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Medicare is covering less of specialist visits. But why are doctors’ fees so high in the first place?

<div class="theconversation-article-body"> <a href="https://theconversation.com/profiles/susan-j-mendez-2219444">Susan J. Méndez</a>, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> Fees for medical specialists are going up faster than <a href="https://www.abc.net.au/news/2024-09-25/medicare-rebates-only-covering-half-of-specialist-costs/104389360">Medicare rebates</a>, leading to a bigger gap for patients to pay. Recent data from the <a href="https://www.aihw.gov.au/reports/medicare/mbs-funded-services-data/contents/summary">Australian Institute of Health and Welfare</a> shows that in the first quarter of this year, Medicare rebates covered just over half (52%) of the total fees. This is <a href="https://www.abc.net.au/news/2024-09-25/medicare-rebates-only-covering-half-of-specialist-costs/104389360">down from 72%</a> two decades ago, and the lowest proportion on record. Doctors can charge what they like, while the government determines the Medicare rebate. The difference between the two, or the gap, is what impacts patients. For GPs, the government provides an incentive for doctors to <a href="https://www.health.gov.au/our-work/increases-to-bulk-billing-incentive-payments#1-november-2023-changes">bulk bill</a>, but there’s no such incentive for other specialists. Doctors blame large gap payments on rebates being too low, and they’re partly right. After adjusting for inflation and increasing demand, the average dollar amount one person receives in Medicare rebates annually dropped from <a href="https://www.aihw.gov.au/reports/medical-specialists/referred-medical-specialist-attendances">A$349 to $341</a> over the past decade. But this is only a part of the problem. When many people can’t afford hundreds (if not thousands) of dollars for essential specialist care, we need to look at why fees are so high. <h2>How do specialists set their fees?</h2> Although general practice is technically a speciality, when we talk about medical specialists in this article, we’re talking about non-GP specialists. These might include paediatricians, oncologists, psychiatrists and dermatologists, among many others. In determining fees, specialists consider a combination of patient-level, doctor-level and system-level factors. Patient characteristics, such as the complexity of the patient’s medical condition, may increase the price. This is because more complex patients may require more time and resources. Specialists, based on their experience, perceived skill level, or ethical considerations, may charge more or less. For example, <a href="https://www.sciencedirect.com/science/article/pii/S0277953623007104?via%3Dihub">some specialists report</a> they offer discounts to certain groups, such as children or pensioners. System-level factors including the cost of running a practice (such as employing staff) and practice location also play a role. Problems arise when prices vary considerably, as this often signals limited competition or excessive market power. This holds true for medical services, where patients have little control over prices and rely heavily on their doctors’ recommendations. In <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4909881">recent research</a>, my colleagues and I found fees varied significantly between specialists in the same field. In some cases the most expensive specialist charged more than double what the cheapest one did. <h2>Doctor characteristics influence fee-setting</h2> My colleagues and I <a href="https://doi.org/10.1016/j.healthpol.2024.105119">recently analysed</a> millions of private hospital claims from 2012 to 2019 in Australia. We found the wide variation in fees was largely due to differences between individual doctors, rather than factors such as patient complexity or the differences we’d expect to see between specialties. Up to 65% of the variance in total fees and 72% in out-of-pocket payments could be attributed to differences between doctors in the same field. To understand what doctor-level factors drive high fees, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4909881">we looked at</a> data from a representative survey of specialists. We found older specialists have lower fees and higher rates of bulk billing. Practice owners tended to charge higher fees. We also found doctors’ personalities affect how much they charge and how often they bulk bill patients. Doctors who scored more highly on the personality trait of agreeableness were more likely to bulk bill patients, while those who scored more highly on neuroticism tended to charge higher fees. What we couldn’t show is any evidence fees were associated with competition. <h2>Effects on patients</h2> This is not a competitive market. On the contrary, it has high entry restrictions (long training requirements) and a limited supply of specialists, particularly in <a href="https://www.aihw.gov.au/reports/workforce/health-workforce">rural and remote areas</a>. Meanwhile, patients’ access is controlled by the need for referrals which expire, generally after a year. Patients are often unable to shop around or make informed decisions about their care due to a lack of information about the true cost and quality of services. For private hospital services, the fee structure is complicated by the fact that several providers (for example, surgeon, anaesthetist, assistant surgeon) bill separately, making it difficult for patients to know the total cost upfront. Despite efforts to introduce price transparency in recent years, such as through the government’s <a href="https://medicalcostsfinder.health.gov.au/">Medical Costs Finder</a> website, the system remains far from clear. Reporting is voluntary and the <a href="https://doi.org/10.1016/j.healthpol.2020.06.001">evidence is mixed</a> on whether these tools effectively reduce prices or increase competition. All of this contributes to high and unpredictable out-of-pocket costs, which can lead to financial strain for patients. About <a href="https://www.abs.gov.au/statistics/health/health-services/patient-experiences/latest-release#barriers-to-health-service-use">10.5% of Australians</a> reported cost was a reason for delaying or avoiding a specialist visit in 2022–23. This raises important questions about equity and the sustainability of Australia’s universal health-care system, which is built on the principle of equitable access to care for all citizens. <h2>What can be done?</h2> Patients can take steps to minimise their costs by proactively seeking information. This includes asking your GP for a range of options when you’re referred to a specialist. Note the referral from your GP can be used for any other doctor in the same specialty. Similarly, ask the specialist’s receptionist what the fee and rebate will be before making an appointment, or for a <a href="https://www.ama.com.au/articles/informed-financial-consent#Two">detailed quote</a> before going to hospital. Shop around if it’s too high. But responsibility doesn’t only lie with patients. For example, the government could seek to address this issue by increasing investment in public hospital outpatient care, which could boost competition for specialists. It could also publish the range of fees compared to the rebate for all Medicare-billed consultations, rather than relying on voluntary reporting by doctors. Price transparency alone is not enough. Patients also need quality information and better guidance to navigate the health-care system. So continued investment in improving health literacy and care coordination is important. If things don’t change, the financial burden on patients is likely to continue growing, undermining both individual health outcomes and the broader goals of equitable health-care access.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/239827/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/susan-j-mendez-2219444">Susan J. Méndez</a>, Senior Research Fellow, Melbourne Institute of Applied Economic and Social Research, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/medicare-is-covering-less-of-specialist-visits-but-why-are-doctors-fees-so-high-in-the-first-place-239827">original article</a>. </div>

Money & Banking

Surcharges are added to most purchases, but what are the rules behind these extra fees?

<div class="theconversation-article-body"> <a href="https://theconversation.com/profiles/steve-worthington-138">Steve Worthington</a>, <a href="https://theconversation.com/institutions/swinburne-university-of-technology-767">Swinburne University of Technology</a> You head to the register at the cafe to pay for your lunch, swipe your card and suddenly realise you’ve been hit with an extra small but unexpected charge. It might be listed on your receipt as a service or merchant fee, but either way it’s because you’ve used a credit or debit card. With the pandemic accelerating the use of cards instead of cash – <a href="https://www.rba.gov.au/publications/bulletin/2023/jun/cash-use-and-attitudes-in-australia.html#:%7E:text=Cash%20payments,-The%20CPS%20suggests&text=In%20value%20terms%2C%20the%20cash,cent%20by%20value%20in%202022.">only 13% of Australians use cash</a>, dropping from 27% in the last five years – these extra charges have become mainstream. However, as was highlighted by National Australia Bank chief executive Andrew Irvine during a <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/FinancialAbuse">parliamentary inquiry</a> into bank charges last week, they are often applied, in varying amounts, by businesses for reasons not always in line with their original purpose. Irvine slammed as <a href="https://www.afr.com/companies/financial-services/credit-card-surcharges-should-be-banned-or-regulated-nab-boss-says-20240830-p5k6jm">“outrageous”</a> a 10% surcharge he was forced to pay when he recently bought a cup of coffee at a Sydney cafe. “I don’t like the lack of transparency and lack of consistency,” he said. But most Australians are making these extra payments every day, without question. So how did this end up happening – and what can you do about it? <h2>Card surcharges in Australia</h2> At the start of this century, payments for goods and services were mainly made by cash, paper cheques, credit and debit cards. The first two of these options would eventually be deposited into a bank account by the merchant who ran the business. The latter two would be processed by the bank or financial institution which would charge the business a merchant service fee. For debit cards this might be a fixed fee. But for credit cards it would be proportionate with the value of the goods or services. The Reserve Bank of Australia became concerned the use of credit cards was greater than that of debit cards and <a href="https://www.rba.gov.au/publications/consultations/201106-review-card-surcharging/background.html">introduced surcharging in January 2003</a>. The intention was to lower the cost to the merchant of accepting debit cards and change customer behaviour. This has been achieved, as both the volume and value of paying by debit cards now exceeds the volume and value of paying by credit cards. However, the reality in 2024 is that card surcharges have become commonplace, and in a wide variety of payment situations. <h2>It’s estimated to cost us billions</h2> It is difficult to calculate the total cost of surcharging to Australian consumers since they became legal more than 20 years ago, because the rates charged vary widely. But at last week’s inquiry, Labor MP Jerome Laxale suggested it added up to <a href="https://www.smh.com.au/money/banking/card-surcharges-are-costing-us-billions-but-can-they-be-avoided-20240830-p5k6o8.html">A$4 billion</a> in the last year. Surcharges can be imposed by small to medium enterprises such as your local cafe, doctor’s surgery, your energy supplier, or when you use a card to pay your council rates. As an example, my rates are payable by card, with a surcharge of 1.10% for Mastercard and Visa credit, and 0.55% for eftpos and Mastercard and Visa debit cards. <h2>When surcharges can be applied</h2> Many merchants charge the same rate for all their card payments and some fail to alert customers to the extra fee before accepting the payment at their terminal, which they are required to do. Indeed, even on a receipt for payment, the surcharge can be described by the merchant as a “handling” or “merchant” fee. The Australian Competition and Consumer Commission <a href="https://www.accc.gov.au/consumers/pricing/card-surcharges">(ACCC)</a> regulates surcharging and demands the merchant prove a surcharge is justified. Furthermore, the ACCC says if there is no way for a consumer to pay without paying a surcharge – that is, they can’t pay by cash or cheque – then the business must include the surcharge in <a href="https://www.accc.gov.au/business/pricing/price-displays#toc-display-of-surcharges">the displayed price</a>. <h2>Penalties for misuse</h2> The ACCC can take merchants to court to enforce these regulations and there have been some examples of this in recent history. In July 2021, <a href="https://www.accc.gov.au/media-release/nine-entertainment-pays-penalties-for-alleged-excessive-payment-surcharges#:%7E:text=The%20ACCC%20alleged%20that%20these,Deputy%20Chair%20Mick%20Keogh%20said.">Nine Entertainment paid penalties totalling $159,840</a>, plus $450,000 redressing customers, for charging subscribers and advertisers excessive surcharges. The ACCC specifies that the surcharge must not be more than it costs the merchant to use that payment type. As guidance to the merchants, it also offers <a href="https://www.accc.gov.au/consumers/pricing/card-surcharges">the average costs for different payment types</a>: eftpos less than 0.5%, Mastercard and Visa Debit 0.5%–1% and Mastercard and Visa credit 1%–1.5%. However, despite the ACCC setting guidelines for the amounts that can be charged, many surcharges are above this guidance and in some cases more than 2.0% for all cards. Some merchants do charge different surcharging rates, depending on the cards they accept, be it eftpos, Mastercard or Visa. In theory, the surcharge rate is meant to be determined by the merchant service fee, which is negotiated between the merchant and their bank. Larger merchants, such as the supermarkets, department stores and energy companies, can negotiate low rates (reportedly as low as one cent a transaction). But smaller merchants with less negotiating clout will have higher service fees. The arrival of new payment players, such as <a href="https://www.forbes.com/advisor/business/software/square-vs-stripe/">Square and Stripe</a>, has offered businesses an alternative banker of card payments, which can then use surcharging as part of their merchant service fees. <h2>Surcharging overseas</h2> The <a href="https://europa.eu/youreurope/business/finance-funding/making-receiving-payments/electronic-cash-payments/index_en.htm">European Union</a> already has a long-standing ban on surcharging, while in the United States, surcharging is illegal in some states. Other countries, including the United Kingdom, have tried surcharging on card payments, only to abandon them as it was rorted by some merchants and became an unnecessary expense for consumers. <a href="https://bluenotes.anz.com/posts/2023/07/anz-news-surcharge-steve-worthington-australia#:%7E:text=In%202018%20the%20UK%20Treasury,their%20hard%2Dearned%20money%E2%80%9D.">A statement</a> released by the UK Treasury when it banned the practice in 2018 described surcharges as <blockquote> Hidden charges for paying with a debit or credit card, which will help millions of UK consumers to avoid rip-off fees when spending their hard earned money. </blockquote> <h2>What can you do about it?</h2> Before surcharging was allowed by the Reserve Bank in January 2003, acceptance by merchants of payments was just another cost of doing business. And it seems many consumers have just accepted surcharges as part of their transactions. There are ways to avoid them, the most obvious being to use cash. Using eftpos involves charges, but they are less than those imposed on credit and debit cards. The Reserve Bank is working on implementing a so-called <a href="https://www.rba.gov.au/payments-and-infrastructure/debit-cards/least-cost-routing/#:%7E:text=What%20is%20least%2Dcost%20routing,'merchant%2Dchoice%20routing'.">“least-cost routing”</a> system that defaults to the lowest cost network when processing payments. Unfortunately, this is yet to be widely adopted by businesses.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/237964/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/steve-worthington-138">Steve Worthington</a>, Adjunct Professor, <a href="https://theconversation.com/institutions/swinburne-university-of-technology-767">Swinburne University of Technology</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/surcharges-are-added-to-most-purchases-but-what-are-the-rules-behind-these-extra-fees-237964">original article</a>. </div>

Money & Banking

Aussie motorist's act of defiance against parking fees

Aussie drivers have been warned against replicating a cheeky way a motorist tried to pay for parking at a cashless parking meter. The motorist wasn't able to pay for his parking charges with a card, so instead they erected a sign in his car with gold coins attached, proving they are good for the parking fees. The driver said the cashless revolution doesn't "suit their lifestyle", but added they are "willing to pay for parking with these coins any day of the week". Despite displaying their method of payment, the North Sydney Council, who recently upgraded all their parking meters to cashless ones, explained to <a href="https://au.finance.yahoo.com/news/major-136-fine-warning-after-fed-up-aussies-3-cashless-act-of-defiance-023528239.html" target="_blank" rel="noopener">Yahoo</a> Finance this method could massively backfire. "The only way to avoid being fined is to comply with the signage restrictions for the space in which you have parked," a Council spokesperson said. "In metered spaces, you must pay using our parking meters. You are likely to receive a fine if you leave a note and do not pay," with parking fines in this council setting you back $136. After the driver's unique payment method garnered attention on social media, many agreed with their sentiment saying there should always be an option for people to pay with cash. "Should always have a cash option," wrote one user, while another said, "How can they expect everyone to be credit card online app savvy anyway and download it while standing in the street? I have so much trouble paying." A third added, "This is a great idea, but the inspectors do not have a sense of humour, they just issue you with a fine." Image credits: Facebook

Legal

6 extra items to pack when travelling by yourself

Travelling alone can be a life changing experience, but it also requires a few extra precautions. Pack these six things to keep yourself safe. 1. Doorstop A simple wedge of wood or plastic can give you priceless peace of mind in a hotel room. Even if you lock the door, people might be able to break the lock or use a cloned key. A doorstop quickly and easily wedges it shut so you can sleep easy. If you want to go one step further, you can get special doorstop alarms that will emit a loud siren if anyone tries to force the door. 2. Extra lock There are endless uses for an extra padlock or bike lock-style cable. You can double up on your hotel door, secure your train carriage or ship cabin, double lock your suitcase or chain it to something sturdy. Compact, sturdy locks are relatively cheap and easy to carry with you, and will deter most thieves or intruders looking for an easy mark. 3. First aid kit If you don’t have a travel buddy to send down to the chemist, a simple first aid kit can be a lifesaver. Keep it stocked with band aids, basic bandages, pain killers, antibiotics, antihistamines and gastro meds, along with anything else you think will be useful. If you are really unwell, you’ll obviously need to see a doctor, but having the first line of defence within easy reach is always smart. 4. Whistle or personal alarm If you will be walking through unfamiliar cities at night (or even in the day), a whistle or personal alarm can give you a feeling of security. If anyone unsavoury approaches you, a loud noise will startle them and generally scare them off. It also draws the attention of other people and makes them aware of your predicament. 5. Small torch Never underestimate the power of a little light to make you feel safe. It’s great for finding your way through dark streets, looking for your keys in your bag or seeing the lock on your hotel door. You can get small lights that attach to a keychain or wallet and give out a surprisingly bright light. People are less likely to approach you if they feel they will be seen. 6. Fake wedding ring This one is for the ladies – in some countries an unmarried woman is seen as an easy target. Buying a cheap, fake wedding ring can give you a simple cover. Men may be less likely to approach you and, if they do, you can simply say your husband is in the next shop or waiting for you back at the hotel. Image credits: Shutterstock

Travel Tips

Major banks hand over millions in refunds over unfair fees

Four major Australian banks are set to cough up close to $30 million in refunds to low-income customers after the Federal corporate watchdog revealed a pattern in high fees. A new report from the Australian Securities and Investments Commission revealed ANZ, Commonwealth Bank, Westpac, as well as mid-tier Bendigo and Adelaide Bank kept at least two million low-income customers in high-fee accounts. Many of these low-income earners rely on Centrelink payments, and were unfairly slapped with unreasonably high fees. The report followed an ASIC review which focused on improving financial outcomes for First Nations customers by addressing avoidable bank fees. “We focused in this project on the banks who were most likely to have First Nations consumers on low incomes trapped in high-fee accounts,” ASIC commissioner Alan Kirkland said. ASIC said the four banks have committed to moving more than 200,000 customers into low-fee accounts, saving them about $10.7 million a year, with the financial institutions also committed to refunding over $28m in fees to these customers over the next 12 to 18 months. This includes $24.6 million to Aboriginal and Torres Strait Islander students and apprentices receiving ABSTUDY payments, and customers in areas with significant First Nations populations. “At any time ASIC, and the community, expects that the banks will treat their customers fairly,” Mr Kirkland said. “But that’s particularly important for people on low incomes and for people who are struggling to make ends meet, the last thing they need is to have the very little income that they have being eaten away in unnecessary bank fees.” Mr Kirkland added that the implications of ASIC’s latest review applied to all banks across the country. “We’re expecting all of them to read the report and make improvements to their practices to stop other people being trapped in high-fee accounts that they can’t afford,” Mr Kirkland said. Image credits: Shutterstock

Money & Banking

Aussies hit with "hidden fees" for using common payment method

Millions of Aussies have copped up to $1 billion in "hidden fees" for choosing to use one common payment method. Many are unaware about the secret extra charges that come with using the tap-and-go payment method, as millions of customers use it as the preferred way to pay and go. However, according to financial counsellor Scott Pape, also known as The Barefoot Investor, while tapping your card may be easier, it might not be great for your bank account. “What most people don’t know is that, when they tap, their bank generally defaults that payment through Visa or MasterCard, who pays them a fee — instead of defaulting that payment through the much cheaper bank-owned EFTPOS,” Pape said in his column for the <a href="https://www.dailytelegraph.com.au/business/barefoot-investor/the-common-smartphone-app-thats-ripping-you-off/news-story/0b71afa29c86faf2b938c44f93bbc8d6?amp" target="_blank" rel="noopener" data-link-type="article-inline">Daily Telegraph</a>. While some businesses choose to absorb the cost, others pass it on to the customer as a surcharge, as Pape says, “Talk about a rort.” According to the Royal Bank of Australia (RBA), Visa and Mastercard are generally more expensive for merchants than the EFTPOS network. Payments through EFTPOS are generally about 0.3 per cent of the transaction value, while Debit Mastercard and Visa Debit may cost many some people about 0.5 per cent. Mastercard and Visa credit could cost customers more than 0.75 per cent of the transaction, while American Express card payments are even more, charging merchants 1 to 1.5 per cent. Thankfully, according to Pape, there are ways to avoid paying the extra fees. If your bank card is attached to your smartphone, you can change the default payment setting. “On an iPhone, open ‘Settings’, go to ‘Wallet & Apple Pay’, then tap your debit card,” Pape said. “Then look for ‘Payment Option’. It will generally have ‘MasterCard’ or ‘Visa’ preselected, but instead you should select ‘EFTPOS SAV’.” This is not allowed on all cards, however, and those who use Android will need to check with their bank if a possible solution exists. <div> </div> The other way to avoid paying the surcharges is to just start inserting or swiping your card again. “I know it’s annoying, but if you swipe and insert your card you can choose ‘cheque’ or ‘savings’ and it’ll go through the EFTPOS system, which at the bigger retailers means you’ll be less likely to be charged,” Pape said. Image credits: Shutterstock

Money & Banking

Lisa Wilkinson's hefty legal fees revealed

The eye-watering costs of Lisa Wilkinson's legal battle against Bruce Lehrmann after he unsuccessfully sued her for defamation has been revealed. Lehrmann took Wilkinson and her former employer Network Ten to court following the airing of allegations by Brittany Higgins that she was raped in Parliament House in 2019. The defamation suit was lost by Lehrmann in April after Justice Michael Lee found that Lehrmann had, on the balance of probabilities, assaulted Ms Higgins, therefore cannot be defamed for the allegations. Ms Wilkinson has now returned to court in an attempt to recuperate approximately $1.8 million in legal fees from Network 10 after she decided to be represented separately to her former employer. Documents released by the Federal Court on Thursday reveal the eye-watering cost behind Ms Wilkinson’s defence by high-profile defamation lawyer Sue Chrysanthou SC. The documents detail numerous invoices issued to Ms Wilkinson throughout the years-long legal battle; the most recent being an invoice dated May 9th for $405,328. The fee is listed as being for Ms Sue Chrysanthou‘s counsel; similar fees dating back to mid-2023 ranged in size from $10,340 to $97,988 before GST was added. The largest single invoice issued to Ms Wilkinson was dated February 29th 2024 and amounted to a whopping $576,224.72 after GST, which included news subscriptions and lunches. Early costs agreements sent to Gillis Delaney Lawyers, who Ms Wilkinson had retained to represent her, and Ms Chrysanthou quoted fees of $8,000 per day. A range of other expenditures are included in the documents, including thousands of dollars for printing and folders, USB drives, and subscriptions to The Australian. A referee is expected to be appointed for certain items that the Network claims did not come under legal costs, with Justice Lee foreshadowing a similar process for costs being asked of Mr Lehrmann. In earlier written submissions, Network 10 said it did not have to pick up the bill for Ms Wilkinson’s legal costs which were “unnecessarily duplicative or wasteful”. The referee, called for by Network 10, will be tasked with combing through the legal bills incurred by the former The Project host to decide whether the costs were reasonable, and whether she would be compensated. Image credits: Steven Markham/Speed Media - MICK TSIKAS/EPA-EFE/Shutterstock Editorial

Legal

Cafe targeted online for charging customer a "heating fee"

A cafe in Melbourne has copped a wave of backlash online after allegedly charging a customer to heat up his muffin for breakfast. The disgruntled diner took to Facebook to complain about the extra fee on his $7 muffin at the cafe and claimed the first he knew of it was when he saw it on his receipt. His post went viral with hundreds of people slamming café etiquette and urging him to go to the ACCC. "A f***ing dollar to heat my muffin? It's cr*p like this that just makes you shake your head and question where it is all going," the customer wrote in his original post. The cafe has since hit back at the post, and the angry customer who wrote it, saying the extra charge had been an error despite Heat Standard $1.00 being written on the receipt. They also said the customer could have simply solved the issue in person rather than blasting them online. "We do not nor have we ever charged for any heating of our wonderful baked treats," the café spokesperson told <a href="https://www.dailymail.co.uk/femail/real-life/article-13465591/Melbourne-cafe-targeted-angry-mob-charging-1-heating-fee-muffin-Aussies-reveal-hidden-charges-theyve-hit-amid-cost-living-crisis.html" target="_blank" rel="noopener">Daily Mail Australia</a>. "Unfortunately this has become a mountain of an issue that could have easily been resolved without a lynch mob caused by negligence at the hands of an influential keyboard warrior who ironically sells the idea of spiritual life practices and being grounded yet flipped out over a muffin." The original post racked up more than 870 comments before it was deleted, and more than 1,000 reactions. Some of those who saw it went on to slam the cafe by sending them threatening messages, commenting on posts on Instagram and calling their business phone to hurl abuse. "It's a sad world when a local cafe that aims for nothing more then customer satisfaction and community values to be upheld gets threatening messages from rogue vigilantes about wanting to see us go out of business over a muffin being prepared and served to quality standards," the cafe owners said. The cafe responded to the growing backlash online by announcing their muffins would be free on Tuesday. Image credits: Facebook / Shutterstock

Travel Trouble

"A little bit steep": Jetstar passenger hit with "wild" excess baggage fee

A Jetstar passenger has been slapped with a "wild" excess baggage fee after her luggage was less than just one kilogram overweight. Monique McCreanor was flying from Melbourne to Sydney after competing in a fitness competition when she was hit with the unexpected fees. Travelling with only carry-on luggage, Ms. McCreanor said she made a mad dash to the airport to catch her flight, only to be stopped at the gate due to the weight of her bag. Because of the prizes she won at the competition, her bag was just 900g over the 7kg limit, and she was issued a $75 fine. Ms. McCreanor took to TikTok to share a warning with other travellers to triple check the weight of your bag, as even being over the limit by mere grams will set you back. “This isn’t a complaint, this is merely just warning you guys,” she said in the clip. “If you do fly with Jetstar on a domestic flight, and your bag is even 100g overweight, you’re going to get charged $75 at the gate for that excess luggage." “Now, this kind of sucks, because I’m like damn, I could have had 15kg in this bag to really make it worthwhile." “I got hit with $75, so just make sure are booking the extra checked baggage, it is better to be safe than sorry, because $75 is a little bit steep for just 900g overweight.” While her video quickly garnered thousands of views, many were left divided in the comments about her complaints. One person sided with the airline, saying, “No sorry, it clearly gives a weight allowance. You went over, you pay.” “Seriously it doesn’t matter who you are with, you will have to pay any way, they are the rules,” another added. Others were quick to empathise, sharing their own experience of encountering excess baggage fees. “They did this to me on my honeymoon... I was p****d,” one person said. Image credits: TikTok

Travel Trouble

Restaurant sparks outrage for "ridiculous" fee

As inflation rates continue to rise it is not surprising that restaurants are charging extra fees, but one disgruntled customer was particularly shocked to see this "ridiculous" fee on their bill. The customer, who dined at restaurant and cocktail bar in Georgia, USA shamed the restaurant for charging their customers a $20 fee for “live band entertainment”. They shared their complaints on Reddit with a copy of their receipt and an unexpected fee at the bottom which read: “Two Live Band Entertainment Fee — $20”. Most people in the comments were equally annoyed and called the fee "ridiculous". “This is one of those leave money on the table, hand the waiter a tip and leave, sorry but if I didn’t order it, I’m not paying for it,” one wrote. “Great way to not have repeat customers,” said another. “This will backfire for them, just be honest and upfront," a third added. Other commenters were less sympathetic and did not understand why the customer was complaining when it looked like they could afford it. “When you’re paying seven dollars for a bottle of water, you really don’t get to complain about ‘unexpected costs.’ You knew what you signed up for," one commenter wrote. “Imagine a live band getting paid, huh,” another added. “They’re buying $7 bottles of water, they can probably afford it,” added a third. Image: Getty/ Reddit

Money & Banking

Big W customer gobsmacked over $4000 shipping fee

A Big W customer was only trying to buy an outdoor play set for her kids but got the shock of her life when she saw the "ridiculous" shipping fee that was over three times the cost of the play set. The Singleton mum had added the $1,200 item to her cart while shopping online and was about to check out when she was greeted with a $4,466 shipping fee. "How in God's name can they charge $4,466 for delivery! Big W are slowly losing my vote!" the outraged mum wrote on Facebook, even swearing off the department store for the apparent money grab. According to the Big W website, the play set is sent via Plum Play, a "trusted partner", and not by Big W stores, and because the woman lives in a rural area, she initially believed that was the reason for the extortionate shipping costs. A few other shoppers criticised the high fee. "That is fricken ridiculous!!!! No one would pay that," one said. "Jesus, are you ordering a few pallets of bricks? No way normal merchandise would cost that much to send," another wrote. A few others questioned the weight of the item and where she lived, while others tried to buy the same item and got even higher shipping fees. "It jumped a few grand for a couple of ks for me," one wrote, with the cost of standard delivery for the play set at $7,858. Some reported fees of up to $50,000, but most were $7,000 to $10,000. The department store has addressed the issue and told Yahoo News Australia that an "error on the website" was to blame. They have since corrected the delivery charges which should have been about $100 for the woman's location. "We were made aware of a delivery calculation error on our website which has since been resolved. We apologise for any inconvenience this has caused," a spokesperson told the publication. Image: Getty

Money & Banking

AusPost customer faces extra charge for using cash

As conversations continue about moving to a cashless society, an Australia Post customer was outraged after being slapped with a charge for using cash. Brisbane resident Gerrie Hoogland shared her outrage after hearing about the supposed cash charge through a friend, who claims they were charged $2.20 for wanting to use cash to pay a bill. Hoogland recounted the story on X, formerly known as Twitter, to share the story, while asking if anyone else had encountered anything similar. She wrote, “A friend of my husband’s went to pay a bill at the Post Office last week. He gave them $82.00 in cash and they said they would have to charge him $2.20 for using cash.” “He refused to pay it after telling them cash is legal tender, and then he left without paying the bill at all. Is anyone else hearing more of this?” A number of Aussies took to the comments to call out Australia Post for being “shady”, with some calling the fee a “scam” and a “disgrace”. However the outrage towards Australia Post may be misplaced. <a href="https://au.finance.yahoo.com/news/australia-post-customer-charged-220-for-using-cash---but-is-the-outrage-warranted-025519571.html">Yahoo Finance</a> has contacted the national postal service and understands the fee is set by individual billers, rather than Australia Post themselves. The fee relates to bills paid in person at an Australia Post outlet via Post Billpay and can apply to both cash and card transactions, and whether or not the fee is passed onto the customer will depend on the individual biller. In recent years, a number of billers charge an additional payment fee for bills paid in person, with some notable examples include telcos Telstra, Optus and Vodafone. Image credits: Shutterstock

Money & Banking

"No empathy": Grandmother kicked off flight over unpaid fee

An outraged father has unleashed over Jetstar's decision to remove his mother-in-law and children from a flight over an unpaid fee. Father of three Jay Tee took to social media to slam the airline over their treatment of his family on their flight from the Gold Coast to Melbourne. Tee's kids were being accompanied on the flight by their grandmother, who was informed she needed to pay a $35 fee to check in a bag. The woman forgot to pay the fee before boarding, on what was her second time ever on a plane. Tee was then contacted by the airline after his family had boarded and was told they would not be allowed to travel if the charge wasn’t paid for within 10 minutes. “They informed me I had 10 minutes to pay $35 or else they would be removed from the flight extra fees would accur (sic) for holding up the flight,” he said. “I hung up transferred funds and rang back within four minutes. Jetstar did not take payment and had removed my mother-in-law from the flight altogether leaving her and 3 kids stranded at Gold Coast airport no water no food.” The father slammed the airline for “disgusting service” that was “the worst I have ever been treated” by a company. “My anger is not with the payment for luggage, it is how my mother-in-law and three kids under 10 were treated.” The airline confirmed the family were removed from the flight, with a spokesperson saying the airline was trying to contact Mr Tee for more information. “We’re really sorry to hear about the customers’ experience and are reaching out to get a better understanding about what happened,” the spokesperson said. The airline went on to say they had no record of any payment being made, while also clarifying they asked the elderly woman to move to the service desk multiple times to pay the fee, but she didn't. Mr Tee says he was then forced to pay another $600 to book the group on the next flight to Melbourne with discount airline Bonza. The situation stirred up debate on social media, with some blaming the woman for the mishap. “I don’t understand how this is anybody but the mother in laws fault, She would have checked bags in then should have walked over and paid for the excess, not boarded the plane,” one person wrote. But others defended her, and the fact the charge was paid by Mr Tee. “Would have thought Jetstar could have helped in some way, but that sums up Jetstar’s customer service for you. No empathy what so ever.” Image credits: Facebook / Getty Images

Travel Trouble

Obese woman sparks debate for not giving up extra seat for toddler

An obese woman has sparked debate online after refusing to give up the second seat she paid for to a fussy toddler. The 34-year-old booked the two seats for her cross-country flight to visit her family for Christmas because she was previously unable to comfortably fit in one seat. All was well until the young woman next to her demanded that she "squeeze into one seat" so her son could sit on the other. "I am obese," she admitted on the Reddit thread. "I'm actively working toward losing weight and I've made progress - but I booked an extra seat because I'm fat." She added that she insisted on keeping her seat because she paid for it, but the mum "made a big fuss over it, and she told the flight attendant I was stealing the seat from her son." "Then I showed her my boarding passes, proving that I paid for the extra seat. The flight attendant asked me if I could try to squeeze in, but I said no, that I wanted the extra seat I paid for." The woman claimed that the toddler was only 18 months old, so he didn't need his own seat and could've sat on his mum's lap for the duration of the flight. "I got dirty looks and passive-aggressive remarks from her for the entire flight and I do feel a little bad because the boy looked hard to control - but am I in the wrong?" she asked other social media users. Many shared their overwhelming support for the woman and slammed the mum and flight attendant for their "horrific" behaviour. "The mum is an a**hole for not buying a seat for her son and assuming someone else would give up a seat they paid for. Odds are she was hoping there'd be extra seats on the flight so she didn't have to pay and used the lap thing as a loophole," one commented. "What's even the point of the extra seat if the flight attendants are going to let entitled people bully others into giving it up?" another added. "People buy entire seats for high-end musical equipment. Not even people. Their lack of planning does not constitute an emergency on your part," a third wrote. However, there were a few others that said the woman was in the wrong for causing an inconvenience. "If you are so fat that you have to have more than one seat on an airplane then you are selfish," one said. "Flights overbook all the time especially during the holidays - how can you justify having two seats to yourself?" "How much room does a kid take up, seriously? Yeah the mum should've bought a seat but that doesn't mean you have to be selfish and cause two people discomfort," another commented. Image: Getty

Travel Trouble

Parents slapped with hefty fee over badly behaved children

Two parents have been slapped with a hefty fine tacked onto their restaurant bill after their children caused a ruckus during dinner. Kyle and Lyndsey Landmann were dining at a restaurant in Georgia, USA, when they were given a $50 fine for their allegedly badly behaved kids. Two weeks after the incident, Kyle took to Google to leave a negative review for the eatery to say he was “disappointed by the experience”. “The owner came out and told me he was adding $50 to my bill because of my children’s behaviour,” he wrote. “My kids watched a tablet until the food arrived, ate their food and my wife took them outside while I waited and paid the bill.” Lyndsey went on to tell Today that her kids were well behaved, although they were joined by other families, with 11 children in total at the table. “The kids were sitting at one end of the table and they were being so good,” Landmann said. “'I even commented halfway through the meal, ‘I can’t believe how well-behaved they are’.” After dinner, restaurant owner Tim Richter approached the table and told the party about the additional charge on the menu, which reads, “Adult surcharge: For adults unable to parent.” “Be Respectful to staff, property, and self. No Respect, No Service.” Landmann said she was expecting a compliment for the well behaved kids, but Richter said there would be $50 added to each bill at their table. When Landmann then asked for an explanation, she claimed Richter told her they were being “too loud”. He was angry that the kids were “running around outside” by the water after dinner, even though they were chaperoned by adults, she clarified. “I was like, ‘They were quiet the whole time’. He got in our faces and told us that we belonged at Burger King and not at his restaurant. We asked to speak to the owner and he said he was the owner,” Landmann explained. “I looked around the restaurant and everybody was frozen watching this show he was putting on. He was yelling.” The 61-year-old restaurant owner said that he implemented the rule during the pandemic, but never actually charged the couple, saying, “We want parents to be parents.” However, several other Google reviews blasted the quality of the service and the owner's attitude, including one that warns diners with children to steer clear. Image credits: Facebook

Money & Banking

An entry fee may not be enough to save Venice from 20 million tourists

<a href="https://theconversation.com/profiles/sameer-hosany-292658">Sameer Hosany</a>, <a href="https://theconversation.com/institutions/royal-holloway-university-of-london-795">Royal Holloway University of London</a> Venice’s history, art and architecture attract an estimated <a href="https://www.responsibletravel.com/copy/overtourism-in-venice">20 million</a> visitors every year. The city, a <a href="https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=ac36ced945412121372dc892cc31498fb268247c">Unesco World Heritage site</a>, is often crammed with tourists in search of special <a href="https://onlinelibrary.wiley.com/doi/full/10.1002/mar.21665">memories</a>. But for the people who actually live there, this level of tourism has become unsustainable. So from 2024, day-trippers will be charged a €5 (£4.31) fee as part of an <a href="https://www.nytimes.com/2023/09/12/world/europe/venice-tourist-fee-italy.html#:%7E:text=The%20City%20Council%20passed%20an,popular%20but%20equally%20fragile%20place.&text=Starting%20next%20spring%2C%20day%2Dtrippers,5%20euros%20for%20the%20privilege.">attempt</a> to better manage the flow of visitors. The city’s mayor has <a href="https://travelweekly.co.uk/news/tourism/controversial-e5-venice-tourist-tax-finally-approved">described the charge</a> – which will be implemented on 30 particularly busy days in the spring and summer – as an attempt to “protect the city from mass tourism”. It comes after cruise ships were banned from entering the fragile Venice lagoon in 2021. Both policies are designed to respond to the particular problem facing Venice, which is that <a href="https://www.theguardian.com/world/2022/jul/02/venice-day-trippers-will-have-to-make-reservations-and-pay-fee">around 80%</a> of its tourists come just for the day. Research has shown that such a high proportion of day-trippers – who tend to spend little – <a href="https://www.sciencedirect.com/science/article/pii/0160738395000658">pushes</a> a tourist destination <a href="https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1541-0064.1980.tb00970.x">towards decline</a>. So from next year, all travellers to Venice will have to register their visit in advance and obtain a QR code online. Day trippers will then have to pay the fee; visitors staying overnight will not. Other exemptions include children under 14, as well as people who travel to the city for work and study, or to visit family members. To enforce the policy, the municipal police and authorised inspectors will carry out random checks. Anyone without the proper QR code will face a fine of up to €300 (£261). But some have expressed doubts about whether the €5 fee – the price of a coffee or an ice cream – will be enough to dissuade tourists from travelling to this iconic ancient city. One city politician <a href="https://www.nytimes.com/2023/09/12/world/europe/venice-tourist-fee-italy.html">commented</a> that the charge means Venice has become “a theme park, a Disneyland,” where “you get in by paying an entrance fee.” Certainly the charge is a lot less than Bhutan’s (recently reduced) “sustainable development fee” of <a href="https://globetrender.com/2023/09/17/bhutan-woos-more-tourists-reduced-entry-tax/">US$100 (£82) per night</a>, which applies to all tourists, and was introduced to encourage “high value, low impact” tourism. Research also indicates that strategies aiming at persuading tourists to come at less crowded times <a href="https://www.sciencedirect.com/book/9780080436746/seasonality-in-tourism">do not reduce numbers</a> at peak periods, but actually end up increasing overall demand. <h2>‘Veniceland’</h2> But Venice has to try something. For <a href="https://www.mdpi.com/2071-1050/11/24/6937">researchers</a>, Venice is the embodiment of <a href="https://www.cabidigitallibrary.org/doi/book/10.1079/9781786399823.0000">overtourism</a>, and residents clearly suffer from the consequences – living with the congestion, environmental damage and affects on their lifestyle and culture that 20 million visitors can cause. This can then lead to a negative response, known as “<a href="https://www.researchgate.net/publication/348605007_Overtourism_and_Tourismphobia_A_Journey_Through_Five_Decades_of_Tourism_Development_Planning_and_Local_Concerns">tourismphobia</a>”.Another term, “<a href="https://dokufest.com/en/festival/2013/cities-beyond-borders/das-venedig-prinzip-the-venice-syndrome#:%7E:text=The%20film%20shows%20what%20remains,municipal%20council%20with%20scorn%3B%20a">Venice Syndrome</a>” has been used to describe the <a href="https://www.sciencedirect.com/science/article/pii/S0264275123001816#:%7E:text=It%20explains%20the%20data%2Dgathering,between%20urban%20form%20conditions%20and">decline of the city’s</a> permanent population, as citizens feel forced to leave. Venice’s population is around 50,000 and has been consistently falling, from a peak of <a href="https://www.blueguides.com/venice-in-peril/">175,000</a>. If the population falls below 40,000, there is concern that Venice will cease to be a <a href="https://www.responsibletravel.com/copy/overtourism-in-venice">viable living city</a>. Those who remain have often expressed their discontent. Well publicised protests have included the “<a href="https://www.reuters.com/article/us-venice-funeral-idUKTRE5AD1DQ20091114">Funeral of Venice</a>” in 2009, a mock funeral to mourn the sharp drop in population, and “<a href="https://scholarworks.gsu.edu/cgi/viewcontent.cgi?article=1065&context=anthro_theses">Welcome to Veniceland</a>” in 2010, which claimed that Venice was becoming more of a theme park. And while “tourist taxes” <a href="https://www.tandfonline.com/doi/full/10.1080/14616688.2019.1669070">remain popular strategies</a> to address overtourism, their effectiveness remains debatable. Instead, research suggests that a <a href="https://www.tandfonline.com/doi/abs/10.1080/14616688.2019.1669070">combination</a> of specific economic measures (like fees and variable pricing) and non-economic policies (such as educating visitors) is the best option. That combination needs to be specially designed for each destination. There can be no one-size-fits-all solution. A <a href="https://www.e-unwto.org/doi/pdf/10.18111/9789284420070">report</a> by the World Tourism Organisation on overtourism identifies 11 different strategies and 68 measures to manage visitors’ growth in urban destinations. Barcelona, often seen as a city which has done well in handling mass tourism, has successfully used a <a href="https://www.econstor.eu/bitstream/10419/216242/1/CESifo-Forum-2019-03-p20-24.pdf">well targeted approach</a>. This has included harnessing new technology to develop a data driven management system to control visitor flows and overcrowding. It also deliberately engaged with the public when deciding on policies, and came up with specific strategies like limiting the number of new souvenir shops. But it did not resort to charging an entrance fee. Venice will be the first city in the world to do so – and other locations struggling with mass tourism will be keeping a close eye on whether such a bold move turns out to be a success.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/213703/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/sameer-hosany-292658">Sameer Hosany</a>, Professor of Marketing, <a href="https://theconversation.com/institutions/royal-holloway-university-of-london-795">Royal Holloway University of London</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/an-entry-fee-may-not-be-enough-to-save-venice-from-20-million-tourists-213703">original article</a>.

International Travel

Junk fees and drip pricing: the underhanded tactics we hate yet still fall for

<a href="https://theconversation.com/profiles/ralf-steinhauser-1459112">Ralf Steinhauser</a>, <a href="https://theconversation.com/institutions/australian-national-university-877">Australian National University</a> You see a fantastic offer, like a hotel room. You decide to book. Then it turns out there is a service fee. Then a cleaning fee. Then a few other extra costs. By the time you pay the final price, it is no longer the fantastic offer you thought. Welcome to the world of drip pricing – the practice of advertising something at an attractive headline price and then, once you’ve committed to the purchase process, hitting you with unavoidable extra fees that are incrementally disclosed, or “dripped”. Drip pricing – a type of “junk fee” – is notorious in event and travel ticketing, and is creeping into other areas, such as movie tickets. My daughter, for example, was surprised to find her ticket to the Barbie movie had a “booking fee”, increasing the cost of her ticket by 13%. It seems like such an annoying trick that you may wonder why sellers do it. The reason is because it works, due to two fundamental cognitive biases: the way we value the present over the future; and the way we hate losses more than we love gains. <h2>Present bias preference: why starting over feels too costly</h2> In the case of booking that hotel room, you could abandon the transaction and look for something cheaper once the extra charges become apparent. But there’s a good chance you won’t, due to the effort and time involved. This is where the trap lies. Resistance to the idea of starting the search all over again is not simply a matter of laziness or indecision. There’s a profound psychological mechanism at play here, called a present-bias preference – that we value things immediately in front of us more than things more distant in the future. In their seminal 1999 paper, <a href="https://doi.org/10.1257/aer.89.1.103">Doing it now or later</a>, economists Mathew Rabin and Ted O'Donoghue define present-biased preference as “the human tendency to grab immediate rewards and to avoid immediate costs”. They give the example of choosing between doing seven hours of unpleasant activity on April 1 or eight hours two weeks later. If asked about this a few months beforehand, most people will choose the earlier option. “But come April 1, given the same choice, most of us are apt to put off work till April 15.” In simple terms, the inconvenience and effort of doing something “right now” often feels disproportionately large. Drip pricing exploits this cognitive bias by getting you to make a decision and commit to the transaction process. When you’re far into a complicated booking process and extra prices get added, starting all over again feels like a burden. Often enough, this means you’ll settle for the higher-priced hotel room. <h2>Loss aversion: buying more expensive tickets</h2> Beyond the challenge of starting over, there’s another subtle force at work when it comes to our spending decisions. Drip pricing doesn’t just capitalise on our desire for immediate rewards; it also plays on our innate fear of losing out. This second psychological phenomenon that drip pricing exploits is known as loss aversion – that we feel more pain from losing something than pleasure from gaining the same thing. The concept of loss aversion was first outlined by economists Daniel Kahneman and Amos Tversky in <a href="https://www.jstor.org/stable/1914185">a 1979 paper</a> that is the third most-cited article in economics. <hr /> <figure class="align-center "><img src="https://images.theconversation.com/files/543635/original/file-20230821-25-mca6ku.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px" srcset="https://images.theconversation.com/files/543635/original/file-20230821-25-mca6ku.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=497&fit=crop&dpr=1 600w, https://images.theconversation.com/files/543635/original/file-20230821-25-mca6ku.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=497&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/543635/original/file-20230821-25-mca6ku.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=497&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/543635/original/file-20230821-25-mca6ku.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=624&fit=crop&dpr=1 754w, https://images.theconversation.com/files/543635/original/file-20230821-25-mca6ku.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=624&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/543635/original/file-20230821-25-mca6ku.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=624&fit=crop&dpr=3 2262w" alt="A graphic representation of loss aversion. The pain from losing a good or service will be greater than the pleasure from gaining the same good or service." /><figcaption>How economists Daniel Kahneman and Amos Tversky graphically represented loss aversion. The pain from losing a good or service is greater than the pleasure from gaining the same good or service. Daniel Kahneman and Amos Tversky, Prospect Theory: An Analysis of Decision under Risk, Econometrica, Vol. 47, No. 2</figcaption></figure> <hr /> Drip pricing exploits this tendency, by dragging us away from more “rational” choices. Imagine you’re booking tickets for a show. Initially attracted by the observed headline price, you are now presented with different seating categories. Seeing the “VIP” are within your budget, you decide to splurge. But then, during the checkout process, the drip of extra costs begins. You realise you could have opted for lower-category seats and stayed within your budget. But by this stage you’ve already changed your expectation and imagined yourself enjoying the show from those nice seats. Going back and booking cheaper seats will feel like a loss. <h2>Do consumers need protection?</h2> Empirical evidence supports the above theoretical predictions about the impact of drop pricing on consumers. <a href="https://doi.org/10.1002/mar.21426">A 2020 study</a> quantified how much consumers dislike the lack of transparency in drip pricing (based on tracking the reactions of 225 undergraduates using fictional airline and hotel-booking websites). The authors liken the practice to the “taximeter effect” – the discomfort consumers feel watching costs accumulate. But drip pricing’s effectiveness from a seller’s perspective is undeniable. A <a href="https://doi.org/10.1016/j.jebo.2020.04.007">experimental study</a> published in 2020 found drip pricing generates higher profits while lowering the “consumer surplus” (the benefit derived from buying a product or service). A <a href="https://doi.org/10.1287/mksc.2020.1261">2021 analysis</a> of data from StubHub, a US website for reselling tickets, calculated drip pricing increased revenue by 20%. Which is why the tactic remains attractive to businesses despite customers disliking it. Buyers would benefit from a ban of drip pricing. Many countries are taking steps to protect consumers from drip pricing. The UK government, for example, announced a <a href="https://www.theguardian.com/business/2023/aug/21/growth-of-airlines-add-on-fees-sparks-calls-for-price-reforms">review of drip pricing</a> in June, with Prime Minister Rishi Sunak flagging the possibility of measures to curb the practice. The US government is also considering <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/06/15/president-biden-recognizes-actions-by-private-sector-ticketing-and-travel-companies-to-eliminate-hidden-junk-fees-and-provide-millions-of-customers-with-transparent-pricing/">new regulations</a>, with President Joe Biden denouncing “junk fees” in his <a href="https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/02/07/remarks-of-president-joe-biden-state-of-the-union-address-as-prepared-for-delivery/">2023 State of the Union address</a>. Proposed changes include requiring airlines and online booking services to disclose the full ticket price upfront, inclusive of baggage and other fees. The effectiveness of measures, however, is <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4430453">still being debated</a>. In the meantime, your principal protection is making a more informed decision, by understanding why the tactic works. Bargains may attract you, but you can learn to not fall for hidden costs and align your choices with your budget and values.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/211117/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/ralf-steinhauser-1459112">Ralf Steinhauser</a>, Senior Research Fellow, <a href="https://theconversation.com/institutions/australian-national-university-877">Australian National University</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/junk-fees-and-drip-pricing-the-underhanded-tactics-we-hate-yet-still-fall-for-211117">original article</a>.

Money & Banking

"Unbelievable but true": Tourist outraged over shocking restaurant fee

A tourist in Italy has been hit with a shocking fee from an upscale eatery after he asked for his sandwich to be cut in half. The anonymous man was travelling in Italy's picturesque Lake Como region, and stopped in at Bar Pace in Gera Lario, at the lake’s northern end, for a vegetarian sandwich and fries for lunch. Travelling with a friend, the man asked for the meal to be cut in half so they could share. After polishing off their lunch, the traveller was shocked when he was given the bill, noticing a charge he had never seen before. The man paid without arguing, but later took to TripAdvisor to leave a negative review. “Unbelievable but true,” the man captioned a photo of the receipt on TripAdvisor. The receipt lists the sandwich for €7.50 ($12.60), Coca Cola for €3.50 ($5.90), water for €1.50 ($2.50) and espresso for €1.20 ($2), along with the debated “diviso da meta”, or “cutting in half” fee, amounting to 2 euros, or $3.40. The confused customer gave the restaurant one star on TripAdvisor, far below the average of four and a half stars, based on over 100 reviews. After the review garnered a lot of unexpected attention, the restaurant's owner defended the fee to a local news outlet. “Additional requests have a cost,” owner Cristina Biacchi told La Repubblica. “We had to use two plates instead of one and the time to wash them is doubled, and then two placemats. It wasn’t a simple toasted sandwich, there were also French fries inside. It took us time to cut it in two.” She also noted that the customer did not complain or question the charge and clarified that she would have removed the charge from the bill, if someone had raised an issue. The extra charge is not unheard of in expensive cities and popular tourist destinations, with some cities in the United States are sometimes hitting diners with a share charge, or a split plate charge, to make up for the lower check average at a table, while some New York City eateries even ban the practice of sharing all together. Image credit: TripAdvisor

Travel Trouble

Richard Wilkins and Sir Bob Geldof catch up live on air

Richard Wilkins is the man with a black book of celebrity contacts so it’s no surprise that he’s friends with rock legend Sir Bob Geldof. The Boomtown Rats frontman was being interviewed for his own accomplishments, and the upcoming launch of his own independent radio station Disrupt Radio when he interrupted the interview to catch up with his old mate. "Lovely to see you, you're looking well I have to say," Wilkins told Geldof. Who replied: “I’m good how are you”, which Wilkins quickly responded to before asking his question. After answering a few questions about his upcoming gigs with The Boomtown Rats, the rock legend couldn’t hold his excitement of seeing his old mate and asked Wilkins how he was, for the second time. "How are things with you?" Geldof asked Wilkins. To which a slightly flustered Wilkins replied: "I'm good man, I will give you a call after the show," as he tried to get the show back on track. This elicited a chuckle from the Today Extra co-hosts Sylvia Jeffreys and Tim Davies who quipped “it’s not about you, it’s more about Bob” before steering the conversation back to the original topic of interest. Image: Nine/ Today Extra

Music

Returning and Earning for your community

Charities and community groups across NSW are cashing in empty drink containers to support their important work in the community, all with the added benefit of helping the environment. It’s an easy win-win to fundraise through Return and Earn, and it makes donating to a local charity or community group very easy. Return and Earn is the incredibly successful container deposit scheme in NSW, where 10 cents is refunded for every eligible drink container returned for recycling through the network of 600+ return points across the state. Since launching over five years ago, <a href="https://returnandearn.org.au" target="_blank" rel="noopener">Return and Earn</a> has become an important and well used channel for charities and community groups fundraising to support a range of local and broader causes. Groups such as Rotary and Lions Clubs, animal rescue organisations, and fire and rescue services are just a few of the many different cohorts that have partnered with Return and Earn and relied on the generosity of NSW citizens to help them do vital work in their communities. “We’ve seen many groups really embrace the scheme, showing a humbling passion for giving back to the community – whether it’s to help fund an event for a local club, or to donate to a charity,” said Danielle Smalley, CEO of scheme coordinator, Exchange for Change. “Some of these groups have raised a lot of money from recycling drink containers through Return and Earn. Often local residents and businesses are handing over their containers or donating their refunds to support the cause, proving there is enormous goodwill in the community.” The Gerringong Lions Club recently celebrated one million containers collected, raising $100,000 that was donated to a variety of causes including medical research, local sporting facilities, as well as helping both Australian and oversees Lions Clubs provide relief during catastrophes. <img class="alignnone size-full wp-image-67811" src="https://www.readersdigest.com.au/wp-content/uploads/2023/06/Gerringong-Lions-Club-image-2-for-article-2_RD.jpg" alt="" width="770" height="500" /> The Gerringong Lions Club are now raising around $20,000 each year. The COVID shutdowns and restrictions put a halt to the activities that would normally bring funds to the club. Return and Earn was the only means for the club to generate an income to help the community during this time. As routine users of the scheme, the Gerringong Lions Club are now raising around $20,000 each year, all the while making positive impacts to the environment. Bruce Ray is a past president and active member of the club, and says he gets a sense of satisfaction knowing they are helping the community while also looking out for the environment. “We have the bins at the hotel, the bowling club, and campgrounds. The club also provides the container collection bins for events such as weddings and uses them at local New Years’ Eve events,” said Mr Ray. In Cobar, the local Rotary Club is also using Return and Earn to support the work in their community. They partnered with the local Girl Guides who help the club sort through any drink containers collected. They’ve now raised more than $25,000 since they began in early 2020. Club Secretary Gordon Hill said that one of the benefits for the Girl Guides is the real-world experience in seeing how much locally created waste can be recycled. “It also provides a healthy opportunity for a challenge to see which girls can pack the most containers during a 1.5 to 2 hour session. The record currently stands at 3,080, but the challenge continues,” Gordon added. <img class="alignnone size-full wp-image-67813" src="https://www.readersdigest.com.au/wp-content/uploads/2023/06/Cobar-Rotary-Club-image-for-article-2_RD.jpg" alt="" width="770" height="500" /> In Cobar, the local Rotary Club has partnered with the Girl Guides to help with sorting! Since Return and Earn launched in December 2017, over $42 million has been raised through donations and return point hosting fees. The funds have made a significant difference to individuals and groups who have received the support. “There are a lot more collection drives in the community that we don’t track, so the total fundraising amount is in fact even higher,” Ms Smalley said. “We encourage all our Return and Earn users to consider donating containers to a local charity or community group either at the nearest Return and Earn machine or using the Return and Earn app. “And if you’re a member of a group looking for an easy and effective way to fundraise, consider Return and Earn where you can double the benefit by raising funds while also helping the environment.” Every Return and Earn machine features a local donation partner, to whom users can donate part or all of their refunds to. The charity listed changes every six months to give as many groups as possible the opportunity. Charities and groups can also elect to be listed on the Return and Earn app, allowing anyone using the app at a machine or automated depot to donate direct to their favourite charity. There are currently over 170 charities featured on the app. When using a Return and Earn machine, select donate, then select which of the charities listed you want the funds to go. If you’re using the Return and Earn app, simply select donation as your payout option and then select the charity or group you would like to donate your refund to. “Contributions don’t need to be big to make a difference. It can be as easy as collecting a few eligible drink containers and donating them to a charity, helping local communities thrive while looking after the environment.” said Ms Smalley. For more information on donating through Return and Earn visit <a href="https://returnandearn.org.au/donate/" target="_blank" rel="noopener">returnandearn.org.au/donate/</a> Images: Supplied This is a sponsored article produced in partnership with Return and Earn.

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Returning and Earning for your community

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