Travel app Hopper automatically adds tip to checkout, but where does the money go?

Monday, April 17, 2023

Hopper app automatically adds tip to checkout. Who gets the money?

Canada-based travel app Hopper auto-adds a tip to checkout. But in forcing customers to opt-out, and the money going to the company, is that fair?

SAN FRANCISCO (KGO) -- Tipping when sitting down at a restaurant has long been the thing to do. The rise of coffee houses and food trucks brought tip jars to just about every business taking counter orders. Now, video screens are in on the act, asking us to tip even before the product is handed over or service rendered. Online, we are asked to tip, too.

With so many asking for tips, it is only right for us to ask where does the tip money go. I asked those who tip, "Who do you think gets the money?"

"The staff." "It should be the server." "Let's just say (at) a spa, I certainly want my masseuse to get the money. I would not want the organization to get it."

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Everyone I spoke with agreed the tips should go to those employees directly involved with providing the service.

Experts agree, too.

"By federal law, the employee should get the tip," says senior Bankrate.com analyst, Ted Rossman. "By law the business owner is not allowed to take any of that."

What do the laws say about tipping in California? Steven Wegner is with the California Labor Commissioner's Office. I asked him if the business is allowed to take a cut.

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"Absolutely not," says Wegner. "Gratuity belongs to the workers, and only the workers. It cannot go to an owner at all."

That brings us to the Hopper app, a popular online travel sales site headquartered in Canada.

Watch in the video above as I look for hotel rooms. See what happens when I go through the process. A tip appears. It is automatically there. If you do not want to pay the added amount, you must toggle "off" the tip button.

"To see this is really shocking. I mean, this is basically a surcharge masquerading as a tip," says Jamie Court. He heads up Consumer Watchdog.

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"It's really a very deceptive use of the visual technology, actually, because when you click through to the next screen and see the total, it's not even obvious how you got there and people, we know, are not likely going to give 10% tip to a company on top of a big travel bill for a hotel or an airline," he says.

I reached out to Hopper and asked who got the money. I received an email that said: "This tip goes to Hopper and is completely optional. Customers have the ability to opt-in or out."

Is that legal in California?

I asked Steven Wegner from the California Labor Commissioner's office.

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"That's something I'm probably not qualified to answer. Because when you get into the online, you get into the problem (of) whose law controls? Are we talking about federal law? Are we talking about California law? Are we talking about the law in the country where the website might be based? I don't know," he says.

Jamie Court told 7 On Your Side: "This is a complete violation of the spirit, and probably the letter of California law that requires tips to go to workers and employers, and if it's not going to the workers and employers, they shouldn't call it a tip. They should call it a corporate surcharge, which is exactly what it is. But then, again, no one would pay for a corporate surcharge. Would they?"

I asked Hopper for an on-camera interview so I could understand why the company should get a tip. Hopper declined.

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Consumer Watchdog's Jamie Court offers this advice if you are doing business with Hopper: "If you don't watch this bunny carefully, you're going to lose a lot of money. So you have to really watch what they're doing with this hop tip and make sure you uncheck all the boxes. Read the fine print."

If you want to know more about tips, tipping and the California regulations, this website offers great information.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

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