Many individuals have concluded that hidden fees are a part of life. This notion leaves consumers feeling powerless when it comes to getting nickeled and dimed by big corporations, figuring this is just the way it is. On the other side of the fence, business leaders say they’re just doing what they need to do to stay competitive in their industry. We find this common practice in event ticketing, cable TV, and travel. Who can blame them? It’s a bit of a catch-22.
Take the example of StubHub. They did their due diligence and took stock of their consumers, finding that most did not like the fact they were paying up to 27% of the ticket value in additional fees. In response to this, StubHub disclosed all the hidden costs to display upfront before consumers click “buy this ticket.” What happened? Their sales dropped around 20%. They decided to go the transparent route with their customers in hopes of other companies following suit. However, other ticketing vendors did not jump on the bandwagon. Furthermore, the company did A/B testing only to find that hidden fees performed better than upfront transparency.
So what is the resolve? Regulation? Lawmakers need to establish boundaries on how far companies are allowed to go when it comes to tacking on fees. The cable industry is the first market where legislation efforts have been made. There were two laws passed recently: Television Viewer Protection Act, and Satellite Television Community Protection and Promotion Act.
The Television Viewer Protection Act requires service providers to present all costs, including additional fees and taxes, when customers sign-up. The motion applies to both standalone and bundle packages. The consumer has the right to cancel their subscription within 24 hours of subscribing. Companies are also prohibited from charging customers for equipment they don’t even use.
Furthermore, the Television Viewer Protection Act prevents cable companies from performing “blackouts” of certain television stations due to unresolved negotiations between broadcasters and service providers. Customers are also protected from paying “runaway fees” in these situations, meaning they will not be charged for channels they do not have access to.
The Satellite Television Community Protection and Promotion Act permanently extends the “distant signal” provision of the STELAR act. This law pertains to TV signals being available (or not) to customers living in underserved and short markets.
Who’s behind all this progressive lawmaking? Well, Consumer Reports is one organization. We had the pleasure of sitting down with them recently on an episode of The Bistro to discuss all the details on this marketplace failure and what actions are needed to take the hidden out of fees in other industries. To listen to this episode, click here!