Hidden online fees are draining consumers’ wallets — and it's getting worse

Thanks to online shopping, consumers are writing a fraction of the checks they were writing 30 years ago — if they're writing them at all. But as popular as e-commerce is, one thing many consumers resent is online fees.

According to Business Insider's Juliana Kaplan, companies aren't really reducing fees — they are simply finding better ways to hide them.

"Every time we log on to shop, buy a new cable plan, or book that long-awaited vacation," Kaplan explains in a report published on September 14, "companies have been playing psychological tricks to lure us into paying more than anticipated….. While the rise of tacked-on fees has continued unabated for years, growing consumer backlash and President Joe Biden's recent initiative to eliminate hidden junk fees have pushed more companies to shift to transparent, all-in pricing. But this seemingly generous act is anything but."

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Kaplan continues, "Companies are just baking all those fees into the total price — making the hidden fees even more hidden. That $20 booking fee and the $7 handling fee are still there, just shrouded in an extra layer of mystery…. You may be thinking, 'I am a savvy consumer. I always make sure I'm getting the best deal possible.' Unfortunately, research has found that the obfuscation strategy can make it hard to even realize when you've been suckered."

One tactic that companies are using, according to Kaplan, is "drip pricing," which she describes as "charges that will get added to your total" gradually during an online purchase.

"Think of the convenience fees that rack up as you buy a concert ticket, for instance," Kaplan explains. "On the first page, you see the ticket price. On the next one, once you select your ticket, you see the booking fee. Finally, when it's time to whip out your credit card, you see a facility or venue fee. Drip pricing relies on a timed aspect: You invest a certain amount of time in each step of the purchase, with fees slowly revealed throughout that period."

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Business Insider's full report is available at this link.