Hidden fees: Why online purchases break the bank

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Your stomach grumbles as you pull up your food delivery app: time for dinner.

After choosing your meal, adjusting toppings and adding sides, you go to check out. Your stomach drops as the additional fees increase your meal purchase to almost double the cost of the meal. Suddenly, you don’t feel so hungry anymore.

Consumers who routinely use online services to purchase goods or services often end up paying more than expected due to additional fees.

Food Delivery

Individuals that order from food delivery apps encounter the same situation every time they order food: one price is visible to customers when they choose their food, but hidden fees add on additional costs to the meals they purchase.

Even without the hidden fees, the prices advertised on food delivery apps tend to be higher than the prices that are shown in restaurants. According to the websites for Grubhub, DoorDash and Uber Eats, restaurants are charged anywhere from 10-30% in commission fees to use the app to deliver their food. This can cause the restaurants to inflate their prices to recoup the income they would have made had they not partnered with the apps.

BYU sophomore Annabelle Snow orders from DoorDash once every two months. While she isn’t a regular user, she has noticed the difference between the advertised price and the actual price. Snow said that food delivery companies “know that people would be more hesitant to use it if it’s a lot more than they thought it would be.”

The additional price is explained on the app. There are fees for both delivery and service, as well as the state sales tax. There is also an option to add tips for the delivery driver. While Snow has occasionally canceled her orders, the fees themselves do not bother her.

“If that’s a deterrent for people to buy fast food, that’s probably something that America can use,” Snow said.

BYU freshman Tommy Hale has delivered for DoorDash in the past. Hale said that he was paid based on delivery, not by the hour. Hale would get anywhere from $2.50-$7.00 for each delivery, with tips added on top.

“Without the tip, I don’t think I’d make a profit,” Hale said. Dashers pay for their own gas, which can add up with each delivery they make. Dashers also receive a 2% cash-back credit card that they can use to pay for gas.

“I might do it again since it’s just another thing that makes some income,” Hale said.

Entertainment

Food isn’t the only item that costs more for online convenience. Concert attendees often pay additional fees for purchasing tickets online.

BYU senior Brinley Koenig said she and her friend Alyssa Fox spent nearly four hours waiting for Taylor Swift concert tickets. When they finally got tickets, the advertised price was $750 for floor seat tickets.

“My parents love me, and they’re paying for half, but in my mind, it’s so worth it,” Koenig said.

However, when Koenig and Fox went to pay for the tickets, the Ticketmaster system they used charged them an additional $150 fee to order their tickets online, raising their total price to $900.

“The fees are just ridiculous, and it almost becomes false advertising,” Koenig said. “$150 dollars on top of the ticket is a lot, especially for a college student.”

The advertised prices are much lower than the prices that people eventually pay. President Joe Biden spoke out against these hidden fees in his State of the Union address to the United States on Feb. 7.

“Junk fees may not matter to the very wealthy, but they matter to most other folks in homes like the one I grew up in, like many of you did.  They add up to hundreds of dollars a month,” Biden said.

According to the Ticketmaster website, ticket fees are partially shared with the artists that sell the tickets. They are also used to help Ticketmaster “provide our clients with software, equipment, services and support to manage their tickets and box office, and provide the sales network used by clients to distribute tickets to fans. The remainder, when taken with other revenues, is how we earn a profit.”

The Junk Fee Prevention Act would push companies such as Ticketmaster to disclose their fees up front, instead of surprising consumers with the additional cost right before they complete their purchases. Koenig thinks that disclosing the fees is important, but also said that “it’s weird to me that they need a hundred dollars of processing fees.”

Flights

Airlines also came under scrutiny during President Biden’s remarks. President Biden said that he wanted to “prohibit airlines from charging $50 roundtrip for a family just to be able to sit together.”

Currently, some airlines, such as Spirit Airlines, charge passengers to pay to choose a specific seat while on flights. These fees are optional, but without paying for them, the seats are assigned at random, which could separate families from sitting next to one another.

“We’re tired of being played for suckers,” President Biden said.

United Airlines released a statement on Feb. 20 regarding family seating options. The new system will “sit children under 12-years-old next to an adult in their party for free – regardless of the type of ticket purchased,” according to a press release statement on their website.

While this statement was released after President Biden’s State of the Union address, United said that they had been working on updates to their airlines online “seat engine” since the summer of 2022.

Brad Pulsipher, a sevice delivery manager for Suse, an open source software company, flies with Delta Airlines for his job. Pulsipher said he has paid for fees that were “ridiculous,” but mainly on lower cost airlines.

With Delta and United, he has not encountered those same fees. “You have to pay for better services, that’s probably the crux of all this,” Pulsipher said.

Paying for seat choice, priority boarding, carry-on bags and additional luggage are all optional fees that customers can add on, in addition to the base price of the ticket. Customers are not required to purchase these features as part of their flight experience.

Scott Koenig works as a marketing professor at the University of North Texas, and is “in favor of truth in advertising.” It’s up to the consumer to recognize what fees exist, and then choose to continue to make the purchase. “As long as the consumers know what the price is before they click check out, I don’t have a problem with it.”

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