How to Guard Against 'Drip' Pricing

By MintLife  FEB 20, 2013 11:05 AM

The Federal Trade Commission has been quiet about the issue since 2012, but here's what you can do to stop this consumer-unfriendly practice.

 


The Federal Trade Commission made a splash late last year when it took a stand on something called “drip” pricing.

The feds describe “drip” pricing as a pricing technique in which firms advertise only part of a product’s price and reveal other charges as the customer goes through the buying process. But it isn’t entirely clear what kind of a stand the government took.

The FTC held a conference on drip pricing last summer and it sent warning letters to several unnamed hotel companies, stating that their mandatory resort fees might be illegal. But it took no further action, and has been quiet on the issue since then.

What’s So Wrong With Drip Pricing?

If drip pricing doesn’t seem like a big deal to you, ask yourself: When was the last time you made a purchase decision based on a published price, but then discovered at checkout that it would cost more? It happens a lot more than you think.

Restaurants love drip pricing. Try ordering a taco or sandwich and then asking for a “premium” ingredient. Oops, your meal just got a little more expensive.

When you’re buying a car, you may see a low “sticker” price but then be asked to pay undisclosed add-ons and fees that can’t be negotiated. This can drive up the total cost of your vehicle.

Travel companies, particularly airlines and hotels, are notorious “drip” practitioners. By the time you’re done paying for that $99 ticket, you’ll be out $150 between luggage charges, seat reservation fees, and other add-ons.

Businesses argue that many of these fees are disclosed and that they are not mandatory. But how well disclosed are they? And how much of a choice do you really have?

How You Can Fight Back

This form of pricing is deceptive, no question about it. But what happens next if the war on drip pricing isn’t up to the government? It’s actually up to you. Here are a few things you can do to stop this consumer-unfriendly practice.

What If It’s Too Late?

What if you’re hit with a drip price and it’s too late to turn back? Paying by credit card will protect you, but be prepared to file a dispute. You have 60 days after your statement is mailed to file a dispute under the Fair Credit Billing Act.

Meanwhile, read the fine print on your purchase very carefully. It might be a little “leaky”.

Editor's Note: This article by Christopher Elliott was originally published on MintLife.

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