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Let’s Talk About How Companies Make 'Bad Profits' by Burning You


Feb 7, 2018 | Jessica Ogilvie

We’ve written about how traditional banks often charge hidden fees or hit you with punitive charges for “mistakes,” which can add up to hundreds of dollars over the course of the year. But it turns out that this model — making money off customers by not really telling customers what they’re paying for — is becoming a fairly common trend. Two recent studies found that Americans pay billions of dollars in hidden fees each year; possibly up to $60 billion, according to one.

Plenty of industries engage in this odious practice, but after some digging, we’ve determined that the worst offenders after banks are — drumroll, please — hotels and airlines! Yes, these two industries have earned the business equivalent of a Razzie Award for their accomplishments in charging customers for for every little thing (and not telling the customer they are doing so). Here are some ways they get you, and some ways that their mindset could spread to other industries as well.

Hotels

If you’ve traveled to Las Vegas recently, you’re probably painfully aware of how hotels (particularly in tourist-heavy destinations) slam you with fees from every direction. And while we all know to never even look at the bottle of water in your room, it’s harder to take note of other fees that don’t pop up on your bill until it’s too late. Here are a few of them:

Resort Fee: This sounds like a fun one, right? Like, you probably had a really great, tropical type of time if you’re getting charged for a resort fee. But the truth is that hotels can call anything a “resort” and thus charge you a fee, including just having a pool. These aren’t cheap, either; they usually run around $20, but can get up to the hundreds of dollars by particularly unscrupulous places. They’re also on the rise: according to The Washington Post, 2017 saw a 14 percent increase in the number of domestic hotels charging resort fees. Be sure to ask up front what yours might be before booking.

WiFi and Telephone Fees: Some hotels might let you know that you will be charged through the nose to access the World Wide Web, something you almost definitely need if you’re traveling. But others will keep it a secret until they slip that paper under your door at the end of your stay. WiFi fees often run around $10 a day, in which case it might be worth seeing if there’s a local coffee shop (Starbucks and McDonald’s usually offer free WiFi) where you can log on instead.

A lesser-known fee when it comes to communications is the phone fee. Some hotels will charge up to a dollar or two for local calls (don’t even think about calling long distance). If you have your cell phone with you, you are better off using that.

Check-In and Cancellation: Be wary of the way things used to be. Once upon a time, we could all count on being able to cancel a hotel reservation up to 24 hours before we were supposed to be there. Not so anymore, particularly as third-party booking sites like Travelocity become de rigeur. Make sure you know how much time you have to bail as soon as you put any money down.

Similarly, what was once a common courtesy — early check-in, if the room was available — might now be something that you pay for down the line. Instead, ask if you can leave your bags with the concierge for no charge.

Airlines

This is one we’ve all known for a while now — remember when you could check a bag for free and they gave you a meal? — but have you ever actually sat down and considered how many hidden fees airlines are charging? In addition to any checked bags, you’re also paying for anything and everything that might make your flight remotely tolerable, including:

Headphones and Pillows: This might not seem like a big one, but these luxury items used to come with flights for free. Now, if you want to actually be able to hear the dialogue on the movie you’re also paying extra for, you need to either bring your own headphones or pony up anywhere from $3 to $7 for the privilege. If you want to avoid these fees, make a packing list before you leave and be sure to include anything and everything that you might want with you on the plane.

Seat Selection: Not all airlines charge for letting you pick your seat, but it is a particularly galling thing when they do, because it costs the airline absolutely nothing to provide. These fees are most common on budget airlines like Spirit and Allegient, meaning that the low fare you’re paying comes with a high cost on just about everything else. It’s impossible to circumvent this fee, and for that reason, budget airlines are often best for short trips where you don’t care if you’ll be stuck in the middle of the row for an hour or two.

Fuel Surcharge: What’s a fuel surcharge fee, you might be wondering? Well, it came about back when oil prices rose dramatically, outpacing the rate at which airlines could cover them. The catch? Oil prices have since dropped significantly, but customers are still getting charged. They may now be called “carrier-imposed fees” or “carrier fees,” but they amount to the same thing. And because so many airlines still carry this charge, they’re difficult to avoid. Unless you want to really make a point by hopping on a train or walking to your final destination.

Hidden fees can pop up anywhere a company thinks it can get away with putting them. But by learning about them, we can make smarter choices about where our money goes, what types of companies are on the receiving end, and make it clear that “bad profits” aren’t going to be accepted passively.

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