Concealed fees cost shoppers fortunes

"By the time the add-ons are revealed, consumers are more likely to be committed to the purchase and less likely to shop around." Sue Chetwin ofconsumernz

New Zealand consumers could be paying $68 million a year in hidden fees charged by retailers, Consumer NZ says.

Consumer NZ chief executive Sue Chetwin said more than twothirds of consumers have been charged extra fees on top of the advertised price of goods and services. These charges were often called booking or service fees and were increasingly common in the travel and entertainment industries and were misleading customers, Chetwin said.

‘‘By the time the addons are revealed, consumers are more likely to be committed to the purchase and less likely to shop around.’’

Retail New Zealand spokesman Greg Harford said transparency was not a problem among retailers, but more so with service providers.

Charging credit card fees was a way merchants, typically in the hospitality industry, could recover bank fees on electronic transactions, he said.

The practice of adding fees to advertised prices is known as ‘‘drip pricing’’. Companies use it because it makes consumers more likely to buy. Chetwin said while the Fair Trading Act prohibits misleading representations about price, ‘‘it hasn’t been effective at stopping practices’’.

‘‘Other countries provide better consumer protection. In Australia, for example, companies are prohibited from advertising a component of a price without prominently displaying the total amount.’’

Extra fees can add anything from $5 to more than $50 to the advertised price. On average, consumers are paying $13 more, the survey revealed.

Consumer NZ has launched a campaign calling for the Fair Trading Act to include rules requiring businesses to disclose the full cost of products upfront. The consumer watchdog is inviting people to sign its online petition to get the law changed. drip-pricing