I’m against government micromanaging the economy, but I’m for government protecting consumers from deceptive business practices.
Restaurants are struggling with higher costs, but are afraid that raising menu prices will drive away customers, so they’re passing those costs through (as they must to stay in business) as add-ons to the final bill.
It’s a dodgy business practice that recalls old jokes about a new car having a base price, and you pay extra for the optional tires, seats, and steering wheel. But as long as the buyer knows how much he’s actually paying for the car, it’s not illegal, just annoying.
Restaurants play this game in different ways. A CNBC article on Sunday, August 25, 2024 (here) mentioned a Chicago restaurant whose extra fees “are stated clearly on its website, its Resy page and its menu.” That’s full disclosure, and it’s fair to customers. But if a restaurant doesn’t disclose those charges, and hoodwinks customers into paying them, that’s a deceptive practice that should be banned.
Add-on fees have a name: “Junk fees.” And federal regulators are scrutinizing them. The CNBC article says, “The Biden administration has broadly targeted so-called junk fees, like an undisclosed service charge for concert tickets or unexpected resort fees when checking out of a hotel. This fall, the Federal Trade Commission is expected to publish a rule banning businesses from ‘charging hidden and misleading fees.’”
Good. It’s about time the government cracked down on “undisclosed” and “unexpected” charges.
The practice is so pervasive that if I were to travel, I would assume everything will cost more than advertised, and make allowance for it in my trip budgeting. They get you coming and going: Airline baggage and seat choice fees, restaurant fees, hotel fees, fees on tickets for theaters, sports events, and tourist attractions. Fees here, there, everywhere. And tips and taxes. Virtually nothing costs the advertised price.
One of the most annoying ripoffs is stadium taxes. Nearly every major city with a sports stadium is paying for it by gouging out-of-town visitors. This usually takes the form of extra taxes on hotel rooms, rental cars, and other services heavily used by travelers. At least it’s reciprocal: Minneapolis robs visitors from Milwaukee to pay for its stadium, but Milwaukee robs visitors from Minneapolis to pay for its stadium. So maybe it roughly evens out.
The CNBC article also discusses tips, who gets tips (the restaurant owner or staff), mandatory tipping, and wage theft; but I won’t go into all of that here. It’s sufficient to say their article says junk fees open the door to greater abuses.
I’m not one of those people who think government should keep its hands entirely off business. That’s not realistic. Businesses will be dishonest if someone doesn’t keep them honest. Moreover, businesses have never been unregulated in America, even back in early colonial days. The Mayflower had barely disembarked its passengers before the Pilgrims enacted weights and measures laws. Colonial merchants could charge what they liked, but had to be honest about what they were selling, and how much they were charging for it.
We still have weights and measures laws today. We also have laws against false advertising, adulterated or counterfeit products, monopolies, price-fixing, restraint of trade, and anti-competitive practices. Requiring junk fees is just another consumer protection measure we should embrace.
As a consumer, I prefer a restaurant include all its costs and its profit in the menu price, so I know that a $30 menu item costs $30, plus tax and tip, which in Seattle brings the final cost to about $38. This math is simple enough to do in my head. If it gets more complicated than that, I might not go back to that restaurant again.