All the ways businesses overcharge or bill you for things that used to be free

18 June 2023 , 06:00

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Being aware of consumer rip-offs can save you a fortune (Image: Getty Images)

I love my job, but sometimes it’s a bit depressing. It seems like every week, there’s a new scam, or rip-off, or crafty trick to part you from your cash.

This week, I’m going to introduce you to drip selling/pricing, micro-charging and ancillary charges. BORING!

Yes, I know. But hold on a moment. These terms refer to a range of ways that businesses overcharge you or bill you for things that used to be free.

There’s talk of banning some of these charges, but for now, don’t get mad, get informed. You’ll save a fortune if you learn to spot them and push back.

But first, some plain English for you:

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Drip-pricing: This is the "art" of hiding the true cost of goods or services by offering a cheap starting price, then adding on so many additional extras that the price at the checkout can be much higher. Think of buying an airline ticket for £30, then adding on seat charges, luggage, priority boarding, etc and actually spending £150.

Micro-charging: This is where businesses charge you small amounts for things or goods that used to be free. For example, some email providers now charge as much as £7.50 a month just to allow you to keep your email address.

Ancillary charges: This is the traditional term for any additional charge associated with something you purchase. I hate this phrase. Just replace it with ‘extra charges.

Here’s a bit of good news. Rishi Sunak has told the Department for Business and Trade to look in to drip-pricing and its impact with the possibility of clamping down on it, possibly as part of the Digital Markets, Competition and Consumers Bill.

Don’t get too excited though. That’ll be ages (if it happens). So here’s some advice on how to spot drip-pricing and micro-charging in a range of sectors.

Airlines

Airlines are the masters of additional charges and fees. Despite over a decade of warnings, clampdowns and threats of legal action, drip-pricing and micro-charging is endemic with most airlines.

Readers with long memories will remember when airlines were told to stop charging for processing debit and credit card payments. When that little earner ended, they got creative.

What’s caused particular ire among travellers are the additional charges for vital things like luggage and seat allocation.

Most airlines have now started charging for a large cabin bag (formerly free) and whacked up the price for hold luggage.

These hold prices can increase significantly as the travel date approaches. Seat allocation is deeply unfair too.

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Rather than "first come, first served" if you want to sit next to your family or friends you will have to pay anything from £6 to £30 or more for the privilege.

Otherwise you’ll be separated and stuck where the airline can fit you. Usually in the middle of a row far from your loved ones.

Some price increases are crafty. I was traveling with a particular airline recently where the duty free was advertised as being "20% off".

What wasn’t mentioned was the fact that duty free prices had actually been increased by 40% a few weeks before.

So this was actually a £20 increase. Oh, and the food had crept up by 25% too, though this was disguised though a "refreshed" set of menu options (more or less the same products, different names and pictures).

Online travel marketplaces

Online travel marketplaces are the massive businesses that offer flights, hotels and other holiday options all under one digital roof.

They don’t provide the goods or services so they aren’t’ covered by the Packaged Travel Regulations (outrageous).

These firms often have terrible customer service and lots of poor selling techniques and additional charges.

Don’t confuse them with traditional travel agents, who offer personalised services and some protection from their membership schemes if things go wrong.

Online travel marketplaces also like to hide many of their fees, particularly with regards to cancelations, changes to bookings and payments in foreign currency – which are often not clear at the point of booking.

Because you are effectively using a third party to book, commission charges are factored in to the final price too.

The Competition and Markets Authority (CMA) has also made it clear in the past that "pressure selling" – where you are told that there "is only one room left at this price" – should not be happening.

In practice, this is ubiquitous across the industry. So why not price up a holiday using a marketplace… then book direct instead to get the best price?

Ticket companies

If you’ve bought tickets for a gig, event or festival recently, then you’ll have encountered the horror of excessive booking fees.

These fees are getting ridiculously high and you can’t opt out of them.

In America, much outrage has ensued over these fees being used to disguise the actual cost of some events, with artists and ticket companies blaming each other for the final cost at checkout.

Recent gigs by everyone from Taylor Swift to Bruce Springsteen have seen countless outraged fans post screenshots on social media of booking fees that have reached hundreds of dollars.

And the practice is starting to occur in the UK too. I’d like to see the Government cap or ban booking fees – and ban "dynamic pricing" where prices go up due to demand – too. Tell your MP.

Ticket companies also love a bit of micro-charging. The most common example is "gig cancellation insurance".

These policies are usually available before you pay for the final bill and offer to cover you if a gig is cancelled or delayed. Only… if a gig is cancelled you are entitled to a full refund anyway.

And if you can’t attend a rescheduled gig, then you should get a full refund too. So it’s hard to see a set of circumstances where these policies could be useful.

Car finance

I’ve written in the past about how expensive and complicated Personal Contract Purchase (PCP) car finance deals are. PCP finance deals dominate the industry, yet there are a range of additional charges that can apply at the start of the contract and when you return the car at the end too.

Any damage, even minor, could result in hefty repair bills.

And rather outrageously, you’ll have been given a mileage limit when you took out the contract and if you are over the limit, you will be charged by the mile!

Originally, car hire purchase deals meant the business ‘owned’ the car until you had paid it off, which meant they had to tackle repairs and damage. PCP deals leave you responsible for all of these payments and more.

In a crafty and rather shameless move, car finance companies have realised that they can sell a range of insurance policies to cover things like bumps and scratches, alloys, windscreen damage and more.

Consumer campaigner, James Walker, from jamdoughnut.com told me how he was "encouraged" to take out a range of these policies that would have cost over £1,000 in total.

All of these things would have been free under an old hire purchase deal.

Retailers and voucher sites

In the last few months, I’ve been contacted by loads of readers about so called ‘VIP’ clothing websites.

These businesses charge a monthly fee for which you’ll be given exclusive offers or discount vouchers.

However, often the deals are rubbish, the quality of clothes poor and the refund and customer service policies non-existent.

I’ve looked in to a number of these retailers and was shocked to find many don’t have phone numbers and don’t respond to emails or online chat.

Some are based outside of the UK too, which means they can ignore our consumer rights rules for wonky goods.

Many other readers have contacted me to complain when they have discovered that they are being charged monthly by voucher companies that they don’t recall signing up with.

It turns out that this happens when people make legitimate purchases of things like train tickets and are offered a discount voucher at checkout through a different company.

Be very wary of these sites. You will be asked to enter some details to get the voucher but actually sign up to a regular monthly "subscription" payment.

I found one business was debiting my account despite the fact I never even completed the sign-up process.