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What is Drip Pricing?

 

 

What’s That Fee?

Ever noticed additional fees on your credit card after making a purchase? Or, have you ever shown up to claim your hotel room and were hit with ‘mandatory fees’ that were never disclosed when you made your reservation?

 

Welcome to the world of drip pricing!

According to the Federal Trade Commission (FTC), drip pricing is a technique used to misrepresent prices until after a customer makes the purchase. Not only is this deceptive pricing strategy harmful for the consumer, it also makes it difficult for rival companies to stay competitive and not fall prey to the drip pricing model.

So what are some examples of drip-pricing?

There is a history of drip pricing in the airline, car rental and dealer, financial services, and telecommunications industries. However, the hotel industry is just developing a bad reputation for drip pricing. With the advent of travel sites vying to be the lowest-price aggregate for consumers, the hotel industry is now under the microscope. Some ways of tacking on charges include:

  • Newspaper Fee
  • Towel Rentals
  • Internet Access
  • Pool Fees
  • Housekeeping Charges
  • Fitness Room Fees
  • Surcharges for Local Phone Calls
  • Bottled Water
  • Parking (some charge even when you do not have a personal vehicle on-site)

It pays to be an aware consumer.

To avoid unpleasant surprises at check-in, there are ways to be aware of what your total cost will be.

  • Be informed. Read the fine print before you submit your payment. Know the difference between estimated price and total price.  

  • Always confirm. Call to confirm the total price of your room and specifically ask about any “resort fees.”

  • Fight-the-fees. If you were charged fees you were unaware of, ask to speak with the manager to see if they can be removed.  

  • Have your confirmation in-hand. Make sure you have a copy of your confirmation. If it does not list the charges, fight it. Request a charge-back from your credit card company. 

  • Report abusers.  You can file a complaint with the FTC.  To submit a complaint:
    • Visit https://www.ftccomplaintassistant.gov 
    • Call their toll-free helpline: 1-877-FTC-HELP (1-877-382-4357)
      TTY: 1-866-653-4261
      Tell the company of your intentions, and you may get a faster, better result. 
  • Boycott companies. If an organization dupes you into paying drip-pricing fees, change companies. Let the company know that you are electing to boycott their companies and you will also let everyone know why you’re doing so. Negative word-of-mouth can have disastrous effects on a company’s brand—especially with the viral nature of social media.

Drip pricing is becoming such a problem that the FTC started issuing warning-letters to those guilty of misleading consumers. The letters state that, “the FTC may take action to enforce and seek redress for any violations of the FTC Act as the public interest may require.” (Sounds like it may cost companies more to deceitfully charge consumers than it does to be upfront and honest from the beginning.) Even with the FTC’s actions, it is important for you to be an informed consumer. The next time you make a reservation, book a service, or buy online, read the fine-print very carefully. If you become a victim of drip pricing, get aggressive to ensure the situation is resolved to your satisfaction.

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