washer suddenly cost me $850.
What Drip Pricing Is
I was a victim of “drip pricing” — a firm's practice of advertising just part of the price of a product or service upfront and revealing additional charges as you go through the buying process. The added fees can be mandatory, like surcharges and taxes, or they can be optional ones for upgrades and add-ons.
Drip pricing has become such a rampant problem that the Federal Trade Commission held a workshop I attended Monday in Washington, D.C., partly to discuss what actions, if any, the agency can take to curb the practice. Even Dilbert is annoyed; the comic strip character calls drip pricing “confusopoly” — when companies intentionally confuse consumers so they can’t compare prices.
Drip pricing has been going on for years, but FTC Chairman Jon Leibowitz told me that “our sense is we’re seeing more of it now,” thanks in large part to the Internet. “Sadly, drip pricing has become almost ubiquitous,” he said.
Studies have shown that consumers tend to focus on the first price they see then accept that as the price even if they later find that the ultimate cost will be significantly more. In other words: we’re getting duped.
Chances are, you’ve been a frequent victim of drip pricing. I know I have.
Where Drip Pricing Is Rampant
Airlines, of course, win the grand prize for being the drippiest.
Until a new U.S. Department of Transportation rule went into effect earlier this year, carriers often made their fares seem artificially low by excluding government fees and taxes. Now, these fees must be included in the advertised fare in print, online and on television. But passengers may still face extra fees that aren’t included in the advertised price — for baggage, food, even reserved seats or a boarding pass.
Car rental firms are notorious for their assorted fees that can easily add up to far more than the quoted day rate. There are local and state taxes, fuel charges, airport fees (if you pick up the car at an airport), daily fees for an additional driver or one under 25, peak-season charges, and on and on.
Hotels generally don’t include local and state taxes in their advertised room rates and many also fail to mention things like daily resort, Internet and room-safe fees that are automatically added to the bill. Well, they’re automatically added unless a guest protests. My husband usually puts up a stink, sometimes with success and sometimes not.
Concert tickets, which typically start out exorbitant, become even pricier when the promoter adds in such extras as service fees, building charges and printing fees — even if the ticket is being sent to you electronically.
Leibowitz finds that last charge especially galling. “A $2 fee for printing a ticket when you’re printing it at home, on your own printer?” he said at the workshop. “That’s outrageous.”
Advice for Consumers
So what’s a consumer to do?
The website Spot 55 has a helpful article with smart tips for avoiding hidden fees on airline tickets. One of my favorites: Try to book with a credit card that waives fees for checking luggage.
And Independenttraveler.com has some clever ways to beat drip pricing on car rentals. For example: rent the car downtown so you won’t be charged the airport concession fee.
And Leibowitz has two general tips to combat drip pricing:
Make sure you know the full costs of a product or service before you buy anything. This is especially true if it’s from a so-called “discounter.” Ask the salesperson or representative questions if you’re in doubt about the total price. Do this whether you’re buying by phone, in person or online.
Complain publicly. Use social media, like Twitter and Facebook, to spread the word about nasty drip pricing examples. As Leibowitz told the workshop: “Public shaming should not be underestimated to try to turn off the faucet of drip pricing.”
Share Your Drip Pricing Tale
Everyone has a drip-pricing tale of horror and the FTC wants to hear yours. “Call 1-877-FTC-HELP to share your drip pricing fee story,” Leibowitz said. Then he joked: “The call is free — but it will cost $2 to hang up.”
While you’re at it, please share your drip-pricing story with Next Avenue, either by posting a comment below or sending me an email at [email protected].