FINANCE SPECIAL WHAT
IS THE REAL PRICE? (2)
Service providers take customers for a ride by tacking on hidden fees to the advertised price. Here are some of the biggest culprits that are eating into your spending budgets.
Drip pricing, grey charges, split pricing… These are different strategies that lead to the same problem: hidden charges. To lure customers, sellers advertise only the base price. Then, at the time of payment, a host of charges are tacked on as mandatory fees. The customer usually discovers this too late, as in the case of hotel bills. In other cases, since you don’t want to spend the time and effort to start the search all over again, you just shrug, grumble, and pay up.
However, one fee at a time, this menace ends up claiming a sizeable share of your wallet—up to 50% in the case of travel, 25-40% in realty purchases, up to 133% for home deliveries, and so on. “The main issue in the service industry is hidden fees,” says Geetanjali Dutta, a lawyer who specialises in consumer cases.
Sellers are also becoming increasingly creative when it comes to squeezing a few more bucks out of you on the sly. Say hello to online convenience charges, speak-to-a-human fee, mini-bar restocking fee … Our cover story this week looks at some of the biggest culprits that are eating into your spending budget.
RETAIL GOODS
The Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2006, makes it mandatory for manufacturers to print the cost of production and the maximum retail price (MRP) on the pack, along with other details. The MRP is usually 10-30% higher than the actual price of the product as the seller’s margin is built into it. Given this difference, a retailer is usually in a position to offer you a discount, but he is not bound by law to do so. However, he certainly cannot charge more than the MRP. In 2012, the District Consumer Disputes Redressal Forum, Chennai, ordered Reliance Fresh to pay a consumer `7,000 as compensation for charging a mere rupee more than the MRP of `12 for a packet of cookies. So, at least where retailed goods are concerned, you don’t need to worry about hidden charges popping up at the last minute. There have been occasions where sellers have demanded a higher price than the MRP claiming that the stock is old and rates have since been revised. However, the law is clear on this: revised rates are not applicable to old stocks. In a case filed before the Bangalore Consumer State Commission in 2007, a seller of tarpaulin charged the consumer `112, instead of the MRP ( 92) printed on the pack using the same excuse. The State Commission ruled that it was illegal for the seller to charge more than the MRP. The Supreme Court upheld the State Commission’s ruling. Moreover, the Legal Metrology (Packaged Commodities) Rules disallow individual stickers being affixed on packages for charging more than the MRP. Remember, however, that the MRP need not be uniform across the country because of the different tax rates applicable in various states. For commodities incurring centralised taxes, the MRP would also be the same no matter where you make the purchase. If a seller charges more than the MRP, you can approach a consumer court.
The bad news is that the convenience of MRP completely excludes the service industry, be it the hospitality sector or hospitals or hardware installation/repair. In 2009, the Kerala High Court ruled that those in the service industry are not bound to sell goods at MRP. Even the Supreme Court clarified in state of Himachal Pradesh v/s Associated Hotels of India that MRP was applicable only to sale of goods in retail stores. So, predictably, you will find maximum incidences of hidden fees and grey charges in the services sector.
The Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2006, makes it mandatory for manufacturers to print the cost of production and the maximum retail price (MRP) on the pack, along with other details. The MRP is usually 10-30% higher than the actual price of the product as the seller’s margin is built into it. Given this difference, a retailer is usually in a position to offer you a discount, but he is not bound by law to do so. However, he certainly cannot charge more than the MRP. In 2012, the District Consumer Disputes Redressal Forum, Chennai, ordered Reliance Fresh to pay a consumer `7,000 as compensation for charging a mere rupee more than the MRP of `12 for a packet of cookies. So, at least where retailed goods are concerned, you don’t need to worry about hidden charges popping up at the last minute. There have been occasions where sellers have demanded a higher price than the MRP claiming that the stock is old and rates have since been revised. However, the law is clear on this: revised rates are not applicable to old stocks. In a case filed before the Bangalore Consumer State Commission in 2007, a seller of tarpaulin charged the consumer `112, instead of the MRP ( 92) printed on the pack using the same excuse. The State Commission ruled that it was illegal for the seller to charge more than the MRP. The Supreme Court upheld the State Commission’s ruling. Moreover, the Legal Metrology (Packaged Commodities) Rules disallow individual stickers being affixed on packages for charging more than the MRP. Remember, however, that the MRP need not be uniform across the country because of the different tax rates applicable in various states. For commodities incurring centralised taxes, the MRP would also be the same no matter where you make the purchase. If a seller charges more than the MRP, you can approach a consumer court.
The bad news is that the convenience of MRP completely excludes the service industry, be it the hospitality sector or hospitals or hardware installation/repair. In 2009, the Kerala High Court ruled that those in the service industry are not bound to sell goods at MRP. Even the Supreme Court clarified in state of Himachal Pradesh v/s Associated Hotels of India that MRP was applicable only to sale of goods in retail stores. So, predictably, you will find maximum incidences of hidden fees and grey charges in the services sector.
What’s inflating your
retail therapy bill?
Plastic money fee
Choosing to pay by credit card can sometimes incur a transaction fee, which is not applicable on cash payments. This is particularly rampant among small-time jewellery shops.
Convenience fee
This one typically gets slapped on online purchases like movie or concert tickets. You pay for the convenience of buying online, but it is the seller who is actually saving big on costs.
Delivery charges
Want to buy a product you can’t take home? You will have to pay shipping charges, handling charges, postage and packaging fees, none of which was included in the advertised price.
Customer service fee
Have a query, a complaint or even a service request? Speaking to a customer care executive may cost you extra. Some banks like the Standard Chartered already do so.
Plastic money fee
Choosing to pay by credit card can sometimes incur a transaction fee, which is not applicable on cash payments. This is particularly rampant among small-time jewellery shops.
Convenience fee
This one typically gets slapped on online purchases like movie or concert tickets. You pay for the convenience of buying online, but it is the seller who is actually saving big on costs.
Delivery charges
Want to buy a product you can’t take home? You will have to pay shipping charges, handling charges, postage and packaging fees, none of which was included in the advertised price.
Customer service fee
Have a query, a complaint or even a service request? Speaking to a customer care executive may cost you extra. Some banks like the Standard Chartered already do so.
SUSHMITA
CHOUDHURY AGARWAL ETW130916
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