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California AG and state senators introduce bill to ban hidden fees

oag.ca.gov

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Re: California AG and state senators introduce bill to ban hidden fees

#61
The Republican response:

    Smart politics, but bad economics.

    Ban baggage fees = higher ticket prices
    Ban resort fees = higher room prices
    Ban credit card late fees = higher interest rates

    These proposals just make some consumers pay more to cover the costs of other consumers.
https://twitter.com/George_A_Callas/status/16233291827793182...

There is a point hidden in there, in that banning optional fees makes the price go up for people who refuse the option.

But when the fee is mandatory, hiding it is basically pure evil.

Much more developed argument than my pure evil comment: https://www.slowboring.com/p/junk-fees

Re: California AG and state senators introduce bill to ban hidden fees

#62
post #23
post #11

Earlier quoted context omitted.

This obscures the tax burden from the end user, transparently blending it with the price of the goods and the merchant's profit. Consumers should be consciously aware of the split.

As the average consumer, I would much rather see how much money I need to take out of my pocket on the sticker price rather than deeply considering what the tax burden of my jug of milk is.

We can have both. Sticker price can be all-inclusive price with taxes and fees required to be listed in detail on the receipt.

Re: California AG and state senators introduce bill to ban hidden fees

#63
post #8

Taxes and fees should be mandated for all prices up front. This is how it works in most of the world, there's no good reason it shouldn't work that way here in the US. Someone will come along and point out an edge case, but for the vast majority of retail situations this is doable.

Sales tax rates change too often in the US for this to work. I like the idea in concept, but I can understand why it doesn't work in practice in the US given the current tax regime.

How often is sales tax changing that it becomes infeasible to update the shelf price tags? The grocery stores seem to handle it just fine changing the "buy one get one" type tags every month!

Re: California AG and state senators introduce bill to ban hidden fees

#64
post #24

Earlier quoted context omitted.

And it's better for businesses too! They get to compete on honest things like quality and cost, not BS like tricking you into weird fees.

If it was better for businesses it would already be the common practice.

No, it’s a coordination problem. If you’re the only one hiding your prices in fees, it can be an advantage since it looks like you’re charging less. Everyone has to do it to keep up, but since everyone does it, no one really gets an advantage. With mandated transparent pricing, no one has an opportunity to “cheat” and everyone can specialize (in cost or quality or features/amenities, or some mix of those).

Re: California AG and state senators introduce bill to ban hidden fees

#65
Every business has started doing this and I'm glad there is finally some consumer protection happening.. It's worse than the bronze/gold/platinum 'memberships' or 'package' schemes that have shown up everywhere. My dog's boarding place hit me with three fees on pickup (they also have like 200 permutations of packages that try monetize every possible marginal activity - taking pictures with your dog, letting them hang out with staff 'up front', allegedly watching movies with them, each individual toy or treat, etc).

It's sad that we have to look to government to solve basic stuff like this. I'd rather not regulate everything to death but the alternative is annoying shit like this. Like I could try to go to another dog boarding place, but there just aren't that many of them and they probably do the same thing. I bet they're all owned by the same private equity firm anyway.

Re: California AG and state senators introduce bill to ban hidden fees

#66
post #44

I find it very hard to believe that in the long run companies actually profit from having such a confrontational relationship with their customers. Like is getting an extra five dollars a month from me really worth me hating you?

The problem is that shareholders and "activist investors" aren't exactly thinking about the long term. It's in their best interests to covert a company's goodwill into hard cash, do a series of share buybacks with the money, and then get out of the position.

A lot of it too is just lemmings being lemmings. There are no shareholder activist investors involved when your local brewpub tacks on a 25% service fee. That's just them doing what their other asshole small business owner friends have been doing and not a farsighted play or anything. I know they are assholes because I've overheard conversations of these types many times, especially during the pandemic complaining how none of their staff wants to return to work for the wages they are offering. For a lot of business owners, they end up looking at the numbers alone, weighing what they mean for their immediate cash flow much more than how those numbers impact their employees or even overall customer relations.

Re: California AG and state senators introduce bill to ban hidden fees

#67
post #11
post #8

Taxes and fees should be mandated for all prices up front. This is how it works in most of the world, there's no good reason it shouldn't work that way here in the US. Someone will come along and point out an edge case, but for the vast majority of retail situations this is doable.

This obscures the tax burden from the end user, transparently blending it with the price of the goods and the merchant's profit. Consumers should be consciously aware of the split.

Sellers can still make it very clear how much of the sum were taxes.

Here in Germany every bill, every receipt will contain that information. (I mean, obviously, it’s legally required.)

Different sellers do this differently in terms of clarity, though I think this has little to do with any kind of price signal to the buyer or sticking it to the government or something like that.

My feeling is that the more likely it is that the customer is a company (which do not have to pay VAT) the more clearly do sellers communicate the VAT part of the price.

In fact, if you are not selling to consumers you can ditch that VAT altogether when you communicate your prices. Alternatively (when talking about online retailers) they may provide a toggle to switch between being a business customers or a private customer, e.g. here the toggle top left next to the Conrad logo: https://www.conrad.de

Re: California AG and state senators introduce bill to ban hidden fees

#68

I wish they would treat sales tax as a hidden fee. Just show the actual damn price up front plzkthx.

If we had a standard sales tax, sure. But when sales taxes vary by city and county, like they do in California, it's very painful to do that -- and that's only 1 of the 50 states!

Re: California AG and state senators introduce bill to ban hidden fees

#69
post #24

Earlier quoted context omitted.

And it's better for businesses too! They get to compete on honest things like quality and cost, not BS like tricking you into weird fees.

If it was better for businesses it would already be the common practice.

Not at all. A great example is health codes.

Serving good, safe food is something pretty much every food business wants to do at the outset. Nobody opens a restaurant thinking, "Let's see who we can get sick!" But imagine your hamburger stand is next to a guy who's willing to cut corners. Use the older meat. Buy from the dodgier supplier. Maybe spend less labor time cleaning. Suddenly his prices are lower and you're losing business. Other restaurants nearby are too. You're faced with a choice: do you cut corners, or go out of business?

So if you talk with restaurateurs, you'll find that most of them are in favor of health codes and health inspections, because although they can be a pain, they're keeping competitors on a level playing field. They like food safety laws for suppliers even though they make prices higher, because they don't want to have to worry about giving their customers unsafe or suspicious food.

Re: California AG and state senators introduce bill to ban hidden fees

#70

As a foreigner who lived in the USA for a few years, I always thought the US runs in hidden fees. From tipping, to taxes not in the sale price, to insurances not being able to give a price for a procedure, to hotel fees… I could never actually guess how much anything would cost. Either the wording of the law will have a ton of exclusions per industry.

> to taxes not in the sale price

This gets complicated and there's good reason.

The taxes depend on where you take possession of the goods. If you purchase an item and walk up to the checkout counter, you pay the taxes there. On the other hand, if you are buying lumber in Kansas City, KS to be delivered in Kanas City, MO - you pay the MO taxes (4.225%) rather than the KS taxes (6.5%). So, putting the taxes on the lumber ($3.35) in KS would be $0.22 and if it was to be delivered on the other side of the state line, that would be $0.15.

If you were to say "ahh! Lets solve this by having taxes paid for where you buy it instead" then everyone incorporates in Delaware and you get some sizable data centers in Oregon and sell everything online from there... and you've got other problems with states trying to collect sales tax on goods delivered there.

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