When Britta Gidican visited her dentist last week, she was surprised to find an extra $14 fee on her bill. The surcharge was meant to cover the dental staff’s personal protective equipment and other costs associated with doing business during the coronavirus pandemic.
Gidican, a corporate communications professional in the Seattle area, said she wasn’t warned of the charge until she was sitting in the office with her son in the dental chair. Her health insurance didn’t cover the charge.
Even so, she understood the reasoning behind the extra fee, she said. “It’s tough when the whole world needs this equipment.”
It’s not just dentists who are charging COVID-19 surcharges. For many smaller companies without a massive cash buffer to protect themselves from downturns, weathering the coronavirus pandemic has been a tall order. As a solution, some are adding small COVID-19 surcharges to customers’ bills, which help make up for the cost of heightened cleaning procedures and inflated inventory prices.
Though these charges aren’t commonplace, they are gaining popularity among businesses, from restaurants to hair salons.
“I would call it more of a trickle than a flood,” said Ted Rossman, an analyst for CreditCards.com. “It’s pretty easy to find at least a couple of notable examples in each major city.”
Rossman explained that these surcharges are generally added to compensate for the higher cost of doing business during the pandemic. For example, a hair salon may charge a fee to cover the cost of extra sanitation measures. Many restaurants are dealing with higher food prices and may charge a small percentage of the bill to make up for that.
One of the early high-profile cases was Kiko Japanese Steakhouse & Sushi Lounge in West Plains, Missouri, which added a 5% COVID-19 surcharge to its customers’ bills to make up for the rising prices of meat, seafood, poultry and produce. At first, diners didn’t seem to mind. But once the surcharge was brought up on social media, the restaurant received a ton of blowback.
Other restaurants that have instituted similar surcharges include Dan’s Super Subs in Woodland Hills, California, which charges an extra $0.75 to $1 per sandwich to cover rising meat prices and new procedures. Several Las Vegas restaurants have also joined the trend, including El Segundo Sol, Mon Ami Gabi, Lotus of Siam and Joe’s Seafood, Prime Steak & Stone Crab.
Studio M, a salon in Amelia Court House, Virginia, also added a new $3 sanitation surcharge.
But why break out this added cost as a separate line item? Rossman believes the surcharges are meant to indicate that the added cost is temporary and to provide transparency for customers.
Many consumers take no issue with spending a few extra dollars to cover these costs, but others feel as if they’re being nickel and dimed.
Even though it’s usually only a matter of a few dollars, Rossman said that instead of tacking on an additional fee, businesses could raise prices. “I think that tends to be more accepted by customers and less likely to be noticed, [rather] than a specific line item,” he said. “It’s more of a public relations issue than a financial one.”
Are COVID-19 surcharges legal?
“Technically, the surcharges are fine as long as they’re disclosed,” Rossman said. However, there are mixed reviews as to whether customers feel that they were appropriately notified of the fee in advance. For those who aren’t expecting it, the situation can feel like a “gotcha.”
“A lot of the time it seems to catch them by surprise,” Rossman added. “They don’t know about it until they see it on the receipt, and by then, it’s already been charged.”
Gidican agreed that it would have been nice to know about the surcharge ahead of time. She said the dental office called her on two occasions to confirm and remind her of the appointment, during which they could have mentioned the new surcharge. Even so, it’s not a major issue for her.
“Everyone is still figuring out what to do, how to address COVID-19 concerns and how to follow the new policies in place,” she said. “I expect the process and customer communications will get better over time as everyone adjusts.”
Of course, there’s also no real way for consumers to ensure that a business is, in fact, experiencing higher costs that are proportionate to what it’s charging in added fees, and that those fees are truly going to the purpose indicated. Customers will have to take business owners’ word for it. That is, unless these companies realize that they may be better off simply raising prices ― at least temporarily.
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