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Fees added to bills are costing consumers billions. Now, regulators are cracking down


You may have noticed some little budget-busters on your receipts lately. They go by many names like booking fee, service fee, processing fee. And while they might look small, they can add up fast. And as Stacey Vanek Smith reports, these little costs are actually an old budget killer in disguise.

STACEY VANEK SMITH, BYLINE: Inflation is like a shark. It's like Jaws. Just because you don't see it, just because the water looks calm and inviting doesn't mean it's not there, waiting to strike. If you, say, happen to order some delivery food when you're feeling very lazy on a Monday...

OK, I am ordering a burger.

And fries - got to have fries. So what is this lazy dinner going to cost me?

So the subtotal's $14.07 - seems pretty good.

Or does it?

There's a delivery fee of $5.49. There's a service fee - $3. There's a tip of $4, tax of $1.25. So my burger and fries just went from $14.07 to $27.81.

We're going to need a bigger receipt. Just when you thought it was safe to go back into the economy, you end up paying 30 bucks for a hamburger. Jeff Galak is a professor of marketing at Carnegie Mellon. He says I have just fallen prey to inflation but in a different, deadlier form - fees.

JEFF GALAK: It's a way for firms to raise prices without raising prices.

VANEK SMITH: This is what's known as stealth inflation. It is a price hike lurking just beneath the surface, waiting for you to click on that tantalizing $200 airfare deal or order that refreshing $4 iced coffee. And once you do, it strikes - one fee, another fee.

GALAK: And by the time the fee is tacked on, it's too late. Like, I'm standing at the hotel check-in desk. I don't have a choice anymore.

VANEK SMITH: And Galak says fees are the perfect silent budget killer. Study after study shows when we make buying decisions, we only look at the listed price.

GALAK: These fees where it's not part of the thought process in choosing the product - if you sneak it in, then they might not know. And the data is pretty clear that they don't notice.

VANEK SMITH: Galak says fees have always been around, but these days they are cropping up everywhere. The White House estimates Americans now spend about $65 billion on fees every year. President Biden even brought up fees as a top concern.


PRESIDENT JOE BIDEN: Something that's weighing down family budgets - unnecessary hidden fees known in the parlance as junk fees.

VANEK SMITH: The government has been cracking down on these fees. It just fined Bank of America $150 million for abusive overdraft fees and pressured a bunch of airlines to drop rebooking fees and got Zillow and some other housing sites to help disclose the fees that get tacked onto monthly rents like parking fees or pet fees. But some businesses say fees are not actually evil. In fact, fees are keeping them alive. Troy Reding owns Rock Elm Tavern in Plymouth, Minn.

TROY REDING: We're known for our burgers, our housemade tater tots with bacon ketchup.

VANEK SMITH: Like, ketchup with - that tastes like bacon.

REDING: You got it.

VANEK SMITH: During the pandemic, as the price of bacon, ketchup and everything else spiked, Reding scrambled to stay afloat. He raised prices, raise them again as high as he thought his customers could bear.

REDING: If I charge too much, they'll quit using me.

VANEK SMITH: But not enough to cover costs, says Reding, especially for workers. Reding says it's hard to find workers at any wage and really hard to get them to stay. So he offers full benefits, including mental health insurance. And to cover all of that, he adds a 3% fee onto every bill.

REDING: I call it a wellness fee. I use it to help take care of my employees. And that's what I tell my guests that complain about a fee. And why don't you just wrap it in?

VANEK SMITH: Reding says fees are a way to be transparent about how he's covering his costs. But even he thinks the fee situation has gotten a little bit out of control the last couple years.

REDING: I went to the airport. You know, it was like, there's a service fee at the airport. This makes zero sense to me, right? Seven percent - are you kidding me?

VANEK SMITH: Are you kidding me - pretty much exactly the same words that went through my head as I saw the final bill for my $30 hamburger. Of course, by the time I saw those charges, I had already been thinking about that burger, and I was so hungry.


VANEK SMITH: Thank you.


VANEK SMITH: Have a good one.

Fees - you can run, but you can't hide. Stacey Vanek Smith, NPR News.


NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Stacey Vanek Smith is the co-host of NPR's The Indicator from Planet Money. She's also a correspondent for Planet Money, where she covers business and economics. In this role, Smith has followed economic stories down the muddy back roads of Oklahoma to buy 100 barrels of oil; she's traveled to Pune, India, to track down the man who pitched the country's dramatic currency devaluation to the prime minister; and she's spoken with a North Korean woman who made a small fortune smuggling artificial sweetener in from China.