How Hidden Fees Cost Americans Billions | CNBC Marathon

CNBC Marathon explores how tipping, ‘junk’ fees and the hidden price of free shipping are costing Americans billions.

Tipping in the United States is on the rise and experts are calling it tipflation. The pressure to tip well in front of the tip receiver, before a service is completed, or in front of other customers makes a difference for many. After customers swipe their credit card, they’re typically prompted with three large tipping options on a screen. With Americans being pressured to tip higher percentages and for more services, the question is, where is the tipping point?

Americans are collectively spending nearly $65 billion on sneaky fees, according to the White House. “It really seems like companies have become addicted to junk fees,” Lina Khan, chair of the Federal Trade Commission, told CNBC. Junk fees are making companies billions of dollars richer. “I think part of the reason that a lot of companies are doing this is that investors and shareholders really like it. It’s another way to pull in more revenue without really competing,” Rohit Chopra, director of the Consumer Financial Protection Bureau, told CNBC.

FedEx, UPS and Amazon make deliveries on behalf of retailers advertising “free” shipping. But, none of those packages are being shipped for free. The cost of shipping is becoming ever-increasing. Companies like Amazon, Walmart, Target and even Etsy benefit from economies of scale because they generate mass online sales. This puts them at an advantage to achieve bulk discount rates from carriers. Watch the video above to learn why free shipping is a myth, what it really costs companies to send parcels around the country and how it impacts consumer sentiment.

Chapters:
00:00 — Introduction
00:32 — Why Tipping Is So Out Of Control In The U.S. (Published March 2023)
12:46 — How ‘Junk’ Fees Secretly Invaded The U.S. Economy (And How Pres. Biden Wants To Stop Them) (Published April 2023)
25:31 — The Hidden Cost Of Free Shipping (Published March 2022)

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How Hidden Fees Cost Americans Billions | CNBC Marathon