In the United States, clip joints were widespread during the national prohibition of alcohol from 1920 to 1933. They are generally outlawed in America now. For instance, the New York State Liquor Authority will impose penalties against any licensed premise permitting such conduct.
These clubs' scam is simple: a customer is shown in and offered a drink or the company of another hostess at their table. If they accept either offer, they will be presented with an outrageously high bill - often for several hundred pounds - for the drink, service charges, or hostess's company. As with any bar bill, immediate payment is demanded on pain of criminal charges (or, occasionally, physical violence).
This scam is in a legal grey area if extortion is not involved, since there is no law against charging high prices and customers are considered to be responsible for determining the price of what they consume before they purchase it.
Often, a clip joint employee will wait near a legitimate club, and invite passing pedestrians in; the potential customers are meant to believe that the person works for the nearby legitimate club. Typically, clip joints have a ticket counter on the ground level and a bar below; the customer may pay the admission fee and proceed down to the underground bar. Drinks are usually watered down and overpriced, with no prices listed on the menu. An unrequested companion(s) arrive at the table. In many cases, the visitor does not know he/she is being cheated until presented with an inflated bill. If the bill is not paid, the visitor may be accused of theft of services, while if the bill is paid, the visitor may be defrauded.
The clip joint has evolved over time into a sophisticated scam that targets a materialistic crowd eager to use their credit cards. The new take on the old scam is to offer a "VIP experience" in exchange for liquor at inflated prices; often a $50 bottle of liquor is marked up to $300 and more. The customer is led to believe the experience will include great service, the chance to see celebrities, or meet attractive singles. Instead, the victim receives minimal service, as the server only appears twice: once to drop off the bottle and mixers, as customers are expected to mix their own drinks and once to present the bill. The scam includes hiring shills to pose as club goers. Attractive women, hired as "floor managers", start up conversations with customers unaware of the arrangement. Word of mouth advertising is spread by "party promoters", who talk up the club or invite people to the club in a way that disguises the commercial pitch as a normal conversation.
While the markup on liquor is legitimate, these clubs exploit several loopholes in order to pad the bill. Several extra mixers not ordered may be added to the final bill. An automatic twenty percent gratuity may be added, even when the customers may not have received it. In extreme cases, a "minimum table charge" of 3-4 bottles is imposed.
The Manhattan bottle service club, Arena, was sued in 2007 for their version of the clip joint scam. In December 2007, a patron knowingly purchased a $350 bottle of vodka, but was not told of a 3 bottle minimum. At the end of the night, he was presented with a $1050 tab that included two unordered bottles. When he refused to pay, the Arena bouncers beat him up. The patron agreed to get money from an ATM. The bouncers escorted him two blocks to the ATM, where his debit card was declined. The bouncers then dragged him back to the bar, where he was held until police arrived. He was arrested for theft of services but the charges were dismissed.