COVID-19 Surcharges: Why These Fees Are So Controversial [2024]

COVID-19 has undeniably changed the face of our economy, and not just for the short term. While many people grapple with being furloughed or laid off from their jobs and struggle with how to manage money, businesses everywhere have also suffered the impact of the pandemic.

Many companies have been forced to reduce their hours and staff, as well as cope with the new regulations surrounding safer shopping methods, including more online orders, curbside pickups, and increased sanitization efforts. All of these things amount to a strange time for business owners, and, as you can imagine, a lot of stress on their finances.

To combat these struggles, some businesses have started charging their customers COVID-19 surcharges. In many cases, this seems to be something shoppers are aware of, and depending on the reasons behind them — even willing to pay. But what exactly are these surcharges, and are they even legal? We spoke with business owners and legal experts to find out.

Here’s everything you need to know about COVID-19 surcharges.

What are COVID-19 surcharges?

Over the past few months, most small businesses have faced expensive new safety regulations — such as mandatory closures, operating at partial capacity, and required sanitization efforts and PPE for employees. All of which has resulted in a lot of money going out the door and a lot less coming in.

To relieve some of this financial burden, businesses have started charging COVID-19 surcharges, as a means of sharing these expenses with their customers. Surcharges have been reported as raised prices, or even percentage-based line items on bills. And if you haven’t heard of these surcharges before, you’re not alone.

According to our recent COVID-19 surcharges survey, only 43% of Americans have heard of these costs. Although some people find them fair (depending on the business and what the charges are being used for,) others say the charges would be a deal-breaker and that they’d even go so far as to stop frequenting a business because of them. But before we play into any sort of controversy, let’s take a look at what these charges actually are and hear from business owners on why they’re necessary right now.

How much do COVID-19 surcharges cost?

There’s no set rule about how much surcharges cost, which means it’s up to the discretion of business owners to decide what seems fair and makes sense for their company. That being said, most surcharges we’ve heard of have been reasonable — as in, slightly increased prices or a small percentage of your bill. For instance, you might see an extra charge to cover the cost of additional PPE at the dentist or a 3% increase at the barbershop.

These charges seem to be relatively low and in-line with customer expectations. According to our recent survey, Americans would be willing to pay a 9.53% surcharge (on average) on their total check to help support local restaurants during the pandemic. Another thing to consider is that for some business owners, having this extra support is the difference between staying open and being forced to close.

“Though surcharges add onto your bills, it's usually to cover something important a business needs,” says Ethan Taub, CEO of Debtry. “This additional cost is saving businesses from shutting down, and helps to avoid new expenses that have occurred because of the pandemic.”

Although people might not be thrilled about paying more for services like hair appointments or other in-person consultations, it’s also important to consider the health risk business owners are taking in continuing to provide services during this time.

“I am a wine educator doing wine tasting events, and I charge a COVID surcharge which covers everything from the sanitation of glassware to pre-packaging of food to gloves,” says Tiffany Victoria Bradshaw of Boisset Collection. “The surcharge is new, but so far, people have been supportive. They understand that to get someone to come out in person during a pandemic is a big deal — we’re risking our lives.”

Are COVID-19 surcharges legal?

Although there can be no doubt that most business owners use surcharges as an honest way to make ends meet, we still had to ask: Are these surcharges actually legal? Turns out, they are.

“Any business, whether a restaurant, a dentist, or a nail salon, can lawfully decide to pass along the costs of protecting their customers by charging a fee,” says David Reisxcher, business attorney and CEO of LegalAdvice.com. “It’s easy to see how a business that spends money on masks, gloves, sanitizer wipes, or other precautionary measures would want to be compensated for the extra expense.”

And although charging the fee is legal, Reisxcher advocates for businesses to communicate these new charges well in advance in order to avoid any confusion or hard feelings from their customers.

“Customers should receive the disclosure before the services are rendered so that they can decide whether they are willing to pay the fee,” Reisxcher says. “Disclosure after the fact makes any choice moot and would be looked at by the courts as an adhesion contract given to a customer to pay the surcharge under duress.” Because state laws can vary on these details, Reisxcher suggests business owners familiarize themselves with their local legislation — and give customers plenty of fair warning to avoid any problems.

How to avoid COVID-19 surcharges

Despite the reasoning behind COVID-19 surcharges, you might still not be all that keen to pay these fees as they impact how to manage your money. After all, millions of Americans are struggling to pay bills right now, and it's understandable if you’re working to stick to a tight budget while things get back to normal.

If you want to avoid paying surcharges, the best thing to do is simply ask about them ahead of time. This might mean asking a restaurant host before placing an order, or calling up your nail salon to find out its protocol before making an appointment. It might also mean doing some research about a business online, and even talking to someone before you drive there to get a haircut or have your teeth cleaned.

Although this might make for some uncomfortable conversations, it’s still better than ending up with a surprise bill that you don’t want to pay. Do your research in advance and keep in mind — these surcharges are most likely temporary.

The bottom line

COVID surcharges might sound like a sneaky way to jack up a bill, but as we’ve heard from our small business owners, that’s simply not the case. For some, imposing these charges is the only way to keep their business afloat after months of closures and additional expenses. Thinking of these costs as a way to support local businesses may make it easier to pay them.

When it comes to COVID-19 surcharges, communication between businesses and their clients seems to be the key. “I think a lot of people don't understand where the extra money is going,” Taub says. “So making the public aware that things may be priced differently should be considered. That way, they’ll have time to decide from home whether they need that service now, and it will help them see that we're human too, and doing them a service despite the risks.”