Coming to a receipt near you: The COVID-19 surcharge
Hit by shutdowns and extra costs, some businesses are adding a new charge. It’s legal — but are Ontarians prepared to reach deeper into their pockets?
As some businesses in Ontario start to reopen as part of Stage 3, customers may notice an unfamiliar line on their bill. Often called a “COVID fee” or “COVID surcharge,” it’s meant to cover the additional costs businesses have to shoulder as a result of the pandemic.
“Essentially, what a COVID-related surcharge would include would be strictly related to COVID,” says Julie Kwiecinski, the director of provincial affairs for Ontario for the Canadian Federation of Independent Business, a non-profit with around 110,000 members. “So it could be hand sanitizer, masks, Plexiglas shields — maybe even extra employee time for cleaning because sanitation levels have escalated, of course, due to COVID-19. But, essentially, this decision is entirely up to each individual business owner.”
Kwiecinski adds that many businesses that have suffered financially after remaining closed for months rely on this surcharge to be able to continue to operate.
A survey by the CFIB found that, for small businesses in Ontario, the average additional debt that can be attributed solely to COVID-19 is $152,000; the national average is $135,000. “These COVID-related costs are coming down at a time when businesses can least afford them,” Kwiecinski says. “And, given the climate that we’re now in, small businesses are really struggling, some of which are not even open yet.”
Kwiecinski says that businesses are legally able to introduce COVID-19 surcharges and that they can do so either by adding the fee at point of sale and visibly identifying it on receipts or by increasing their prices overall as a result of the additional business cost.
Businesses that have introduced such surcharges include salons, dentists, and restaurants that offer patio dine-ins. When Katherine Oliveira took her dog to a groomer in Mississauga, she was charged a $10 COVID-19 fee for her dog’s haircut. “I can't imagine all the extra sanitization and PPE were cheap, not to mention they can't operate at full capacity right now,” the webcast producer says. “So I imagine that puts a strain on the business.”
Annie Lam, who offers microblading and lash extensions in Toronto, says she understands why some businesses need to charge the extra fee. “People need to realize how expensive PPE item prices have jumped up,” she says, adding that she’s always used disposable masks as part of her work and has noticed that the price per box has jumped from $7.99 to $35. Businesses are not just trying to “gouge” people, she says. She plans to reopen as part of Stage 3, but doesn’t intend to introduce a surcharge, as she still has PPE that was purchased pre-pandemic.
Some businesses, such as Jon Roth’s Crows Nest Barbershop, in Toronto, have chosen to charge customers a small price for masks if they fail to bring their own. “Coming out of this, I don’t want to impose a ton of extra fees on our customers,” says Roth, who has six barbershop locations in Canada.
He adds though, that, while the Crows Nest currently doesn’t charge customers a COVID-19 surcharge, he may consider doing so in the future: “We spend money on things now that we didn’t have to before. That’s something we have to take a closer look at.”
But the affordability of these additional charges may be of concern for some customers, especially those that have become unemployed because of the pandemic — according to Statistics Canada from February to April, there was an employment drop of 3 million.
“Jacking up prices is not the solution, because it just drives the cost of living up,” says Prashmit Yadav, a customer-care coordinator for a food-manufacturing brand in Toronto. “And I'm pretty sure people with jobs haven't got COVID bonuses with their salaries — my salary has remained the same pre- or post-COVID, hence there are bound to be questions about affordability."
Chartered Professional Accountants Canada is warning businesses to be careful with adding COVID surcharges. Joseph Truscott, an Ontario-based accountant, said in a release that businesses should exhaust all government relief options before charging customers the extra fee: “Businesses should focus on giving exceptional service to clients and not focus so much on the surcharge.”
During a daily press conference in June, Premier Doug Ford said that, when it comes to COVID-19 charges, consumers should “let the market dictate” the prices of services and goods: “If you’re going to a store, something’s a little bit higher but not being gouged, then shop around.”
David Soberman, a marketing professor at the University of Toronto, agrees. “Most of us live in communities where there are several alternatives” for services or goods, Soberman says. “It’s that competition that actually helps determine businesses’ competitive price level.”
Oliviera personally has no regrets about covering the $10 charge. “They were very transparent about it,” she says. “And I was more than happy to pay.”
This story was originally published on TVO.org.