>Junk fees are the flip side of consolidation, because they force prices up across the board by breaking the very structure of a market and forcing even honest actors into cheating.
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.
Consolidation means there are only a few possible vendors. It looks like we have choice but we don’t. Comparing between Vacasa and AirBnB isn’t really a comparison when both are directly encouraged to hide fees until you’re ready to checkout. So you spend time comparing options only to realize the one you’ve chosen has +30% per day cleaning fee. Now you’re unable to even appropriately cross compare results because of the hidden fee structure. I used Vacasa and AirBnB mostly as an example, but cable companies and telecoms are worse in that you don’t know about the bullshit fees (and anything that is labeled as a fee is bullshit) until you’ve signed up. Additionally, they can add fees at will; which, I can’t believe is at all legal. Tacking on any fee labeled or not should be illegal unless I directly consented to it.
I read the original comment as it didn’t make sense that prices in the US aren’t inclusive of taxes.
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.
Spending is the issue, complaining about taxes in isolation is just silly.
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…
Taxes and the governments they support are still a huge net benefit. You can quibble about kinds of spending but then you’re going to offend someone who wants that spending thus the silly focus on taxes. Can’t cut police because people want that, can’t remove GPS, can’t cut veterans benefits, can’t…
But hey leaching off other people is a time honored tradition.
I think both can be good. We should know how much of a purchase is tax. We should also know upfront. I also think it's okay to question if a tax rate is appropriate and if the money already being taken for tax purposes is being spent well.
A much, much simpler explanation is that not including taxes in an items price increases the likelyhood of a consumer buying the product. Once a consumer goes to pay for a product, either online at checkout or at the cashier, they're much less likely to back down from a purchase.
This is a conspiracy level explanation. Do you really think middle aged Americans are surprised by taxes every time they buy groceries? "Oh, darn, the total cost is unexpectedly higher, how could I forget about the sales tax... that I see on every check every day for 50 years."
I mean it is inconsistent and there is really no way for an average American to know how much they will pay in tax at the grocery store. A prepared sandwich has tax, but sandwich ingredients do not. Depending on which side of the county line the store you’re shopping at is, a bottle of soda could have tax or be tax free. Sunny D might have tax while concentrated orange juice does not. Etc.
Prices are done without taxes in the US and Canada due to the anti-tax lobby. The theory goes if people have to see the figure they are taxed each transaction they will more loudly complain about the rates and more strongly resist raising the rate. In practice all it does it make it annoying to figure out what something costs.
In practice it works. Sales tax averages around 5% in US states, and over 20% in Europe. When I lived in the states, everybody knew what their local sales tax rate was off the top of their head, and most knew the last time it was raised. Here in northern Europe, nobody really knows. Out of sight, out of mind.
Because for the last 50 years or so there has been a vast effort to erode the regulatory power of our government. From the FDA and EPA, to the education system and more -- these institutions have either been captured by industry or starved for funding.
The result is that business can do pretty much any ani-consumer thing they want and there is nobody to stop them.
Much of the federal government's regulatory authority shouldn't exist in the first place, and stems from an overly broad interpretation of the Commerce Clause. Hopefully we will see Supreme Court decisions which overturn those precedents and eviscerate the power of most federal agencies. Most issues should be left to the several states, or if federal authority is really needed on certain issues then let's pass narrowly targeted Constitutional amendments to that effect.
So when companies are dumping so much hazardous pollutants into local water so that the river catches fire[1], who's responsibility is it to deal with that?
If the problem is contained within one state then the state government can deal with it. If there are significant levels of pollutants flowing downstream to another state then that would be a federal issue under even a very narrow interpretation of the Commerce Clause.
So most major waterways affect and are affected by interstate issues, especially when you take into account watersheds that feed into them. And anything you put into the air by definition is going to be impossible to contain within just one state. And the ocean is by definition an interstate issue by default.
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.)
As an American who has lived abroad a fair bit, I can confirm that the American approach seems deranged if you're used to prices that match what you will pay.
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.
Fair point on the advertising. Perhaps a good compromise would be to mandate displaying the price with the taxes included in store/on the website so what you see is what you get when you checkout with no bad surprises.
What are the boundaries where VAT rates change? Within the US, there can be state + county + special tax district in the county + city + special tax district in the city.
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.
Plenty of things vary by location. Rent and wage have a bigger impact than sales tax on the final price in a supermarket. Yet they are able to coordinate sales prices even when the rent varies a lot, because anyway those are loss leaders and then the rest of items get the proper markup and differentiated prices depending on the location. Just like you have items in the RU with the same promotion prices in countries with 15% VAT and countries with 25% VAT, usually because you want the nice rounding at, say, 399.
That's not really true as a general rule. Grocery stores, for example, have an average profit margin of just 1–3%.
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.
That's the profit margin across all products. Consumers are not rational (or at the very least, not infinitely knowledgeable and able to use that knowledge instantaneously), so you would absolutely expect effects like charging 4.99 rather than some tax-adjusted number like 5.18 to translate into real profits.
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.
I don't, and will never understand this argument, because here in Europe, the Tesco in my town centre has a different price for the exact same item to the Tesco Superstore on the edge of town which also has a different price to the little Tesco Express down the road.
Somehow this all works magically here but in the US it is impossible because.. reasons unknown
Are hotels unaware of where they are located and so unable to determine their prices? I'm pretty sure that the cause of the collapse of the Pax Americana at this point will be the willful conflation of American Exceptionalism into learned helplessness.
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.
I'm curious where you have ever seen a national advertisement for a hotel room that includes a price; it is not something I've observed but perhaps my chauvinism has blinded me. That said, do you think that a hotel company is able to calculate the price of a room when I go onto their online portal and request a price for a particular location and date?
The usual strategy is to nationally advertise "as low as" some base $$ amount. And then you go into the online portal and come up with an actual price for an actual date that (hopefully) includes all taxes and fees--and is probably a fair bit more.
In certain states, some customers such as disabled veterans are exempt from hotel occupancy tax. So the tax rate isn't necessarily the same for everyone.
When I book hotels/rental cars/etc. online, you can usually see what the all-in price is going to be. But when comparison shopping, you have to keep an eagle eye out because the difference between all-in and base price can be 25% or more. (Also pre-pay/no cancel vs. paying at arrival and having some ability to cancel.)
for a non-American answer: in countries with VAT, tourists are not required to pay VAT, although domestic citizens are. The hotel will often service both foreigners and domestic citizens, so it charges a rate without VAT to tourists and a rate with VAT to domestic citizens. Unlike most businesses where most of their clientele are domestic citizens, hotels are special in that most of their clientele are foreigners, thus hotels are permitted to advertise a rate without VAT.
I haven't experienced the examples provided in the articles except at restaurants (kitchen fees) where I won't return ever again. I reduced the 20% tip to 15% because of that. Sorry.
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 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."
My local municipality charges 5% to use a credit card to pay for automobile or property taxes.
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%.
Its disclosed, indeed, but the problem is why is it so high? I can't recall the last time I've ever seen a payment processor so high outside of tax/government paid services.
Do they offer direct payment from your checking account? If so, this is an incentive fee to do that rather than use a credit card. It is annoying however when the only alternative given to using a credit card is a paper check sent somewhere using a stamp (but that is where your bank’s autopay might be useful).
They do, but it's a "give us your account number and we promise to keep it forever totally secure and you agree to auto-pay" thing. They failed to get my name correct after having it spelled out multiple times, shut off our water because someone requested it for a different address (to their credit, they did turn it back on at the right address within a day after waiting on hold, and the person even agreed the name thing was funny, just not funny enough to fix), I just don't trust them to not make it a bigger issue down the line than the fee if I make that choice.
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.
If you wrote them a check, they would also have your account number forever…so I’m not sure how this would be different.
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.
I saw a discussion about tipping on FB not long ago, where many participants were servers. One waitress posted "If you don’t tip at least 20%, you’re going to get some nastiness in your food next time." That attitude seemed to meet with others’ approval, too. So, in your case, you really would have to never go back.
People who think that way don't remain servers long. Managers absolutely do not tolerate it. Feel free to vent on the Internet but if you actually touch the food you get blackballed.
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.
If you include a 5% kitchen fee, and still expect a 20% tip, I ain't paying 25% ... The server will get 15%. I prob wont go back to that restaurant again if they charge ridiculous fees.
In San Francisco restaurants, I’ve seen this tactic applied liberally. Maybe AirBnb and DoorDash are rubbing off on them:)
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”.
"In January 2008, the voter-approved San Francisco Health Care Ordinance went into effect, requiring any business with more than 20 employees to set aside money for their workers' health care."
It's ok for business to tell their customers why prices are increasing via line item.
Sure, if they actually increase the prices written on the menu. But the way I understand the parent comment, they didn't, they just tacked them on as extra fees at the end.
No it isn't. The cost of my widget isn't broken out to material sourcing, transportation, and other overhead. Doing it this way causes unnecessary mental gymnastics and is done for the sole purpose of creating political pressure. I don't mind companies having and sharing political opinions, but keep it off my receipt. Just put up a sign that says "prices have increased due to new regulation" and feel free to hand out pamphlets decrying the state of things, don't be disingenuous about your motives.
Exactly. If the SF restaurants OP mentions are not also itemizing all their other taxes and expenses on their customers' bills, yet singling out the “SF health mandate” one, it's pretty clear that they are just using those bills to make a passive aggressive political complaint.
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.
Not the sole purpose of creating political pressure: there is also the benefit to business of showing a customer a lower price and psychology easing them into spending more.
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.
Usually there's some little footnote on the menu or sign on the door stating the fee, so it would be impossible for a prosecutor to prove fraud. But this kind of bullshit is one of the reasons that I don't visit SF as much as I used to.
> Usually there's some little footnote on the menu or sign on the door stating the fee, so it would be impossible for a prosecutor to prove fraud.
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.
Forcing all taxes to be itemized separately is a win for enabling people to have the most information to make the most accurate decisions. It allows them to see how much money the government is taking from them, and depending on whether they think that number should be higher or lower, allows them to make informed voting decisions. Voting is far more important than choosing which restaurant to eat at.
Where are you from? In the US goods and services are normally quoted as one price and charged as another if there are taxes and fees. Restaurants, grocery stores, hotels, retail, etc. Everywhere basically. “Junk fees” take this further but your definition of fraud describes basically every sale already.
I care less about this with one-off businesses (hotels, restaurants, post) but doing this with rent at apartments seems like they’re duping people into paying more than the advertised rate. It genuinely seems like fraud.
Yeah, an apartment I looked at told us there would be an extra $100 for utilities, then an extra $30 for trash, then an extra $100 community fee... If they're mandatory, fixed expenses, those need to be part of the rent and listed up front.
If the prices on the menu are just 10% higher, this is fine. You know what you're getting in to and can always decide to order something cheaper or not eat there.
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.
If a restaurant raises food prices by 10% to pay for healthcare, is that an undisclosed fee?
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.
What would you consider credit card fees? Those are variable hidden costs that are passed on to all customers of that establishment - including cash payers.
I would like credit card fees to be prominently displayed on POS at checkout with the option to opt out by using debit be very obvious. Perhaps two prices, one Total with Cash/Debit and another Total with Credit. It’s kind of the opposite situation of the OP in that it’s priced in everywhere in the total advertised price so it’s not fraud in the same way, but it’s still an issue that’s related but tangential
Adding taxes on at the end is 'junk fees' in this sense and should also be banned.
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.
Add tipping to this, and it becomes very tiring as a tourist in the US trying to figure out what anything costs.
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.
The great thing about the free market is, we get to run the whole country like it’s a ferengi casino and then tell everyone that it’s their own fault that they work 80 hours a week and can’t afford to buy insulin.
This is a great writeup. I wish more political writing would call out specific names and show specific examples of the shady lobbying industry at work like this. American business culture is so greedy and slimy—with no shame whatsoever these groups push back on what amounts to legislating outright fraud for profit. I’d like to see a similar writeup on the real estate industry as that’s another powerful group actively making our lives miserable for their own profit.
The flip side of greedflation is that people keep paying it.
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.
> Though if you really want to get back at restaurants, drink at home.
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.
Even my beloved Tmobile is going down this anti-consumer path unfortunately, and kicking people off of older plans into some new, more expensive plan of T-mobile's choosing, "unless they opt out". [1] I hate this stuff. I don't want to babysit my assorted vendors to learn when they will next try to "stick it to me" when I least expect it. Modern life is complex enough without wondering who is gonna get me this week with some new unexpected KPI/OKR fluffery. :/
>It’s a fantasy that this law is going to make prices go down.
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.
Another junk fee that disproportionately impacts people who do not have a ton of cash sitting around: reconnect fees.
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.
At least in my major US metro, only the electric utility can toggle their service on/off remotely. Water and gas services have a digital meter but still need a physical action by a human service worker to turn them on/off.
I look at car prices now and unavoidable "destination charges" and "document fees" are also outrageous. Just put it into the number that I see first, before the paperwork is started.
I traveled extensively for work for years — around 100 nights/year, on average. So, I’ve stayed at a lot of hotels.
“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.
Your outrage may be exclusively from the hiding of various fees, but please don’t assume that extends to everyone.
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.
I guess we’ll have to agree to disagree on that. I think it is very relevant that while the article called out specific private actors advocating for these fees, and specifically described privately-assessed fees at hotels, it completely missed that the government is the ultimate source of some of the most pervasive junk fees in the hospitality industry.
> 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
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'.
> 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.
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.
Yeah. Resort fees exist especially at, well, resorts or at places like Vegas casinos that I guess think they qualify as resorts. (And they're often less than transparent when you book.) But, as you say, it's not something I routinely encounter at most Marriotts etc., much less random independent hotels.
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.
Nothing special about "resorts." It is/was a fee that (mostly) certain types of hotels felt they could tack onto the basic rate to cover things like pool access, WiFi, maybe a drink coupon, and various other things that one would have assumed were included or will likely not use (10% discount at spa).
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.
I get charged a $25 nightly mandatory amenity fee at the Hyatt in SF. They are obviously a huge multinational conglomerate. It supposedly covers $10 in credits (one time, not per day, even though you pay the fee per day) at the overpriced convenience store at the bottom of the hotel as well as discounts and vouchers to bike rentals I will never use and museums I will never go to. It is not possible to opt out of this fee, which is also not advertised in the nightly room rate.
I would just call those taxes. Although I very much agree that they should be included in the posted price. Maybe this will induce that to get fixed also.
I don’t think that bundling them in the posted price is the right solution. I think external fees, like taxes, should have to be disclosed separately, but prior to purchase. If they are included in the room rate, it looks like the hotel is just charging more, and these fees are fundamentally different than the normal junk fees some hotels try to charge for.
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%.)
139 comments
[ 2.9 ms ] story [ 203 ms ] threadWhat 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.
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!
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.
https://case.edu/ech/articles/c/cuyahoga-river-fire
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!
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...
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.
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.
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.
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.
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.
“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%.)