Restaurant guests sour on Ziosk’s “touch it and you’re charged” payment systems

By | July 25th, 2016

On a recent visit to Pizzeria Uno with his family, Ed Lawrence discovered a mysterious $1.99 charge on his bill for something called Ziosk.

Ziosk is a seven-inch tabletop tablet installed throughout many casual dining restaurants, which allows customers to order food, pay a bill and even play games. Best of all, it’s “free” to use, according to the manufacturer.

Except when it isn’t.

“The Ziosk includes games enticing to children,” Lawrence explains. “The device apparently charges the fee at the tap of a finger, without warning.”

Lawrence and his family played trivia games on the tablet while they waited for their food to arrive, but he says there was no button to accept or decline charges. Then the surprise $1.99 fee appeared on his bill.

As a consumer advocate and a mom to young children, Lawrence’s case makes me sit up and take notice. Restaurant-goers are encouraged to use the tablet, which includes both “free” and paid content on the same screen. But it is designed with apps for kids — even cartoons. Tricking parents into paying for charges incurred by children, some of whom aren’t even old enough to read, seems pretty deceptive.

But it gets worse.

As it turns out, this is happening at restaurants every day, all over the country.

Not long after Lawrence shared his story, Amanda Glass wrote to us about how her bill was padded when her family used a Ziosk tablet at a Red Robin restaurant in Broken Arrow, Okla. When she visited the restaurant, the Ziosk tablets were brand new.

Here’s what she told us:

The hostess seated us and told us we could order drinks from the Ziosk or wait for our waiter, but didn’t tell us anything else about the Ziosk.

As my husband scanned the printed menu, I looked at the Ziosk. I got to the drink screen and decided it looked too complicated and I would just order with our waiter. That’s when I saw the games tab. I clicked and saw a baby video option as one of the first choices. I tapped it before I saw the $1.99 on it. There was no pop-up asking, “Are you sure you want to purchase this video for $1.99?” It was immediately purchased.

I had access to the video throughout the meal and it did distract my baby while we waited for our meal, but I probably would not have purchased it had I realized there was a charge.”

OK, so Glass thought the video was helpful. But the last thing she said — that she wouldn’t have purchased it had she known there was a fee — is a critical piece of establishing that a consumer practice is deceptive.

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When customers aren’t aware that doing something — in this case, clicking an app — will cost them money, it’s problematic, and the company is profiting off the deception.

And while you might think that consumers are just being careless when they use the device, consider this: Ziosk offers both “free apps” and “premium content” on the same screen, with no verification built in to warn or confirm that the fee is in fact understood and accepted.

TheZiosk
In the case of Lawrence and Glass, neither restaurant patron asked to have the dinner bill adjusted.

In Lawrence’s case, he had a $10 off coupon for his meal, so he rationalized that he was still ahead $8.

In Glass’s case, she chose not to complain because “it didn’t seem worth the trouble.”

The Ziosk company claims that its device speeds up the restaurant ordering and payment process, which benefits both the restaurant and customers. But the $1.99 fee for unlimited premium content, which is being charged to the customer without their consent, is high enough to generate profit, but low enough that customers don’t feel like arguing with management to have the bill adjusted.

After all, if the customer is able to pay at the table without calling a server over to bring the bill, return to collect payment, take the customer’s card to a pay station and come back, the customer would have to make the judgment call as to whether two dollars is worth the time to summon a manager, listen to an explanation of the charge, make their case, and wait for an adjustment.

In other words, this is all by design.

Curious to understand who profits from the charges to customers, I came across a 2013 interview with Ziosk’s Chief Strategy and Product Officer, John Regal. In the interview, Regal explains how money is made off the tablets:

REGAL: “We have a very unique business model with what we do with the restaurants. What happens is, we literally are able to give the restaurants the Ziosk for free, and actually we write them a check every month. So they don’t actually have to buy the 30 or 40 million dollars of hardware at all.”


INTERVIEWER: “Ok. Explain. What’s the model?”

REGAL: “Yeah, how do we give away money. The way it works is we put the Ziosks on every single table in the restaurant. And the restaurants get all this benefit from people ordering food and drink and all of that. The only thing that the guest pays that’s incremental is if the guests want to play the games that’s on the Ziosk. Right on the Ziosk, we have a bunch of the top Android games. And if you want to access the entertainment or watch some videos or some cartoons, it’s $1.99, unlimited for the entire time you’re at the table. And that revenue literally pays the lease payment on the equipment, and that’s what makes the Ziosk free.”

INTERVIEWER: “So it’s free to the establishment to put in because someone like me, I have a four-year-old, he’s gonna go on there, watch a cartoon, play a game, a 20-year-old is gonna go there, will play some other type of game, and that’s kind of the revenue generator on the back end?”

REGAL: “Yeah. So to be a little more specific, the restaurant agrees to pay us a monthly service fee, let’s just say it’s $1,000, the fee varies by the restaurant. They’re going to get the first $1,000, or whatever the amount they’re paying us is, out of the premium content sales. And we have a track record that sort of shows that they’re going to get more than enough to cover their monthly fee, and then we share whatever incremental revenue above that 50/50.”

So, to recap: Ziosk installs millions of dollars worth of hardware in restaurants, provides the software and servicing for “free,” and both Ziosk and restaurants split the profits uniquely generated by the device, which are sales of premium apps. It benefits everyone. Except for you.

I contacted Ziosk to ask whether Regal’s description of the business model is still accurate, and the answer was a resounding “yes.”

I also sent Ziosk Lawrence’s case, for which it apologized. Ziosk insists his case is the exception, and that “more often than not, parents praise the experience.” Ziosk tells us if customers don’t want to be charged, all they have to do is ask restaurant management to adjust the bill.

Mike Leon says it’s not that easy. He was recently at a Chili’s in Long Beach, Calif., where he said his 7-year-old granddaughter clicked an app while the adults were not paying attention. He found the charge on his bill and disputed it with the manager, who refused to remove it.

In fact, as he explained, “The manager said [the Ziosk] was the cause of many complaints, but wouldn’t take the charge off the bill.”

I have a problem with companies making money off kids in an underhanded way.

Regal perhaps doesn’t. In the summer of 2012, Regal gave a presentation called “App Discovery by Kids in Brick & Mortar Establishments” at a gaming professionals conference in Seattle about the challenges to getting games in front of kids. And according to this article, Regal explained that kids don’t pay the bills, parents do. And the article says that “reaching [parents] in a way that cuts the amount of work they have to do to purchase your game is, in Regal’s opinion, crucial. If they have to go through a bunch of hoops, chances are you’ll suffer from it.”

So, interestingly, if the game is too tough to purchase, it cuts into your bottom line. Can a game be too easy to purchase?

Joe McIlwain thinks so. The $1.99 charge appeared on his bill at Friendly’s Restaurant in Framingham, Mass., where he dined with a friend and her three-year-old daughter.

“I assumed that any sort of fee-generating activity would be child-resistant, requiring an adult action, like swiping a credit card,” McIlwain wrote. “However when the bill came, there was a fee for a game. Since the child really hadn’t handled the device long enough to actually play a game, we asked the server if the charge could be removed, and the restaurant adjusted the bill. Lesson learned.”

Who has learned a lesson, though? Ziosk, apparently, has not. Plaintiff Brenda Quijada filed a class action lawsuit in a California court against the company and Chili’s parent company last year on behalf of parents and guardians who were charged for games targeting their children. The parties entered into a confidentiality agreement, and then early this year, the plaintiff filed a voluntary dismissal of her case. The case did not proceed on behalf of the class. Counsel for plaintiff did not respond to our request for comment.

Ziosk is doing something unethical and immoral — bringing in money not just by deceiving us, but our kids. It may have been able to hold off Quijada in court by paying her hush money, but its business model is wrong and unsustainable. It needs to make money like the rest of us do — by earning it.

Should Ziosk change their apps so customers must confirm they agree to the fee?

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