The following is a guide to junk fees in Canada including the definition, real life examples used by companies across many industries including banking, telecommunications, airlines and events, as well as what laws exist that may apply and where you can submit a complaint about the pricing practice.
What are junk fees?
Junk fees, also known as hidden or surprise fees, are unnecessary, unavoidable or undocumented surcharges that are found as line items on your bill, invoice or receipt that increase the cost of a product or service while adding little to no value to the consumer.
According to the US Federal Trade Commission (FTC), junk fees are an umbrella term for:
unfair or deceptive fees that are charged for goods or services that have little or no added value to the consumer, including goods or services that consumers would reasonably assume to be included within the overall advertised price.
Companies do this to make their initial prices seem cheaper, obscuring the full price of a product or service and make it harder for consumers to comparison shop. Junk fees are often given names like “service fee”, “convenience fee” or “administration fee”.
This entices consumers to venture further into the buying process. Companies then bank on consumers simply accepting them as small/insignificant, mandatory and/or unavoidable, increasing their bottom line. If consumers complain, the company will often point to where the fee is hidden: on a “fee schedule” or in the fine print of a contract.
These additional fees may be named in a way that implies that they are mandatory taxes charged by a government body or third party authority such as a tourism board. The way they are presented may suggest this as well, being listing as a line item next to fees that are actually mandatory such as sales tax (HST) and Municipal Accommodation Taxes (MAT). This can deceive and confuse consumers.
Simply put, they are a cash grab that should be included in the advertised price.
This isn’t to say that businesses can’t or shouldn’t increase the price of their services. They are welcome to do so, but any price increases, mandatory components (eg. 5% “admin fee”) and components that would generally considered to be a part of it (eg. access to a pool or gym at a hotel), should be lumped into its total listed price, rather than tacking them on in a way that deceives, confuses or forces consumers.
Any additional fees, interest, charges, or other costs that may be incurred and are not reasonably avoidable should be transparently disclosed clearly and conspicuously upfront before the purchase process begins, rather than during or at the end and labelled to indicate what they are for, and whether they are optional or required.
Types of junk fees
The FTC categorizes junk fees as follows:
Unnecessary charges
The line items for these fees should be included in the purchase price as they are for worthless, bogus, free, or fake products or services. They cost the companies nothing to provide or are available for free.
Examples may include:
- Service fee
- Convenience fee
Unavoidable charges
These fees are imposed on captive consumers who cannot avoid them or opt out because they are customers of a monopoly or have already sunk costs into a product or service. Examples may include:
Hidden or surprise charges
These unexpected or “hidden” fees can shock consumers when they suddenly appear at the end of a purchasing process, in the fine print after a purchase or after giving consent via dark patterns. They are not disclosed up front and the consumer did not previously know about, consent to, or factor them into the purchase. In Canada, this is known as drip pricing, and is illegal according to the Competition Act.
Examples
For example, a website, online ad, or e-mail promotion shows you a price so good that you to click the link, add the product or service to your cart or begin the purchasing process.
You make a couple of selections on one page, fill out your personal information on the next page, you click next and then suddenly the price shown is higher – additional, mandatory fees have been revealed now that you’re deeper in the checkout process, causing the final price to be higher than initially advertised.
Regulatory changes in Canada
2021 Minister mandate letters
In 2021, the Deputy Prime Minister and Minister of Finance’s mandate letter referred to junk fees, requiring them to:
- Advance legislation to enhance the powers of the Financial Consumer Agency of Canada to review bank fees and charges and to require adjustments if they are excessive
- Continue to engage with stakeholders to lower the average total cost of interchange fees for merchants, proceeding in a way that ensures small businesses benefit from this work and protects existing reward points of consumers.
2023 federal budget
The 2023 Federal Budget announced the government’s intention to address unexpected, hidden, and additional fees, taking a similar whole-of-government approach by working with regulatory agencies including the Competition Bureau, the Financial Consumer Agency of Canada and the Canadian Radio-television and Telecommunications Commission, provinces, and territories, to ensure that businesses are transparent with prices and help make life more affordable for Canadians. This followed the US move to crack down on junk fees.
Actions mentioned include:
- Amendments to the Competition Act to strengthen protections against hidden prices
- Amendments to the Bank Act and Financial Consumer Agency of Canada Act
- A new policy direction to the Canadian Radio-television and Telecommunications Commission to ensure Canadians can affordably and easily change, downgrade, or cancel services.
It specifically mentions:
- Telecom roaming charges
- Event and concert fees
- Excessive baggage fees
- Unjustified shipping and freight fees
2023 Fall Economic Statement
In the 2023 Fall Economic Statement: Supporting a Strong Middle Class the government announced:
- Plans to reduce bank NSF fees Outline steps that it is taking to reduce the non-sufficient funds fees charged by banks by Budget 2024. These fees, which can currently be as high as $50, disproportionately impact low-income Canadians or those who may not have access to overdraft protection due to their credit history.
- CRTC investigate international mobile roaming charges, and will provide an update and concrete next steps in 2024.
- Ensure all children under the age of 14 next to their accompanying adult at no extra cost by working with the CTA to amend the Air Passenger Protection Regulations.
- Office of Consumer Affairs supporting independent research on junk fees to support ongoing efforts to crack down on them across Canada.
Junk fee examples
The most well-known examples of junk fees are in the event ticketing, hotel, and entertainment industries, but other industries and businesses have adopted the practice.
Banks
Excessive NSF fees
The bank’s automated program receives a pre-authorized purchase request. Checking the customer’s balance, it finds that the amount of the request is larger than the current account balance. Since there is not enough money available to complete the transaction, the transaction is declined, the bank issues a NSF code to the seller/merchant that submitted the pre-authorized request and charges a NSF fee.
Banks in Canada are charging $45 to $65 for this simple, automated process, but how much does it cost them?
There is the computer processing cost of the automation and updating digital numbers in 2 ledgers as well as the long-term cost of storing the details in a database. However, these are negligible and the same as if the transaction had been successful.
For comparison, consider a credit card transaction, which includes fees from credit card network (VISA, Mastercard), the cardholder’s/buyer’s credit card issuer and the business/seller’s payment processor.
Popular payment processor Stripe charges businesses a transaction fee of 2.9% + $0.30 per successful credit card charge. An average of 1.4% out of that 2.9% is the interchange fee to the financial institution that issued the credit card to the customer. This amount covers their handling of the transaction, taking on the risks of fraudulent transactions, chargebacks and debt defaults, and their profits. The remainder goes to the credit card company (~0.10%) and payment processor (~1.4%). Stripe does not charge businesses for unsuccessful transactions and advises that they do not retry charges more than 4 times.
For the 2.9% charge to generate a similar per-transaction value of $45, the amount of the purchase would have to be worth over $1,500. Even credit card chargebacks (also known as disputes), which require human intervention and review, only incur a fee of $15 to $20.
Banks aren’t dealing with the same risks of debt when they charge a NSF fee, they are simply saying “no” to the transaction.
Some of the largest banks in the US have eliminated NSF fees since the CFPB started tracking them in late 2021 and issued guidance on avoiding illegal junk fees.
NSF fees are an excessive, unnecessary junk fee and simply a tax on the poor.
Multiple NSF fees
By default, most banks charge non-sufficient funds fees that range from $45 and $65 when they deny a debit transaction – typically a cheque or pre-authorized payment – because isn’t enough money in a bank account to complete the purchase – even if it’s only a few cents short.
However, the big banks in Canada have allegedly been charging multiple NSF fees on a single purchase when the seller retries the transaction after it is rejected initially due to insufficient funds. Class action lawsuits were filed against each of the Big 5 banks in 2022 detailing this practice:
The example given in the TD class action is as follows:
- On December 2, 2020, Tyler attempted to make a one-time payment of $19.49 via PayPal. The balance in his Account was $19.04 – 45 cents short of the purchase price.
- On December 3, 2020, TD Bank rejected the payment due to insufficient funds and charged Tyler a $48 NSF Fee.
- 4 days later, the payee resubmitted the same transaction for payment. TD Bank rejected the payment again and charged Tyler a second $48 NSF Fee.
- In sum, TD Bank charged Tyler $96 in fees to process a single payment because he tried to make a transaction while his Account was 45 cents short.
Simplii’s Service Agreement warns: Note: Merchants may present the same payment item multiple times which can result in an NSF fee being charged each time.
These fees are not simply to recoup the expenses of managing unsuccessful transactions on the back-end, they’re profiting from missed payments by charging (multiple) hefty fees. The burden of these fees falls disproportionately on low-income Canadians living paycheque-to-paycheque, who are more likely to maintain low bank account balances:
Antonietta, an ACORN member from East York in Toronto, was expecting her pension payment, which got delayed due to some glitch in the system. RBC charged her four NSF Fees ($45 each) and then for an overdraft, so the overdraft interest. Added to that was the monthly bank fees for the account. All this while she was struggling and trying to find where her pension money was. – Acorn Canada
In 2019, US bank revenue from overdraft and non-sufficient funds fees surpassed $15 billion with the average cost of each charge between $30 to $35. RBC earned $1.86 billion in service charges 2021 and the class action suit alleges that the make tens
of millions of dollars per year from charging multiple NSF fees.
Unfair overdraft fees
In the US, banks have charged unfair “authorize positive, settle negative” (ASPN) overdraft fees on transactions where the consumer had a sufficient balance to make a purchase when the bank authorized the transaction, but during the time period between when the transaction was authorized and final settlement, the consumer’s account balance dropped below the sufficient balance, and overdraft fees were charged at the time of settlement. This caused tens of millions of dollars of consumer injury.
Dormancy or inactivity fees
It doesn’t cost the bank anything to have your account just sitting there. In fact, they use the balance in your account to make money by loaning it out to borrowers in the form of mortgages, lines of credit, etc.
However, many banks charge inactivity fees if you haven’t completed a transaction or logged into your account for a certain period of time as they make them more money than simply writing loans.
For example, Simplii charges $20 per year after 2 years of inactivity up to 9 years for a total of $140. Tangerine charges $10 after 1 year of inactivity, then dormancy starts after it has been 2 years since you last logged in. It costs $20 per year for years 2 through 9 and finally $40 per year for year 10.
Mortgages
Closing costs
When buying a home, there are many one-time fees presented by the lawyer and lender as part of the closing costs. However, they’re typically introduced late in the buying process, when time is limited and you don’t have a lot of leverage – making it difficult to comparison shop.
Lenders may tack on the following fees to make the rate on their loan look cheaper. However filling out application forms, creating the loan and underwriting to secure a mortgage are all mandatory components, so it doesn’t really make sense to make them separate line items:
- Loan origination fee
- Application fee
- Underwriting fee
- Courier fees
- Processing fees
- Administrative fees
Our guide to closing costs when buying a home in Canada lists many of the fees that may be incurred.
When starting a mortgage application, ask your lender to provide you with a list of expected fees – they are legally obligated to do this in most cases.
It’s in the lender’s best interest to proceed with any existing loan that’s in process, so while it may feel like you’re under pressure, you have some leverage, so don’t be afraid to be the squeaky wheel. Many lenders will remove fees or negotiate them and there is no harm in asking.
Excessive discharge fees
After paying off your mortgage and meet the terms and conditions of your mortgage contract, the lender doesn’t automatically give up the rights to your property, they must discharge your mortgage. Discharging a mortgage also happens when you change lenders or sell your property.
The discharge fee covers the administrative costs relating to the payout and discharge of a mortgage. In Ontario, there is no limit on the fee, so lenders can set their own fee, which typically range from $300 to $400.
However, some provinces regulate the amount that can be charged. BC limits the fee to $75, Alberta to $10.
Telecommunications
Telecom companies have been adding and increasing one-time ancillary fees that are charged alongside the cost of your phone or internet plan. The fees include excessive overage and roaming charges, as well as changing phone numbers, switching from postpaid to prepaid and making changes to your plan with a customer service representative.
The Wireless Code states that providers can’t change key terms in a contract without a customer’s consent, and that all one-time fees must be spelled out.
Rogers has said account transaction charges don’t need to be disclosed in a contract because they’re simply “administrative fees” that apply only at certain times to certain customers.
In 2019, the CRTC sent a letter to providers stating that it is “concerned that the practice [charging customers for certain client service calls] may be inconsistent” with the Wireless Code – the mandatory code of conduct for wireless companies.
The federal government announced a new policy direction to the CRTC in 2022 to ensure Canadians can affordably and easily change, downgrade, or cancel services.
Mobile administrative fees
Customer service fees to change, downgrade and cancel:
| Fee | Amount | Description |
|---|---|---|
| Activation/connection | $50 | Fee for activating in-store/in-person, typically not charged when activation is done online. |
| Service Adjustment | $10 to $20 | Changes to rate plans when completed by a representative |
| Upgrade Processing | $50 | Upgrading to a new device |
| Bill Reprint | $15 to $20 | Bill reprints |
| Telephone Number Change | $50 | Change your wireless number when completed by a representative |
| Transfer of Responsibility/Ownership | $50 | Take over ownership of wireless services from another customer |
| Non-Sufficient Funds, Returned Payment/Cheque, Suspension/Account Processing | $25 to $50 | When services are suspended for non-payment or when placed in a non-payment status after you don’t pay a past due amount and don’t make a payment arrangement. |
| Core to Pre-Paid Migration | $10 to $40 | Changing from postpaid to prepaid |
| Reconnection, Resume from Cancel | $19.99 to $50 | Reconnection of residential services when suspended/disconnected for non-payment |
| Temporary/Vacation Suspension | $10/mo to $30/mo | Putting your plan “on hold” and pausing service while you go on vacation or leave Canada for more than 1 month to avoid losing your phone number |
| Late fees | 3% per month (42.58% APR) | Telus, Bell and Rogers all charge just under the legal limit of 47% APR, The advertised rate of 3% per month is misleading as the interest is accrued daily and compounded monthly by Rogers (Bell and Telus do not specify their terms), meaning you’ll be charged for every day your payment is late after the due date. |
| Top up a prepaid account | $2 | |
| Reset a voicemail password | $5 |
- Rogers
- Fido charges $15 to change your plan and $50 to change your phone number. They started in May 2019.
- Chatr began charging $5 for various services including changing your account password and updating a payment card in August 2018. Their fees page cannot be found through Google as Chatr has applied the “noindex” tag.
- Bell
- Virgin Plus began charging $10 in May 2019, the fee is now $20
- Lucky Mobile charges for add-ons, but is online-only, no human phone support and is prepaid only, so there are no hidden fees.
- Telus
- Koodo Mobile charges postpaid customers $10 to change an add-on over the phone and $15 to change their plan. Their fees page is not easy to find when searching on Google as they have set it up as a pop-up window on their Help page.
- Public Mobile charges for add-ons, but is online-only, no human phone support and is prepaid only, so there are no hidden fees.
Note: Another example of the big telcos all making changes to their plans/pricing at around the same time, for around the same prices.
The following charges are not permitted under Quebec’s Consumer Protection Act, but are permitted elsewhere in Canada:
- Suspension/Account Processing Fee
- Returned Payment/Cheque Charge
- Reconnection Fee
Many of these adjustments can be done online for free, including changing plans, phone numbers and getting copies of bills. Rogers has said that the “vast majority” of Fido customers already use its free online services, which allow them to easily manage their accounts at their convenience.
While 93.5% of Canadians have access to high speed internet in 2022, due to the high prices of phone plans and internet service in Canada, low- and moderate-income Canadians struggle not with getting access to the internet, but whether or not they can afford it at home. Known as the digital divide in Canada, approximately 6% (2.28 million) Canadians did not have access to the Internet at home in 2020, with 39% of those saying it was due to the cost of Internet service or equipment.
In addition, customers can incur multiple customer service interaction fees in a single interaction. For example, $30 due to non-sufficient funds, then 3% per month for being late on payment, then a reconnection/resume fee.
How accessible are their fee schedules?
The trouble with these fees is that in addition to many of them being junk-like, they are also made somewhat difficult to find.
These fees are not mentioned during the sign up process for a phone plan online at Telus. Bell and Virgin link to their one-time fees in the fine print drop down section on their Plans pages. Rogers refers to an unclickable URL on their Plans page that leads to their Terms & Conditions pages, which has a link to their administrative charges page. Fido and Koodo do not mention them during the sign up and checkout processes.
Rogers, Bell and Telus each told CBC News that their fees comply with the Wireless Code.
To learn that they have these administrative fees, and to find out how much they are currently, here’s how to find the page:
Bell
Rogers
Telus
Internet
Cogeco lists the following maximums for additional fees, which I’ve only been able to find at the bottom of my Service Agreement, including a $3 per GB overage charge on non-unlimited plans:
| Fee | Amount |
|---|---|
| Late Payment | 3% monthly or 36% annually |
| Additional Collection Charge | 5% |
| Equipment Installation/Swap Charge | $100 |
| Transfer of Service Charge | $100 |
| Early Contract Termination Penalty | $75 per product up to $225 |
| NSF fee | $35 |
| Unreturned Cogeco Owned Equipment | $799.99 |
Excessive roaming charges
Telus and Bell increased their U.S. and international roaming fees for wireless customers on March 8 and 9th, 2023 respectively, ahead of spring break vacations. Telus increased by 6.7% for international roaming and 16.7% for US roaming and Bell increased by 6.7% for international roaming and 8.3% for US roaming.
On March 23, 2023, the ISED Minister asked the CRTC to “look into” the recent trend of increasing international roaming rates. Increases to these types of ancillary fees add to the cost of a consumer’s bill beyond the main sticker price.
Automotive
Car dealerships
When buying a new car, there are host of miscellaneous fees under a wide variety of names that dealerships will try to tack on to the final price that consumers would reasonably assume to be included in the advertised price of a vehicle.
In a stable market, these fees are not mandatory and can be negotiated away.
| Fee | Required? | Price range |
|---|---|---|
| Freight/PDI | No | $1,695 |
| Documentation Fee (Doc Fee) or Admin Fee | No | $499 |
| Dealer Handling Fee | No | $699 |
| Lock Nuts, Mud Guards, Nitro, Etching * | No | $598 |
| Air Tax Recovery (Federal Air Conditioner Excise Tax) | Yes | $100 |
| Tire tax (if applicable) to fund recycling | Yes | $17.75 to $30.20 |
| OMVIC funds Ontario Motor Vehicle Industry Council | Yes (Ontario) | $10 |
- Freight for shipping a vehicle from the production facility to the dealership
- PDI (Pre-Delivery Inspection) for performing a maintenance check when it arrives at the dealership
- Documentation/Administration/Processing/Dealer Handling Fee for processing a vehicle’s paperwork
- Lock Nuts, Mud Guards, Nitro, Etching are overpriced accessories that can be acquired later, if desired
Other junk-ish fees are “nitrogen filled” tires (the atmosphere is 78% nitrogen), wheel licks, window etching, paint protection and electronic rust protection systems.
To avoid having to play this game, ask for an all-in prices when emailing around for quotes. Consumers have a right to all-in price advertising according to Ontario Motor Vehicle Industry Council.
Oil changes
Midas often advertises a coupon for a $39.99 semi synthetic or $59.99 full synthetic change ($10 off the normal price of $69.99, $10 of which is labour) in Belleville, ON.
However, the final cost and invoice are only presented to the customer after payment is made. In my case, there was an additional line item “Consumable Products” which I figured must be a mistake as my car’s oil capacity is 4L, less than the coupon’s limit of 5L.
I called the shop to inquire about the surprise fee and they started telling me how it was needed to clean the brake calipers, etc. I reminded them that I had had an oil change done, not brake repair, to which they responded by giving a very similar but clumsy explanation. The $6.18 was for the “parts cleaner” or degreaser they used to clean around the oil filter and drain pan as needed.
Now, I have never been charged for this on past oil changes at the various shops I’ve gone to. I did some researching online and couldn’t find any mention of cleaning required in that area aside from a quick wiping of the mounting area with a rag or shop towel.
However, they are likely legally covered by the fine print of the coupon, which gives 3 reasons for additional fees:
- Charge for additional parts and services if needed.
- Taxes and/or disposal fees extra, where permitted.
- Shop fees additional, see store for details and applicability
Excessive late fees
Late fees are penalties for not paying a bill by the due date, and are typically intended to encourage customers to pay on time. However, they can be major sources of revenue for companies across all sectors.
The majority of Canadian businesses using interest-based late fees charge a monthly rate of 1.5% to 3.26%, which is equivalent to 47% APR, the maximum allowed. The 2023 Federal Budget intends to reduce this to 35%, or 2.53% per month.
For example, MNP charges a “service charge” of 1.5% per month (19.56% per annum) on any invoice not paid within 30 days. This is not simply them recouping the cost of not getting paid what they’re owed, they’re profiting from missed payments by charging a rate similar to that of credit card companies.
Other businesses will charge their late fee as a flat dollar amount, which may exceed the legal interest rate when converted to an annual interest rate. For example, a $10 late fee charged on a outstanding payment of $100 owing after the payment is 7 days late is the equivalent of a 520% annual interest rate. Read: When a late payment fee is an illegal penalty
Excessive late fees cost consumers money, causing substantial injury. They do not control how the seller calculates late fees and have no reason to anticipate that the seller’s late fee would be excessive.
Here is how to calculate APR based on an amount owed (Loan Principal), flat dollar late fee charged and the number of days in the term:
- Periodic Interest Rate = [(Interest Expense + Total Fees) / Loan Principal] / Number of Days in Loan Term
- Annual Percentage Rate (APR) = (Periodic Interest Rate x 365 Days) x 100
More: You can convert a monthly interest rate to annual APR here (or vice versa) to see if a rate is excessive
Accommodations
Hotels
Hotels may charge these on top of room rates, to access amenities like pools, gyms or WiFi.
- Resort fees
- Destination fees
- Facilities fees
However, unlike parking fees that you don’t pay if you don’t bring a car, you can’t opt out of hotel amenities to avoid paying the resort fee. They are a mandatory rate customers must pay in order to stay. However, you may be able to ask the front desk to waive it.
Airbnb, VRBO
Airbnb charges:
- Cleaning fees – charged by host to cover the cost of cleaning their space
- Service fee – “helps us run our platform and offer services like 24/7 support”
As part of a $6 million class action lawsuit and a separate $3 million class action in Quebec, Airbnb was found guilty of “double ticketing” by charging more than the advertised cost for a property due to added service fees, which increased the nightly cost from $108 to $122 – which could also be described as drip pricing because fees for non-optional services were added to an advertised price. The settlement applied to Airbnb customers who booked between Oct. 31, 2015, and June 25, 2019 for non-business purposes.
To qualify as double ticketing, the two prices must be on the product, accompanying the product, or on an in-store or other point of purchase display or advertisement – ads outside of stores or point of purchase such as newspaper ads do not count.
It most commonly applies to retail stores’, but the judge ruled in this case that laws around double ticketing should also cover the online world. If the same case were filed today, it would likely reference the drip pricing clause rather than double ticketing.
The total advertised price is now inclusive of their service and cleaning fees, is now displayed on both listings and checkout pages (circled in blue), but after and less prominently than two other dollar amounts, the “regular” and “sale” room rates not including the fees:
In the United States
On a recent trip to San Francisco and Las Vegas, I was inundated with numerous hidden fees. For example, when booking a room at Planet Hollywood hotel in Las Vegas, Google Travel shows a rate of $58 per night:
Clicking through, the official site shows it’s even cheaper! $43 per night (fine print: excluding fees and taxes).
How bad could those additional fees and taxes possibly be? Clicking the drop-down shows that the resort fee is $45.95 per room, per night – more than the cost of the room itself!
When I went, the resort and other fees add up to about 50% of the total cost of the stay:
Hovering over the small information button, it states that this fee is for WiFi, the fitness center and local calls. This isn’t even a one-off, most of the other hotels charge their own resort fees. I would put these fees in the “unnecessary” (ie. worthless) category as I was able to connect to free WiFi at all the major hotels and businesses we visited that we were not guests at and local calls are basically worthless as visitors will need a roaming plan to call back home anyway.
Vegas may be an extreme example, but it helps illustrate just how much junk fees can hinder price comparison and impact consumers.
Event tickets
Companies selling or reselling tickets to concerts, road races, and shows may charge:
- Service fee or convenience charge on each ticket
- Order processing fee on each order to offset ticket handling shipping and support. Ticketmaster says they may earn a profit on the order processing fee
- Delivery fee based on how tickets are received by customers
- Facility charge added by clients to operate and invest back in their venues
Movie tickets
Cineplex
Cineplex charges a non-refundable online booking fee of $1.50 per movie ticket. Showing its junk-quality and unreasonableness, it’s capped at a maximum of 4 tickets per transaction, or $6.00. It is discounted for Scene+ members and waived when you’re a CineClub member.
It exists only to make the base ticket prices look cheaper and push customers into their $9.99 per month subscription, which buys 1 movie per month.
As of May 18, 2023, the Competition Bureau is suing Cineplex for misleading prices.
Landmark Cinemas
The only other theatre chain in Canada will adding a fee on tickets purchased or redeemed online on their website starting September 20, 2023. The fee will be $1.50 per ticket for non-members, $1.00 for Movie Fan members, up to a maximum of 4 tickets. Landmark EXTRAS Movie Club and Movie Insider members are not charged a fee through the website, but will be charged $1 per ticket when purchasing through the ATOM app.
Stubhub
In February 2020, StubHub received a $1.3 million penalty after it was found that they advertised tickets at unattainable prices on its websites, mobile apps and in promotional emails.
Consumers had to turn on an optional filter to include fees in the prices shown, otherwise the fees were revealed at a later stage of the purchasing process and in some cases, customers were still asked to pay more than the prices shown even when the filter was on.
Ticketmaster
In June 2019, Ticketmaster received a $4 million penalty plus $500,000 for investigation costs after it was found that they added mandatory fees during the later stages of the purchasing process – even though they were even disclosed before consumers completed their transaction – which added 20% to 65%+ to the advertised price.
The total advertised price is now inclusive of their service fee and prominently displayed on both listings and checkout pages:
Restaurants
For example, 10 Acres Restaurant in Victoria BC added a 2% Employee Health Benefits (EHB) fee to their bills, passing on the cost of the provinces adding mandatory employee health benefits in 2020 and five days of paid sick leave in 2021. The fee surprised customers when they went to pay.
Accounting
MNP
MNP, one of the largest full-service chartered professional accountancy and business advisory firms in Canada charges an 5% “Administrate Expenses” fee of 5% on top of their cost of accounting services rendered. This is an unavoidable fee that consumers would reasonably assume to be included within the overall price.
Airlines
Seat selection fees
In Canada, airlines are required to take the following steps to help seat children under the age of 14 close to their parent or guardian, at the earliest opportunity, for free according to the Canadian Transportation Agency:
- Assigning the seats before check-in, if that is when the airline is first told about the child on the flight.
- If seat availability is limited, they must let the passenger know that they will try to assign the seats at check-in (online or in person), or at the boarding gate before take-off.
- If they’ve tried but have not been able to assign seats close together in advance or at check-in, they must ask for volunteers to move seats to achieve this at the gate, and then again on the aircraft before take-off, if necessary.
This procedure to seat them near their children is not mentioned during the airline booking processes I tested, and I’d venture many infrequent travelers are unaware of it.
Airlines can and do still offer seat selection to people travelling to children if someone “wishes to pre-select particular seats”, charging around $20 plus tax per seat. If I were a parent going through the booking process, I would feel as though I had to pay for seat selection to look after my child during the flight.
Lynx airlines at least states at the top of their their seat selection page: “Travelling with young children (under 12)? Choose seats below for no charge.
However, in practice, after selecting seats the fees still appear to be charged while checking out:
Payment processing fees
According to a Cansumer reader, the Ville de Gatineau charges a $3 “convenience fee” to pay parking violation tickets online.
Refunding negative bill credit balance
Many companies will not automatically refund negative account balances below a certain amount upon account/service cancellation.
For example, the CRA will not refund a difference of $2 or less. This amount is kept on file indefinitely and will be sent to you as soon as your balance goes above $2.
Bell may charge an “intolerance fee” when an account is closed and the balance is less than $10 to reduce the balance to zero. They may say that it costs more for them to produce the cheque than the value of the cheque itself.
Their policy states: For balances between $10 and $500 on your final bill, we will mail a cheque to your mailing address on file within 90 days of the date of that bill. For balances of a different amount, please contact us to request that a cheque be mailed.
They will happily take balances of $10 or less off customers’ hands unless the customer contacts them to request a refund cheque. In addition, they are happy to take up to 3 months to pay the amount owed if is between $10 and $500. Koodo refunds balances above $5, Fido will not automatically issue a refund for amounts under $10.
However, if roles were reversed, and you owed them $10 for example, this would result in them charging you $1.50 in late fee interest and never forgetting that you owed them.
Destination marketing fees in Niagara Falls
Covered by CBC Marketplace in 2016 (video), in 2017, and again in 2023, in Niagara Falls While hotels do show the added fees when a reservation is made, the Marketplace visits found some restaurants do not provide notice of the fees on menus or signs.
Ranging from 3% to 12%, the fees can go by any one of a number of names:
- Niagara Falls Destination Fee (NFDF)
- Destination Marketing Fee (DMF)
- Tourism Improvement Fee (TIF)
- Attractions and Promotions Fee (APF)
- Destination Productivity Fee (DPF)
- Daily Mandatory Tax
- Luxury Fee (LF)
- Attractions and Promotions Fee (APF)
| Year | Business | Cost |
|---|---|---|
| 2015 | Embassy Suites by Hilton Hotel | 3.80% |
| 2015 | East Side Mario’s | 3.80% |
| 2015 | IHOP | 3.80% |
| 2015 | Four Points by Sheraton Hotel | 3.80% |
| 2016 | Four Points by Sheraton Hotel | 5.00% |
| 2016 | Embassy Suites by Hilton Hotel | 10.00% |
| 2016 | East Side Mario’s | 8.00% |
| 2016 | IHOP | 5.00% |
| 2017 | Four Points by Sheraton Hotel | 10.00% |
| 2017 | IHOP | 6.00% |
| 2023 | Milestones | 6.00% |
| 2023 | Skylon Tower | 3.00% |
| 2023 | Radisson Hotel & Suites | 4.00% |
| 2023 | IHOP | 10.00% |
According to the Ontario Consumer Protection Act and federal Competition Act, businesses are allowed to add discretionary service fees and the amount must be made known to the customer in advance and not shown as a “tax”.
In a 2008 proposal, Muskoka estimated these fees to generate the following revenues:
Where do the funds go?
In Niagara Falls, “it’s going to the owner” of the business, according to the President and CEO of Niagara Falls Tourism. It’s up to businesses to decide how they want to spend the cash collected, according to a previous chair. They are solely another revenue stream for the businesses that collect them.
The Destination Marketing Organization (DMO) is not responsible for establishing pricing, or processing or collecting any service fees.
There’s no independent body overseeing the funds and ensuring that the money goes back into promoting the city. There is no paper trail at the tourism board, municipal or provincial level.
Where do businesses say the funds go?
When asked about the fee, staff members and business spokespeople point out that they’ve contributed millions to the convention centre, fireworks displays, festivals, and events. They say that it’s mandatory because they participate so much in improving tourism in Niagara Falls.
However, the city’s legendary fireworks are paid for by a separate fund, which receives money from the Municipal Accommodation Tax, a separate, mandatory fee on hotel rooms collected by the municipality and used to promote the region.
Are Destination Marketing Fees mandatory?
While the initial stated intent was that the fee would be voluntary in Niagara Falls, some businesses are now saying it’s mandatory, including the Wyndham Garden Hotel. Skylon Tower says it could be removed if requested, pointing out that it pays for renovations and landscaping. Some businesses remove the charge for residents of Niagara Falls residents, but not visitors.
Municipal Accommodation Tax (MAT) replaces the Destination Marketing Fee (DMF)
The Ontario government has allowed Destination Marketing Programs (DMP) in tourist communities since 2004 after Regional Tourism Organizations (RTOs) and tourism destinations indicated they were considering establishing supplementary fees to generate additional funds for tourism development and marketing.
Historically, hotels participated voluntarily in these programs, remitting fees (a flat rate per room nights sold or a percentage of room revenues, typically up to 3%) to their accommodation industry association who then transferred funds to a local or regional non-profit destination marketing organization for marketing activities promoting their city or region as a whole.
As of August 2022, over 20 large and mid-sized municipalities in Ontario have implemented a mandatory, municipal government-imposed MAT charge on accommodations at hotels, motels, bed and breakfasts and Airbnbs that are shorter than 30 days. The fee can be up to 4% of the cost of the room(s) per night, the maximum allowed in Ontario’s Provincial Transient Accommodation Tax regulation, which was passed in 2017.
Niagara Falls collects a flat fee of $2 per room per night, the only fee actually collected by the city. Guelph, Kingston, Mississauga, Markham, Gravenhurst, Ottawa and others charge the maximum of 4%. Toronto charges 6%, the maximum under the City of Toronto Act.
In Ottawa, the 2018 4% Municipal Accommodation Tax replaced the hotel industry’s voluntary Destination Marketing Fee (DMF) program which charged 3%. Under the previous program, Ottawa Tourism only promoted hotels that collected the voluntary fee.
These fees are typically given to the local tourism board or Chamber of Commerce which act as the not-for-profit Destination Marketing Organization (DMO) to fund promoting the municipality as a tourism destination and attracting more leisure, event, sport, conference, and business visitors.
What are the effects of junk fees?
Junk fees obscure the full price of a product or service and make it harder for consumers to accurately comparison shop. While these fees may seem small and insignificant to many consumers, some disproportionally impact low-income Canadians.
They also risk harming small and medium sized businesses as added fees are passed on and and snowball from supplier, to manufacturer, to wholesaler to consumer – adding up to billions of dollars of market inefficiencies (and profits for some businesses) across the Canadian economy.
In the US, the Biden administration estimates junk fees cost Americans $24 billion annually.
Consumers pay more for goods and services
Studies show that it systematically makes consumers pay more for goods and services than they would under a more transparent pricing system – to the benefit of the seller.
A study conducted by StubHub found that consumers who were subject to drip pricing on its website spent 19.52% more than consumers who were shown the full price upfront. An experiment by Huck and Wallace (2015) found that drip pricing reduced consumer surplus by 22%.
These are large harms to individual consumers, but also in the aggregate add up to very large monetary harm.
Reduced market competition
It undermines market competition by making it seems like their product or service is cheaper than the competition, making it difficult for businesses with more transparent pricing to compete on a level playing field by restricting competitive forces to the base price only, with minimal competition influence on additional charges.
Competition is hindered when consumers cannot get the information necessary to make informed choices.
When is a junk fee illegal?
Junk fees may be illegal if products and services are advertised in a way that is defined as false or misleading under the federal federal Competition Act. This includes the following marketing practices:
Drip pricing involves offering a product at a price that is unattainable because consumers must also pay additional charges or fees to buy the product.
Double ticketing occurs when a business puts two prices on a product and charges the customer the higher of the two. To qualify as double ticketing, the two prices must be on the product, accompanying the product, or on an in-store or other point of purchase display or advertisement – ads outside of stores or point of purchase such as newspaper ads do not count.
Under provincial Consumer Protection Acts (Ontario), businesses cannot misrepresent fees as taxes, and any misrepresentation about the purpose of a fee may be considered a violation. If convicted, fines can be up to $250,000.
Penalties
For individuals, the penalty for first-time violations is up to the greater of:
- $750,000 ($1 million for each subsequent violation); and
- three times the value of the benefit derived from the deceptive conduct, if that amount can be reasonably determined.
For corporations, the penalty for a first-time violation is up to the greater of:
- $10 million ($15 million for each subsequent violation); and
- three times the value of the benefit derived from the deceptive conduct, or, if that amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenue.
US taking action to reduce junk fees
In the US, the Biden administration is taking a “whole of government” approach to crack down on junk fees and promote competition, establishing the White House Competition Council and proposing new legislation in the Junk Fee Prevention Act to save Americans the billions of dollars they pay in hidden fees annually.
Airline Customer Service Dashboard
Fixing junk fees can be as simple as calling out and highlighting current practices by major players in an industry.
In the US, airlines had been imposing a fee to seat families together. The Department of Transportation (DOT) published a dashboard of airline policies on family seating, cancellations and delays and several major airlines have now already changed their policies to guarantee adjacent seats for child 13 or under and an accompanying adult at no additional cost for all fare types subject to limited conditions.
DOT previously published a dashboard on when flights are delayed or cancelled due to issues under the airlines’ control, resulting in up to ten airlines adopting more generous reimbursement policies.
Regulatory timeline
October 2023 – FTC proposed rules requiring businesses to:
- Include all mandatory fees when telling consumers a price
- Disclose upfront the amount of the fee, its nature or purpose, and whether or not they are refundable
March 2023 – White House officials and the Consumer Financial Protection Bureau are urging states to expand their efforts in dealing with surprise fees, publishing a Guide for States: Cracking Down on Junk Fees to Lower Costs for Consumers.
February 2023 – The Consumer Financial Protection Bureau (CFPB) announced a proposed rule to cut most credit card late fees to no more than $8, which would save consumers an estimated $9 billion a year.
November 2022 – The Federal Communications Commission (FCC) finalized a rule to require cable and internet providers to list fees and services up front with an easy-to-read consumer friendly label.
September 2022 – The Department of Transportation (DOT) proposed a rule to require airlines and online booking services to show the full price of a plane ticket up front, including baggage and other fees.
December 2021 – The Consumer Financial Protection Bureau (CFPB) released reports on the banking industry’s excessive and unfair reliance on banking junk fees. Since then, fifteen of the twenty largest banks have ended fees for bounced checks, and today they issued a new Supervisory Highlights finding that banks the CFPB has examined thus far will refund roughly $30 million to about 170,000 account holders who were assessed surprise overdraft fees.
How you can take action against junk fees
How (and why) to report deceptive junk fees
Junk fees are easier than ever to implement in the digital economy. Ecommerce alone is a huge ecosystem – there are over 98,000 Shopify stores in Canada and adding features such as dynamic pricing, late fees and additional line items to your store are only a click away.
Over $12 billion was spent on online advertising in Canada in 2021 and online ad platforms Facebook, Google and Amazon are not in the business of verifying advertiser claims – they’re in the business of selling ads – and the legal liability rests on the advertiser, anyway.
The Competition Bureau has had some success in applying penalties for practices such as drip pricing and misleading pricing, but with only 242 employees – they are limited in their ability to monitor the economy at scale and instead rely on complaint reports from consumers to identify instances:
“information brought to our attention by consumers, businesses and other market participants is very important as it contributes to the identification and analysis of potentially anti-competitive practices in the marketplace.”
This is where you come in. You can help combat junk fees practices by:
- Voting with your wallet by walking away from a purchase when you see junk fees and shop elsewhere
- Reporting it to the Competition Bureau in their online complaint form or by calling 1-800-348-5358
- Sending us a tip about it as well so we can add it as an example on this page to warn others
I encourage all Canadians to report pricing techniques that they suspect or feel are deceptive – even after you’ve made a purchase – because if you were a victim of it, you likely aren’t the only one.
Ask what the fee is for
If a fee feels hidden, unfair or undocumented, ask them what the fee is for.
If they cannot give you a clear, straightforward and specific reason why a line item is there, it’s probably a junk fee.
Send us your junk fee story
Whether you’re a consumer that’s tired of being ripped off or a small business owner that’s been undercut by a big competitor using dishonest pricing tactics, you can help.
We want to build a public database of junk fee examples to help consumers like you avoid them, help regulators find them and pressure businesses to get rid of them.
If you were charged a fee that you thought was:
- covered by the baseline price of a product or service
- unexpected and unexplained
- too high for the purported service
- unclear why you were charged
I want to hear about your experience! You can send us photos, screenshots and stories by clicking the button below.
Sources
Over to you
We’re interested to know – where have you run into junk fees? Let me know by leaving a comment below!
