FTC doesn’t crack down on drip pricing, but you can

Friday, February 15th, 2013 By

A pile of coins, mostly nickels and dimes.

Businesses will nickel and dime you with drip pricing – if you let them. (Photo Credit: CC BY-SA/Nicholas B./Flickr)

What is drip pricing, and why has the Federal Trade Commission put its foot down over the practice, although the FTC’s full disposition is not fully known? According to the FTC, the drip pricing practice involves retail pricing in which a company advertises only a portion of a product or service’s total price. The remaining charges are revealed once the consumer is on the hook for the purchase.

FTC says drip pricing ‘might be illegal’

During the summer of 2012, the FTC announced at a national conference that several high-profile hotel and resort companies were using the drip pricing practice, and that said practice “might be illegal.” Quite a definitive stand! Since the pronouncement, no further action has been taken, leaving consumers to more or less fend for themselves.

How drip pricing can hurt you

Even if you haven’t been strung along by drip pricing at a resort, you’ve probably made a purchase at one time or another and found that many more expensive premium options were available. This is common at restaurants, where additional ingredients can add significantly to the cost of a meal. It is also quite common when you’re on a new car lot, where you may be asked to pay for undisclosed add-ons and other non-negotiable fees beyond the sticker price. In the case of a car, the additional expenditure can be sizable.

Then there’s the world of travel. Drip pricing for airline tickets (luggage fees, seat reservation fees) and hotels (a dizzying array of convenience charges) are littered with fees that the businesses will claim and disclosed and non-mandatory, but in actuality are only seen in the smallest of fine print.

Fight back against drip pricing – here’s how

While the FTC has yet to rule that this kind of pricing is illegal, it is definitely deceptive and consume-unfriendly. If you see this kind of pricing model coming, do your best to back away. Don’t frequent businesses that don’t reveal all charges clearly up front. Let management know you’re unhappy, notify the Better Business Bureau and tell the FTC by filing a complaint at the website. If you have been hit with drip pricing and paid via credit card, you may even be able to file a dispute with your card company up to 60 days after your statement is mailed, thanks to the Fair Credit Billing act.

Sources

Federal Trade Commission

Los Angeles Times

Mint Life

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