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Commentary: Hidden fees may not be illegal, but customers see them as dishonest

SINGAPORE: A recent controversy has emerged in Singapore over whether a group of tourists were overcharged at a seafood restaurant.

The diners ordered an Alaskan King Crab that was priced based on its weight, but were shocked when the bill came up to S$938 (US$683). Feeling that they were being taken for a ride, they called the police.

The incident went viral after one of the diners told a media outlet about the ordeal. The restaurant then stepped in to give its side of the story. CCTV footage appeared to show a sense of due diligence from the restaurant, including parading said crustacean at the table before cooking it.

The majority of netizens felt that because the customer had been forewarned, it was more a misunderstanding than a deliberate attempt to deceive.

But the incident did open up a debate about the degree to which restaurants are transparent about pricing items on their menu.

STEALTH TACTICS TO INCREASE REVENUE

Times are hard for our friends in the food and beverage industry. Raw material prices are up, labour costs are increasing and rental is sky high. The situation is not unique to Singapore, but appears to have impacted hospitality venues all around the world.

In the past, the simple answer to rising costs was to increase prices, thereby passing costs to the consumer. However, this practice has its limits, so businesses have resorted to “stealth” tactics to increase revenue without increasing prices.

In the United States, the debate continues over whether restaurants can or should implement service charges in a country with a deeply ingrained tipping culture. More recently, some businesses have also started adding “wellness charges” of up to 20 per cent, on the grounds they need the money to better care for their employees.

Budget airlines in the United Kingdom are often in the spotlight for implementing punitive charges for seemingly minor services, like printing boarding passes. Globally, unexpected charges have also been found in services like Airbnb, where hosts add surcharges on top of the advertised price.

Many hidden charges are strategically timed for when the customer is most likely to pay for them. Whether that is after clicking through multiple pages on checkout, or having the bill presented to them post-meal, hidden charges often work because one feels they have already come this far, or that they have no choice because they have partaken of the meal.

Singaporean restaurants give the impression that they impose hidden charges as well, such as for the braised peanuts or wet wipes that waiters provide by default. I myself have now been trained by my wife to quickly turn away the appetisers the moment they are laid on our table.

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NEGATIVE TOURIST EXPERIENCES

Such pricing strategies are not unique to Singapore, and can be found in many tourist hotspots around the world. For example, in Italy, seafood can be similarly charged through seasonal pricing, and the resulting bill could make one gasp like, well, a fish out of water. ABC news reported in 2019 of a restaurant in Rome that used a per-gram pricing system for fish, resulting in a bill of hundreds of dollars.

While many accept that fluctuations in costs mean it is hard to set a definitive price for some products, others see it as an opportunity for restaurants to overcharge at whim, a practice that is not illegal but seen as dishonest.

Ma Jianan and Sam Li, researchers of Chinese tourism, found that deceptive business practices lead to negative word-of-mouth, alongside a sense of moral outrage in customers.

As a sociologist, I think it is true that the amount of money overcharged is key to feelings of negativity, but the outrage comes from a sense that an unspoken contract between supplier and consumer has been violated in some way.

This is because at the heart of any transaction, even those that are commercial, is an assumption of trust. The consumer trusts that the supplier will supply their goods or services fairly, and the supplier trusts that the consumer will reciprocate by paying promptly.

Introducing hidden charges, whether through additional charges without warning or arbitrary pricing, violates that moral contract. It reduces the chance of a repeat visit and creates an unfavourable perception of the location for other tourists.

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KEEPING THE SOCIAL CONTRACT

Countries with strong consumer protection laws or economies dependent on tourism are in a constant battle to ensure that this moral contract is maintained, however precariously.

This includes legislating larger multinational corporations like airlines and hotels to ensure prices are displayed clearly and at appropriate points in the purchasing process. For example, the UK is currently holding a public consultation on how to regulate firms that add fees at the point of checkout.

The key question remains as to how we differentiate between a “hidden charge”, and what is simply “local knowledge” – for example, that one should refuse braised peanuts. The answer probably lies somewhere in a compromise between the two, and room to negotiate when misunderstandings arise.

In the meantime, the debate will continue, especially in a world where the costs of living are increasing exponentially. We will continue to witness actions that will put a strain on the social contract. At what point consumers lose sympathy for suppliers trying to survive is anyone’s guess.

Terence Heng is a senior lecturer in Sociology at the University of Liverpool, UK. His most recent book, Diasporas, Weddings and the Trajectories of Ethnicity (Routledge 2020), looks at how commercialisation, consumption and rituals shape racial and ethnic identities.

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