I’ve spent my career writing about the scourge of hidden fees and surcharges — and how they wreck the normal price function of market economics — but for once, I’m not sure how I feel about a new fee making the rounds.
(In fact, it’s the 10th Anniversary of Gotcha Capitalism: How Hidden Fees Rip You Off Every Day and What You Can Do About It. I’ve written an entirely updated version. Buy yours here.)
Businesses around the country are toying with the idea of Covid-19 fees and, in truth, I can see why. A dentist I work with recently notified me that their office was charging an extra $20 per visit to supply the staff with proper PPE. It struck me as strange, but at the same time, I certainly want the dental staff properly protected. They deserve nothing less. I’d probably donate $20 for the cause without batting an eye. On further review, I learned that the American Dental Association has essentially recommended this approach, rather than raising prices, so the increased cost doesn’t become a financial football between insurance companies, patients, and providers, So $20 seemed reasonable, particularly since the notification was clear and came well in advance of a visit.
It appears non-health-care companies are adding Covid-19 fees, too. Hair salons in Texas are adding a $3 sanitation fee, for example. I was a little less comfortable with that, until I thought about all the times I’ve been willing to support local businesses during these past two months. Why would this be any different? And there’s no denying: people who work at hair salons deserve to be safe, as do their patrons. The cost of making them safe is both quite real and a completely unpredictable, new cost of doing business. So, I see their side.
In Missouri, a couple of restaurants have tried adding Covid surcharges due to the skyrocketing cost of food, but as Vice.com reports, the backlash was severe. Well, to clarify: The social media backlash was severe after an eatery lost the Internet-Wheel-of-Justice-social-media-outrage lottery. So, at least for now, restaurants there are changing strategy and simply increasing prices. (It’s worth noting that many local restaurants have generously donated meals during this crisis. They don’t deserve abuse for this).
Generally, raising prices is the right way to handle such a situation. We’ve all seen telephone or cable TV bills laden with line item after line item, an intentionally deceptive method of lowering the sticker price to thwart consumer comparison shopping. It’s now standard to charge a fee for something that’s a routine part of doing business, such as the “network access and maintenance fee” nonsense that’s often on Internet service provider bills (as if it costs extra to actually ACCESS the Internet when you are paying for Internet service). I’ve written about firms tacking on a fee to collect taxes, for heck’s sake. Consumers are, rightly, fed up with this way of doing business.
Ted Rossman over at CreditCards.com wonders if businesses that go this route will find it’s not worth the trouble.
“To me, surcharging is more of a public relations issue than an economic one. It’s a bad look,” he says. “While few, if any, customers would be enthusiastic about paying more for any reason, cost increases seem to feel especially egregious when they’re itemized. They’re hard to miss when they’re right there on the receipt in black and white.”
Still, don’t take that frustration out on Covid-19 fees. Small businesses are trying to figure out how to exist in this new reality, so cut them some slack. If there’s any environment that might allow for a temporary surcharge, it’s this one — as long as the fee is prominently displayed so there’s no surprise, and it doesn’t hit consumers with the feel of a mandatory, hidden tip. Also, I think the real issue here is the word “temporary.” I believe most people would rally around a local business that simply wanted to buy appropriate masks for its staff, and would consider making a one-time donation towards that. The real problem is that American consumers have been trained to expect that temporary fees become permanent, like that ISP fee.
There’s also the annoying “asymmetric price adjustment” phenomenon — gas prices go up during a crisis waaaaaay faster than they come down. Will your local business really drop a Covid fee as soon as this nightmare is over? I’d hope so.
If you see a Covid fee, offer polite feedback on how it makes you feel. Even if that makes you decide to take your business elsewhere, which is your right, there’s no need to be nasty about it. And if you use this as an excuse to rant at far-away business owners who get swept up in the Internet’s Wheel of Justice, grinding your “Covid Hoax” ax in their face? Well, you’re just a bad person who gives free speech a bad name.
Stay safe, all!