Isn’t this so much broader? And I think it’s a much underdiscussed driver of inflation, which might not even be showing up in statistics.
Before Uber you still had cabs that took you from place to place. The difference was you probably had to call them in advance of hail them on a street. But for slightly more convenience, you’re now paying somewhere well above 30-40% to a middleman.
Same with food pickup. Restaurants have to pay Grubhub 30-40% even for orders that are placed for pickup. Even if that’s not the case, their prices are adjusted to cover delivery through these apps and most restaurants tend to keep the same price for deliver, pick-up and in person dining. So pretty much all restaurant food now contains a 30-40% tax paid to middlemen.
The same is true for shopping on Amazon. I used to be able to search on Amazon and the top 10 results would pay Amazon a service fee if I bought from any of them. Today, the top 10 results are all sponsored ads, so they all pay a service fee for the actual purchase, but they also pay an additional middle man fee to basically be listed anywhere decent on Amazon’s results. Which is nothing more than a middle man tax for no benefit (in fact, the customer is worse off due to the lower quality of results).
Combine the latter with "most favoured nation" (what a ridiculous name) clauses that bind product vendors selling on Amazon to guarantee that the price on Amazon is the best one. In other words, even if you don't use Amazon, the product prices will include phantom Amazon service fees.
I think the pitch of these parasitic "billing" companies is "we'll allow you to raise your rates without actually raising your rates" - the customer pays higher rates, the middleman takes the largest cut of the "billing fee", and the company gets a kickback as well as potential tiny savings from outsourcing sending billing emails.
Negative value to the customer, but it's a hugely profitable and dirt cheap business for the middleman, so I expect we'll see a lot more of this scam wherever it can be implemented.
IMO all of these bullshit fees are just a lack of competition in plain sight. The only fix I can think of is to simply refuse to pay them, either by not buying them that way, or by only patronizing businesses without them.
- Resort fees in vegas
- Amenity and other fees on top of rent
- "convenience" fee on movie/event/concert tickets
The only sort of regulation that I can think of that might address this is to make it false advertising (bait and switch) to advertise a price that is not net of all non-optional fees. (and perhaps taxes too)
Also I have to say I kind of don't blame the businesses for doing this. American consumers are so complacent compared to other parts of the world. People seem to be just fine with paying whatever price the vendor comes up with and not fighting back (including negotiating or refusing to patronize the business). Maybe it's a sign we're just too rich, or maybe too "polite"?
Captured consumers is another one. IMO unless it's part of the advertised price, it must be optional. If they cannot remove it they should have to waive it, by law.
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[ 1.6 ms ] story [ 199 ms ] threadBefore Uber you still had cabs that took you from place to place. The difference was you probably had to call them in advance of hail them on a street. But for slightly more convenience, you’re now paying somewhere well above 30-40% to a middleman.
Same with food pickup. Restaurants have to pay Grubhub 30-40% even for orders that are placed for pickup. Even if that’s not the case, their prices are adjusted to cover delivery through these apps and most restaurants tend to keep the same price for deliver, pick-up and in person dining. So pretty much all restaurant food now contains a 30-40% tax paid to middlemen.
The same is true for shopping on Amazon. I used to be able to search on Amazon and the top 10 results would pay Amazon a service fee if I bought from any of them. Today, the top 10 results are all sponsored ads, so they all pay a service fee for the actual purchase, but they also pay an additional middle man fee to basically be listed anywhere decent on Amazon’s results. Which is nothing more than a middle man tax for no benefit (in fact, the customer is worse off due to the lower quality of results).
Negative value to the customer, but it's a hugely profitable and dirt cheap business for the middleman, so I expect we'll see a lot more of this scam wherever it can be implemented.
Also I have to say I kind of don't blame the businesses for doing this. American consumers are so complacent compared to other parts of the world. People seem to be just fine with paying whatever price the vendor comes up with and not fighting back (including negotiating or refusing to patronize the business). Maybe it's a sign we're just too rich, or maybe too "polite"?
https://www.ftc.gov/media/71268
https://www.whitehouse.gov/briefing-room/statements-releases...
https://www.reuters.com/world/us/white-house-expands-war-jun...
https://www.whitehouse.gov/cea/written-materials/2023/03/21/...
https://www.ftc.gov/news-events/news/press-releases/2022/12/...
https://www.forbes.com/sites/michaelgoldstein/2023/02/21/did...
Captured consumers is another one. IMO unless it's part of the advertised price, it must be optional. If they cannot remove it they should have to waive it, by law.