Junk fee

Common card · No. 377931

Junk fees (also known as hidden fees) are fees designed to confuse or deceive consumers by exploiting behavioral biases. They tend to come in the form of mandatory back-end fees and hidden add-on charges, which obscure the true cost of goods and services. Junk fees stand in contrast to "all-in", "upfront" pricing where consumers are shown a true single price, inclusive of fees, at the start of the shopping process. Economist Neale Mahoney criticizes junk fees for "increas[ing] search costs and equilibrium prices, distort[ing] consumer choices, and divert[ing] innovation toward exploitative rather than value-enhancing strategies". Even in the presence of competition and disclosure, and despite their unpopularity, firms often opt for junk fees because consumers do not consistently punish firms that resort to junk fees. Some firms, such as StubHub, that use junk fees have advocated for regulatory action to impose restrictions on junk fees in order to level the playing field and prevent collective...

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