Hi,
If a business gives a customer a price and later discovers that the job will cost more than expected, when can the business increase the price? What about change orders, cancellation fees, service charges, “starting at” pricing, dynamic pricing, or fees added later in checkout? When does this become geneivat da’at or breaking an agreement?
The first question is always: what did the parties agree to?
If there is a written or verbal agreement fixing the price and the scope of the work, that agreement controls. A business cannot simply discover afterward that it underestimated the job and unilaterally charge the customer more. On the other hand, if the customer changes the work, asks for additional services, or circumstances arise that the original agreement specifically provided would result in a change order or additional charge, then the price can change accordingly.
If there was no clear agreement, then we look to the normal practice in that business and location. For example, whether a “quote,” an “estimate,” or “starting at $500” represents a fixed price or merely an approximation can depend upon what those terms normally mean in that industry.
There is also a difference between a price quotation that was never accepted and an actual agreement. Before the parties have agreed to a transaction, ordinarily either side can decide not to proceed. But once they clearly agreed, even verbally, the Shulchan Aruch, Choshen Mishpat 204:7, says that a person should stand by his word, and one who backs out can be considered מחוסר אמנה even where there was not yet a formal kinyan.
Hidden charges are a different issue. If a business tells someone that something costs $1,000, gets him committed to the transaction, and then at the end suddenly adds a $700 “fuel surcharge” that was never disclosed or reasonably understood, that is simply dishonest. Shulchan Aruch, Choshen Mishpat 228:6, prohibits misleading people in commercial transactions, אסור לרמות בני אדם במקח וממכר או לגנוב דעתם.
Service charges, cancellation fees, dynamic pricing, and similar charges are not inherently problematic. They simply have to be part of the agreement or disclosed in a manner consistent with normal business practice before the customer commits himself. “Starting at” pricing is also perfectly legitimate if it honestly means that the final price depends upon specified circumstances. It becomes misleading when the advertised price is not realistically available and is merely being used to get the customer in the door before revealing the real price.
As for cancellation, if there is an agreed cancellation policy, that controls. If there is none, look to local law and normal business practice. If neither exists and the parties have not yet entered into a binding transaction, ordinarily either the buyer or seller can decide not to proceed. But once there has been a clear commitment, there can still be an obligation to honor one’s word even if a formal kinyan has not yet taken place.
So most of these questions are not answered by creating a special halachah for every modern fee. First determine what was agreed to. If that is unclear, look to accepted business practice. And whatever pricing system is used, it has to be presented honestly rather than designed to mislead the customer.
Thank you Rabbi for the detailed answer.