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The Almighty Buck Businesses

Stealth Inflation 796

Posted by michael
from the fraud-by-any-other-name dept.
prostoalex writes "The New York Times on the Web explores the topic of incorrect bills and numerous surcharges with names like 'assessment', 'handling', 'restocking', etc. David Pogue quotes Business Week magazine, where it says that such small charges $100 million annually for hotels, $2 billion for banks and $11 billion for credit-card companies. Users of landline phones, cell phones, checking accounts and credit cards are starting to suspect that such huge revenue might imply the mistakes are made on purpose. Is it just another conspiracy theory, or are we becoming victims to the stealth inflation?"
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Stealth Inflation

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  • by garcia (6573) * on Thursday December 04, 2003 @02:17PM (#7630617) Homepage
    How about physicians? I had a couple appointments with my family doctor to regulate my blood pressure... At one of the earlier appointments she took an EKG. Being 24 and never having one before I wanted it explained to me. She spent 2 or 3 minutes (and I am being loose here with the timeframe, it was only as long as it took me to put on my jacket and hat) explaining the peaks and what she thought they meant.

    Out the door I went into the world to get a new prescription filled and pay my co-pay...

    A few weeks pass and the bill from the doctor's office comes showing what the insurance company paid, etc, and that I owed $5. No biggy, pretty typical. I did see that she charged my insurance company $103 for an "EKG Consultation Fee". Call me insane but there is absolutely no way she had the right to charge $103 for a 2 minute deal.

    I went in the next time and not so calmly explained to her that she will not do that again without a) telling me what she is going to later charge, b) lying about what she was really doing, and c) being a cheat.

    We wonder why insurance costs so much... It's because of hidden fees and bullshit that the medical industry decides to make a quick buck on.

    That doctor made as much in 2 minutes as I do in 6 hours at work... She will NOT fleece me again like that... To those of you that say, "who cares, your insurance covered it." I say that my insurance co-pays just went up and they probably won't stop there. I am not going to stand idly by and watch this shit go down and you shouldn't either.

    How about my bank? TCF here in Minnesota. I *pay* for their advanced online banking service (it's just like any other free service I have had before but it shows all the transactions immediately unlike their free version which just shows a balance). I started noticing that I was being charged for using out of network ATMs when I wasn't using them. I had four $6 charges in a six week period. I had to call them each time and get them removed. It wasn't an issue to get it removed it was the unsettling feeling that other people out there that don't have the advanced online banking are getting ripped off, a lot.

    Sad state of affairs these days...

    Just my worthless .02,
    • by Frymaster (171343) on Thursday December 04, 2003 @02:22PM (#7630679) Homepage Journal
      fight fire with fire.

      if you think you're getting shafted by a company with "mystery" fees, just cook up an invoice for "services rendered: $11.52" and ship it off to their accounts payable department.

      most of the people in accts. payable have a policy that any invoice that's less than a certain amount (twenty bucks or whatever) will just get paid. it's a great way to recoup your costs.

      • by sdmartin101 (601186) on Thursday December 04, 2003 @02:25PM (#7630721)
        Wouldn't that be mail fraud?
        • by niko9 (315647) * on Thursday December 04, 2003 @02:35PM (#7630850)
          What if you registered for a buisness license and called it, I don't know, RBE Consultants. (Randon Billing Error) This way you could bill for your time spent fixing their error. You could also start the converstation with the rep as " Hi, this call maybe monitored or recorded for quality assurance...." and you could save the call to mp3 on your computer witha Radio Shack 2.99 phone suction cup microphone.

          Then just send them a bill as a consultant, something like $11.52.

          Sounds like a good little side buisness to me.

          --
          • by micq (266015)
            You could get away with this. There were guys in my old neighborhood that mowed lawns, then later billed the customer, even though no one asked for their lawn to be mowed... so it was kinda like shareware mowing... anyways, those who didn't want to pay, didn't, and the guys didn't mow their lawn anymore. Point being, they weren't doing anything illegal, they were providing a service and billing for it, if the customer didn't pay, they didn't have a foot to stand on, but that was ok.

            You provided a service
        • by Ralph Wiggam (22354) * on Thursday December 04, 2003 @02:38PM (#7630889) Homepage
          Yes, the parent poster made a typo. It should be "Fight fire with a federal crime".

          Don't get yourself in trouble trying to "get back at the Man." I hate the Man as much as anyone, but there are smart ways and dumb ways to fight.

          -B
        • by Lumpy (12016) on Thursday December 04, 2003 @03:18PM (#7631394) Homepage
          no it is not.

          send them a bill.... Check writing fee : $9.95

          you are doing business with them, you have a business relationship with them and it's perfectly legal.

          I have done that for the past 2 years with the local Telephone company cince they atsrtedto charge $5.00 a month for making electronic payments.

          They refused to pay it for the first 3 months until I sent a letter that I was going to send them to collections. I got a telephone call from their finance department asking what was up and I told them it was a fee they are being charged for me to write them a check every month. They asked how could they avoid the fee and I said, accept my electronic payment without a surcharge.

          They keep paying it, and I even recently started sending a note on the bill "remove this check writing fee by accepting no-charge electronic payments!"

          works great, is 100% legal (if they want to stop getting billed they can stop the business relationship with me.) and my lawyer thought I was very innovative and also told me that I am within my right to do what I am doing.

          YMMV, but doing this is not automatically illegal as the misinformed here say.
        • I actually do this. I usually write it up as bookkeeping charges. They waste my time figuring out what the charges are for, so I charge them my usual hourly. I feel it is valid to charge them for my time when it is their bookkeeping "error".

          Telephone and cable companies never pay them, but it makes me feel better anyway ;)
    • by gbjbaanb (229885) on Thursday December 04, 2003 @02:23PM (#7630696)
      no, makes a lot of sense. For those places where you pay indirectly (ie through insurance), you must remember that you still pay. The insurance companies are never going to lose money by paying out outrageous fees without fleecing their customers in turn.

      Trouble is, everyone thinks that its free as they don't have to pay any of it, and so the fees are increased and increased, and the premiums go up and up.

      The other thing to watch out for is compensation paytments for everything. (you should have sued your doctor for .. something, a lawyer could give you a list :), and that would be ok, as her insurance would pay for it......

      its those that cause inflation, not a 0.02 here and there.
    • by milgr (726027)
      Charging for minimal consultations is nothing new for doctors. Over 20 years ago, my father was in the hospital for a heart attack. The insurance was charged for an initial consultation by a doctor who openned the door, peeked in, and closed the door.

      When he was in the hospital for subsequent heart attacks, any time a doctor would peer into the room, he would check if he was being charged, and if so, he would make sure that the doctor answered some questions.

      I must be in the wrong profession to make m

      • by Davak (526912) on Thursday December 04, 2003 @02:53PM (#7631098) Homepage
        No physician should bill for a patient that they have not physically examined.

        However, most of a consultant's time is reviewing the charts, labs, and radiographs. Only very seldom does talking to or examining the patient change a consultant's recommendations.

        Doctors can't easily bill for follow-up consultations anymore anyway. So after the initial consultation, the doctor probably isn't getting paid anymore anyway.

        Those "peek-in's" are usually just make sure the patient is improving and that the consultant doesn't need to re-evaluate the patient.

        No doubt some doctors abuse the system and consult each other on every case. They should be in jail, not in medicine.

        Usually, however, consultants see the patients much more frequently than they charge.

        Davak
    • by BWJones (18351) on Thursday December 04, 2003 @02:37PM (#7630880) Homepage Journal
      Call me insane but there is absolutely no way she had the right to charge $103 for a 2 minute deal.

      You have to consider a couple of things here. The "two minute deal" was the time she spent with you. I suspect more time was spent actually "reading" the results of the EKG. Also, you need to realize that many times insurance companies will only reimburse physicians a portion of the total bill and its stuff like this that prevents many (including me) from wanting to practice medicine. I do research instead. Lemme give you an example: For instance, when my mother had her medical practice, there were certain procedures that ended up costing her money. An example is the cost to her of delivering babies. We sat down to run the numbers and found out that based upon her insurance rates, and the reimbursement from the insurance companies, each child she delivered was costing her $250. Furthermore, because physicians can be sued for delivery issues until a child reaches 21 years of age, she still has to maintain an insurance trailer until the last child she delivered reaches 21. Unbelieveable.

      It is not the medical system that is out of control, it is the insurance companies and the managed care systems that foisted a con on the American public by saying managed care can do medicine for less. Instead of lowering costs, managed care has created an entirely new middle level of management that simply soaks up more money than ever before. Do a little experiment here. Go to your local HMO and look in the parking lot. The Porsches and BMWs you see do not belong to the physicians as much as they do the management staff of the hospital.

      • The main point, I believe, was that gaming the system "back atcha" to get yours out of a system that is broken is bogus. If she's not able to recoup her costs with legitimate fees, all "working around" does is keep the system going. So that the insurance company thinks they're doing the right thing, instead of having a bunch of customers being billed for reasonable interpretation time and revolting against them.

        More simply put, two wrongs don't make it right.

      • Yes, you are absolutely correct, and this is why some doctors will, if asked, allow you to pay directly for your treatment at a much lower rate than what they would bill the HMO.

        This is part of the theory behind MSA's (Medical savings accounts). The idea is that you put money into this account monthly--then when you need to go to the doctor you go to one, negotiate a price, then pay from this fund (I know it's a little more complicated than that, but the idea is essentially correct).

        This means that you r
      • by Malc (1751) on Thursday December 04, 2003 @07:31PM (#7634259)
        Indeed. A recent study in the New England Journal of Medicine indicates that administration costs in the US are over $1,000/capita, and in Canada $300/capita. This explains a large part of the 4% GDP difference between the US and Canada. The US insurance companies spend a huge amount of money on administrators whose job it is to deny insurance or investigate claims.
    • by Just Some Guy (3352) <kirk+slashdot@strauser.com> on Thursday December 04, 2003 @02:38PM (#7630894) Homepage Journal
      Welcome to the new millenium. You realize, of course, that your doctor probably had no say in the amount that she billed you, either because your HMO/PPO/insurer has a set rate for each specific service or because the management company she works for sets all prices with or without her approval. You also realize that her malpractice insurer probably requires her to perform that test because one 25-year-old in Pensiltucky, AL didn't have one once, died that weekend from a heart attack while rocked on crystal meth, and left behind parents that filed a lawsuit against the doctor for $BIGNUM. Finally, I know you're considering that the EKG machine that you or I could probably build for $100 plus some Free software actually cost her or her employeer about $60,000 by the time the manufacturer recoups their FDA-testing outlay, and that like it or not, that machine's got to be paid for somehow.

      OK, yeah, of course I'm being sarcastic. It's amazingly easy to underestimate exactly how much it costs to provide medical services. You're considering the apparent work that went into your 5-minute consultation. She's considering:

      • Her salary
      • Her rent
      • Her electricity
      • Her heating/AC
      • Her transcriptionist
      • Her malpractice insurance
      • Her receptionist
      • Her phone system
      • Her disposable supplies
      • Her equipment investment
      • Her student loans
      • About 200 other "little" things that have to be included into the right-hand side of the equation.

      Sure, some doctors ( NOT ALL! ) make a pretty good living, but you'd be surprised to see how slim their profit margins probably are.

      • by pilgrim23 (716938) on Thursday December 04, 2003 @03:25PM (#7631492)
        To quote and rebut:
        Her salary
        All Professions
        Her rent
        All Professions
        Her electricity
        All Professions
        Her heating/AC
        All Professions
        Her transcriptionist
        All Business related professions (Computer Consultant for example)
        Her malpractice insurance
        Liability, though not as high, but there
        Her receptionist
        All Professions
        Her phone system
        All Professions
        Her disposable supplies
        All Professions
        Her equipment investment
        All Professions
        Her student loans
        Most all professions
        So now,tell me now where a doctor is special and gets off charging three times the rate of any OTHER profession!
        ALL PROFESSIONS have these charges. As a computer tech you have outragiously expensive equipment, strange arcane knowledge, a bizzare incomprehensible language, and all the other trappings of any of the High Priests of our culture. So how come I can't charge Lawyer/Doctor rates? A con gents is still a con. Even when you drive a BMW to the con.
    • by Davak (526912) on Thursday December 04, 2003 @02:39PM (#7630910) Homepage
      I did see that she charged my insurance company $103 for an "EKG Consultation Fee". Call me insane but there is absolutely no way she had the right to charge $103 for a 2 minute deal.


      Let me defend my profession a bit. $103 dollars for an evaluation of an EKG is very, very cheap. An EKG is an easy way to rule multiple life-threating illnesses. Compare an EKG to an CT scan, for example. and it probably saves many, many more lives per dollar than many other studies.

      With insurance the way it is, the doctor probably billed for twice that much... but only took what the insurance was willing to pay.

      Included in that fee is the cost of the machine including upkeep, malpractice insurance, and the greater than 7 years of training that the doctor has received.

      "Did you need an EKG" is another question completely. If you are an older man/woman with hypertension, then an EKG is not a useless test... especially if you were having any symptoms. Some docs (like myself) might use a different blood pressure medication if there are related EKG changes.

      If you are 20 with hypertension, then it's harder to defend. Even then (thanks to the lawyers) anybody with pain above the belt will probably get an EKG because cardiac disease is so common.

      Looking at a normal EKG for 2 minutes is probably about 1 minute too long. However, it's normal... but it's not useless. If we knew the answer without the EKG, then it wouldn't be a very useful test, would it? If the EKG would have been abnormal, then the doctor would have had to spend more time on it.

      Anyway, rant off. Medicine as a lot of thing wrong with it. $100 EKG is not one of those things.

      Davak
      • Well, at 29 years old complaining of chest pain, I was given a toxicology panel, several EKGs, a trip into the MRI, a heart catheter, a shitload of morphine, several in-patient days in a telemetry unit and a $27,000 bill. None of this was at my request. All of it was on medical advice. ...and then I was sent home on a mega-dose of ibuprophen. The real rub? I started taking it on my own just prior to going to the hospital. The only real benefit I got for that $27,000 was the knowledge of the true safe dosage
    • So true... (Score:3, Interesting)

      by bjdevil (190608)

      My wife had a c-section last November and it required an epidural(sp?). The eppy needle left a slight leak of spinal fluid (happens about 3% or so of the time when they do them), which in turn lowers the brain fluid level, which can cause horrible headaches when the woman stands up (i.e. her brain slaps against the skull w/o the fluid cushion).

      My wife started having headaches, and we asked the nurse to get a doctor/anesthesiologist to come check her out. An anesthesiologist comes in and talks to us and say

    • by PCM2 (4486) on Thursday December 04, 2003 @03:00PM (#7631165) Homepage
      Similar situation: When I had my wisdom teeth taken out by an oral surgeon, I was given the option of having general anaesthetic (i.e. being put out completely). The surgeon was apparently required to brief me on the risks and dangers involved -- which meant he sat me down in front of an 8-minute video tape and left the room. I was ushered into all this as if it was part of the procedure -- I had no choice whatsoever.

      When the surgeon eventually returned into the room, I asked, "Look -- do I have to have general?" He looked at me like I was nuts: "Of course not!" More carefully, I asked, "Am I going to want general? Like -- is it going to hurt so bad I'll wish I was put out?" He replied, "Not at all. I doubt you'll feel a thing." I said, "OK, I'll pass."

      (Sure enough, it was no big deal -- some blood, some bone chips, but nothing that I'd really describe as "pain" -- though the surgeon did comment that I was "a very tolerant patient.")

      Anyway, when the bill eventually arrived, sure enough, there was (I believe) a $65 charge for "anaesthetic consultation fee." That's right, finding out the health risks of being put under anaesthesia was the most expensive video rental in the world.

      But there's more! When I got the summary from my insurance company, they denied the charge -- because apparently the law says you cannot have the consultation and the procedure on the same day! I guess I'm supposed to be able to go home and think it over. (Never mind that I declined to have it anyway.)

      Anyway, I later got another bill from the surgeon where he basically reversed the consultation charge. So my insurance company didn't pay it, and I didn't pay it either. The doctor just ate it.

      Now, before you say "everything worked out" here, think about how f'ed up the medical system is and how it has to deal with the insurance companies. In that case, the insurance company said "no, we won't pay this fee" and the doctor, looking at his options, just shrugged and said, "OK, I guess I won't get paid, then."

      And this kind of thing happens all the time -- and not just for questionable charges like this "video consultation fee." My mom worked for many years in the medical billing field (yes, there's an entire industry devoted to working out these billing problems for doctors) and she tells me that most doctors never see the full amount they bill for the procedures they conduct, if they have to bill an insurance company. Got that? Never. The power of the insurance companies is such that they -- despite being private corporations, not government regulators -- can essentially set the prices doctors are allowed to charge for procedures.

      I have another friend who works for a large national HMO and he tells me lots of stories, too. You may not realize it, but there are a lot of people out there who, say, have their legs put back together through reconstructive surgery -- they can walk again, that kind of thing -- and then they turn around and say their bills were unfair and they won't pay. They get a lawyer and they flat-out tell the provider that they won't pay a dime. Again, mark me now: They don't try to re-negotiate, they don't try to set up a payment plan, they don't try to talk the doctor into rolling back a few charges. They flat-out say that they will not pay the bill, and in some cases, because of the structure of the industry, the way that it is regulated etc., they will absolutely get away with it. (Their credit might get messed up, but that's a different story.)

      So my point is: Lest you read my initial story and say, "Yeah, doctors screwing the patients again," consider that the medical industry in the United States is maybe a different case than, say, sneaking an extra $2 charge onto your phone bill. Healthcare in this country has almost completely broken down. Personally, I place the majority of the blame on the insurance companies, though doctors are at fault as well. But the way the industry is set up now, both sides pretty much have to play these stupid little billing games just to keep the money flowing, and personally I'm hard-pressed to figure out how this is going to change without some serious regulatory hammer falling.
    • Tell the insurance company that you suspect the doctor is charging / overcharging for services which were not rendered. Ever had an argument with an insurance company? Stand back and watch the fun.

      Q.E.D
    • by 4of12 (97621)

      That doctor made as much in 2 minutes as I do in 6 hours at work

      No, she didn't.

      My experience is generally that typical doctors charge about US$10/minute that I actually see them. Your charge is a little high, but not when you consider everything going on.

      In case you hadn't noticed, there's a whole phalanx of nurses, receptionists and People to Deal with Insurance Companies. Not to mention overhead like materials, cost of space, phones, etc. Not to mention whatever is lost because of services provided f

  • My answer (Score:5, Funny)

    by Anonymous Coward on Thursday December 04, 2003 @02:18PM (#7630626)
    Is it just another conspiracy theory, or are we becoming victims to the stealth inflation?

    Yes, in that order.
  • by Pingular (670773) on Thursday December 04, 2003 @02:18PM (#7630630)
    Next week: Ninja Tax!
  • Inflation (Score:5, Interesting)

    by musingmelpomene (703985) on Thursday December 04, 2003 @02:19PM (#7630643) Homepage
    Inflation hasn't only gone up because of things like this, but because of the increasing dollar amount of taxes being subtracted from paychecks. Even if your paycheck is the same as 10 years ago, your take-home pay is very likely less. These surcharges are yet another way that make you think you're making the same amount - when really, you're making less and less, every day.
  • Oh yes (Score:5, Insightful)

    by ActionPlant (721843) on Thursday December 04, 2003 @02:21PM (#7630675) Homepage
    Maybe I'm REALLY paranoid, but I figured it was intentional long ago, and have since merely accepted it. Since when does "handling" in the shipping and handling for a two pound item justify an extra $10 expense? Online, I've taken to shopping where I can get free shipping. It feels more honest, and I like making the statement that I appreciate it.

    Damon,
    • Re:Oh yes (Score:4, Insightful)

      by realdpk (116490) on Thursday December 04, 2003 @02:31PM (#7630793) Homepage Journal
      Congrats. You've uncovered the secret for Making Money Fast on eBay - charge excessive handling fees to pad your profits.
    • Re:Oh yes (Score:3, Interesting)

      by One Louder (595430)
      I've had a software company that sold most of its product through distribution (Ingram, etc), but we supported one-off shipping directly to customers that wanted it. We charged a handling fee that was about $10 per unit and we didn't make any money doing so - there was a full-time employee handling these items, which might be 20-30 a day, and given her salary, benefits, packaging, necessary equipment and overhead, it cost us just about $10/unit.

      Could we have been more efficient? Perhaps - but only after

  • Stealth tax (Score:5, Interesting)

    by RealProgrammer (723725) on Thursday December 04, 2003 @02:21PM (#7630676) Homepage Journal

    It all started with adding the sales tax to an item's advertised price to make up the real cost to purchase it.

    That still annoys me.

    • Cash discounts (Score:3, Informative)

      by freeweed (309734)
      Dunno about other countries, but in Canada it's against the law (or at least against merchant agreements) to charge a fee for accepting credit cards. For those that don't know, merchants pay a percentage of every puchase you make on credit card back to the card issuer. The $1000 television you just bought on your Visa may end up costing the store 10 or 20 bucks, depending on their merchant agreement. This money cannot be charged back to the customer.

      Now, stores up here like to play games with this. They of
    • Re:Stealth tax (Score:3, Interesting)

      by egarland (120202)
      I agree. We are all getting used to the "Cost" of an item being less when we ask a sales person then when we ask a cash register. The sales tax started this. To me, it's fine if you are going to add tax but you sould be required to include the tax in any listed price. It's time for a federal law mandating that. Otherwise you never really know how much things are going to cost.

      And all non-optional fees that are directly related to the purchase of an item should be required to be included in the price.
  • Human nature (Score:5, Insightful)

    by Space cowboy (13680) on Thursday December 04, 2003 @02:23PM (#7630690) Journal
    This shouldn't really be a surprise unless you still believe in the essential goodness of humankind (!)

    It's a simple-enough risk calculation - how much will I gain by people not noticing or not bothering for $xxx, how much will I lose by annoying customers. If that comes out positive, it's a good business (and only business) decision to do it. You'd need to re-analyse the figures periodically, and figure in public opinion when news breaks like this, but essentially it's money for nothing.

    So, why are we surprised ?

    Simon.
    • Re:Human nature (Score:5, Informative)

      by MegaHamsterX (635632) on Thursday December 04, 2003 @02:51PM (#7631066)
      I'll give you an example of how this thinking is flawed.

      In 2000 ATT was my local cable service, I wanted pay channels and a remote control.

      They quoted me a price, which was no where close to what I actually paid.

      Normal Sales Tax, I calculate this into everything already, I expect it, roads, schools and such.

      Additional charge for the remote controls, the installer said they're extra, huh?

      County franchise tax, which has something to do with the fact their cable is strung through the county.

      City Franchise tax, same as above, but for the wire strewn through the city.

      Sales tax was calculated after these taxes, the bill was over $50.00 greater than the quoted rate. I argued with ATT to at least calculate the sales tax corretly, they essentially told me to F$%@ off.

      So I did, I canceled cable, went to circuit city, bought a directv system, installed it myself and later that day had crystal clear satellite with just sales tax added in.

      Then I canceled my long distance with ATT after a phone conversation cost me $1.00 a minute, they said I'm not on a plan, so I asked about one, they said I had to pay additional fees every month to be on one, I told them to F#$% off this time, canceled long distance service entirely on the landline, the cellphone has nationwide anyhow.

      After sometime I saw a deal with ATT cellular online, it looked better than everything else out at the time, and my current cingular contract was up. I signed up online, the phone was shipped quickly, no hassels, until several months later.....

      They apparently decided I didn't need the free bonus minutes, or the nights and weekends like I signed up with, I got a $490 cellphone bill, I lost the paperwork I signed up with, they did back credit for that month, but how many other months did they screw me on and how many people actually sit down with the calculator to tally all their minutes?

      ATT has forever lost my business, this includes comcast, no matter the marketing spin, no matter the offer, they will never again be someone I pay cash to.

      Oh and nearly everyone I know has kicked them to the curb as well.
  • by pvt_medic (715692) on Thursday December 04, 2003 @02:23PM (#7630703)
    Now I doubt that the companies intentionally make the mistakes in order to extract more money from the customer...

    Now that being said, I think that the companies intentionally do make extra charges all around and hide them intricately in deals as they see there. It wasnt 800 minutes but 700 plus 100 minutes. Now no one in the world is going to ask about that. I know to ask about extra hidden charges, but no that.

    I think that the companies then through the complication of such systems easily profit from mistakes related to calculating the charges and fees. And they are not going to do anything to fix such errors.

    So the question remains by not doing anything is that the same as actually cheating the customer... This client says YES.
  • by dslbrian (318993) on Thursday December 04, 2003 @02:24PM (#7630713)

    ...starting to suspect that such huge revenue might imply the mistakes are made on purpose.

    I'm sure its all accidental .. and the fact that the charges are never in the consumers favor is a mere coincidence.

    Of course sales of 'random billing error' plugin modules are skyrocketing! ... again, coincidence

  • by sameb (532621) on Thursday December 04, 2003 @02:25PM (#7630720) Homepage
    It's sad that when people tell horror stories, others reply, "Yeah, that's about normal." We should not sit idly by while companies continue to 'mistakenly' swindle consumers out of money. I have personally spent countless hours fighting with RCN (a cable/phone/internet) company to refund $182.91 that they owe me. The full story is available at my RCN sucks [nyu.edu] page. I've had to resort to telling my credit card company to refuse payment, because RCN still refuses to return the money they owe me.
  • by MsWillow (17812) on Thursday December 04, 2003 @02:27PM (#7630739) Homepage Journal
    I'd be inclined to agree, at least some of these ridiculous surcharges are deliberate. Recently, I purchased some DDR Ram, for which they tried to charge me extra to test it. When it arrived, I installed it, and my machine did nothing at all. I got the RMA, and sent it back for refund - they told me I'd get the "restocking" fee.

    Thankfully, I'd used VISA to buy it, and complained to my bank, which refunded it in toto. The company did, eventually, issue me a credit - not only did they take out their "restocking" fee, but charged me to test it when it got there, *and* then credited me based on the current price of the ram, not what I'd paid!

    Thank heaven for VISA. I did get *all* my money back (had to let the bank take the pitiful excuse for a refund that the company issued).

    So yes, these "hidden" charges are, in at least some cases, the way companies can increase their profit margins. Caveat emptor, indeed!
    • It's illegal for them to charge a restocking fee on defective equipment. Contact the state AG, the Attorney General. (not to be confused with the state AC)

      • According to them they are not responsible for the actual products they sell. Boy, long way we've come since store owners actually stood behind the products they sold.

        From their FAQ:

        "What about restocking fees? How much? When? Why?

        There is a restocking fee of 15% on all returns for refund, unless waived by our Customer Support Agent. Newegg is not responsible for manufacturer defects. We are not manufacturers. We are willing to replace a defective item. If a refund is requested instead of a replacement
  • Grocery Stores (Score:5, Informative)

    by Bowling Moses (591924) on Thursday December 04, 2003 @02:28PM (#7630751) Journal
    In California a year or three ago one of the major grocery store chains was slapped with a class action lawsuit and lost, IIRC. They were just ringing items up slightly wrong, like collard greens as the more expensive kale (happened to me. Twice. I don't shop at that chain anymore) or $.99 instead of $.79 for misc. food in a can, small stuff, stuff you probably don't notice 99% of the time. Spread it out across a year, they could screw customers out of maybe $100 each. Multiply that by however many people you've got buying groceries at your stores and that's a lot of "revenue."
    • Re:Grocery Stores (Score:3, Interesting)

      by netringer (319831)
      I noticed the #2 chain here doing an intentional scam.

      Example: They had a promotion for a basket of strawberries for 99 cents. The display in produce had a huge sign above touting the sale. Under the sign was a bit of empty space and baskets of premium strawberries priced at $4.00 a basket. The first time I grabbed the basket under the sign and when I noticed that the price didn't match the sign I told the cashier, who said she would credit the price and literally, "...if you're not lying." (Once again

  • by lysium (644252) on Thursday December 04, 2003 @02:29PM (#7630775)
    How many times have you seen items that weigh a few ounces require $10 - $15 dollars for shipping and handling? I've even seen situations where the postage on the package is not even half of what was charged.

    If two-bit entrepenuers have figured out that this is a sneaky and effective profitmaker, I am sure it is not lost on the bigger, hungerier corporations....

    =========

  • by aminorex (141494) on Thursday December 04, 2003 @02:30PM (#7630787) Homepage Journal
    The poster proposes a false dilemma:
    "Is it just another conspiracy theory, or are
    we becoming victims to the stealth inflation?"
    Clearly both are true, if one accepts the
    non-standard uses of "stealth" and "inflation".
  • by unassimilatible (225662) on Thursday December 04, 2003 @02:30PM (#7630790) Journal
    against these cell companies under unfair competition statutes. California's, which has been widely criticized, nontheless would be perfect for these chickn-$#!t hidden fees and deceptive practices.
    • CALIFORNIA CODES
      BUSINESS AND PROFESSIONS CODE
      SECTION 17200

      17200. As used in this chapter, unfair competition shall mean and
      include any unlawful, unfair or fraudulent business act or practice
      and unfair, deceptive, untrue or misleading advertising and any act
      prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of
      Division 7 of the Business and Professions Code.
    The beauty (or horror, depending on your perspective) is the "unfair" part. What was not technically illegal in the past may now be sued for if it is "unfair."

    Next case, hidden bank and ATM fees...
    • by zoombat (513570)
      I've been waiting for a class action...

      Funny you should suggest that. I just got my Notice of Class Action Settlement [fpcrclassa...lement.com] papers in the mail from Nextel.

      They've been charging most everyone an extra $1.55 per line for "Federal Programs Cost Recovery Fee" - which is really just a rate increase disguised as a government-imposed fee. What sucks about it is that all I get out of it is 9 minutes/month for three months. I don't even use all my minutes as is... I bet the lawyers made better than that.

  • by heironymouscoward (683461) <heironymouscowardNO@SPAMyahoo.com> on Thursday December 04, 2003 @02:30PM (#7630791) Journal
    Assume a background of random errors. Now in usual circumstances, clients are able to fix mistakes quickly: if someone overcharges in a shop, or if you get shoddy goods or service, it's easy to complain and get your money back. As more and more sales get done online, as credit card statements get longer and more complex, as suppliers get futher and further away, we will see the less disciplined suppliers making more profit.

    Example: the company I use for registering domain names made a mistake and charged for a domain name that was actually not available. Now, after some hours of trying to get service, I just let it fall. Hours' work to get $35 back is just not worthwhile. I'm not even annoyed with the company, it's my choice to let it slide.

    So, over time, there will be an inflation in the greyness of transactions, ironically quite the reverse of what you'd expect from a more and more automated system.

    Haha, this gives me a terrible idea. In decades from now, I guess we'll have shifted to a system whereby basic consumables are paid by taxes levied on our level of income. Much simpler and eventually the same result. Think RIAA taxes, but on the entire arena of consumer products.

    OK, sorry, ruined your evening.
  • by Puff65535 (135814) on Thursday December 04, 2003 @02:31PM (#7630797) Homepage
    Back in the 80's my mom used to record _all_ of her long distance calls and numbers on the calendar next to the phone (having only one phone, and little kids who didn't use it helped) and every few bills they'd try and screw us out of 50 cents to a dollar. After 2 years of calling up and screaming she started going into the main office and grumping in person, demanding the manager etc. After a couple of those and proof that we weren't home on days when calls were billed our bill mysteriously quit having problems and has been that way for the last 15 years.
  • by simi-lost (639853) on Thursday December 04, 2003 @02:32PM (#7630815)
    I have to point out on my new Sprint bill, there is a $2.50 charge A MONTH for Number Portability, should I ever decide to change to another carrier. I know they had said it would be a reasonable fee, but that is outragous. Multiply that $2.50 per customer, per month, and that's one HELL of a profit. Sure would love to start a movement to blow that scam out of the water...
  • by jjn1056 (85209) <jjn1056&yahoo,com> on Thursday December 04, 2003 @02:32PM (#7630818) Homepage Journal
    When I got my first student loan back in 1992, the cut out 4.5% right away... Called origination-destination charges or something like that...

    They took like $600 US before the check even arrived at the school!

    You might notice these fees apply more to people who are in need. I remember when I first got out of school I had trouble saving money, and a few times my bank account fell below the minimum and they got me for $25 bucks. Of course now that I make a good income, I find that I don't get caught on many of those hidden fees. Everyone wants to be nice to me now :)

    Of course I do pay higher taxes, but I really didn't notice that as much as you would think.

  • Money rules (Score:5, Interesting)

    by thelenm (213782) <mthelen@NOSPaM.gmail.com> on Thursday December 04, 2003 @02:37PM (#7630879) Homepage Journal
    When it comes to money (specifically, other people getting their hands on yours), everything is done on purpose. Everything. People will do anything they need to do, and will fight harder for money than they will for their own lives. Haven't you figured that out by now?
  • by Anonymous Coward on Thursday December 04, 2003 @02:37PM (#7630887)
    I used to work for an outsource bank data processor. We had a customer who required us to apply debits before credits because it generated more fees that way.

    Not all banks did this, and it wasn't standard practice (at the time -- don't know now). It was odd enough that it was the talk of our company for a couple of weeks.
  • This sucks (Score:5, Interesting)

    by hackstraw (262471) * on Thursday December 04, 2003 @02:44PM (#7630965)
    I've noticed this for years and its gotten entirely out of hand. I am now forced to ask people stupid questions like "How much does the $19.95 a day truck cost?" I was shocked to find out that at UHaul it actually cost 19.95 plus mileage.

    I refuse to get phone service because of this, cell or otherwise. It is insane that the priveledge of using over 100 year old technology to talk to people costs on order of 1/2 the amount to power my house for a month.

    I pay over $1,600 dollars a year in taxes for my house which is in a city. I always thought that city == trash pickup because of said taxes. Nope, they charge me 15 bucks a month on my water bill for trash, plus 4 dollars "maintence" on the sewer systems. I dunno what the sewer charge is for.

    The only way that this is going to stop is if people stop paying for it. I have asked hotels to take off the safe charge.

    Back to the phone thing. I promptly canceled my last phone after the 12.95 a month phone cost me over $26 (yes thats double!). I told them that it was deceitful and false advertising and under no circumstances was I goint to pay that, and I have been without a phone for 6 months or so (my work does pay for a cell, so I'm not that hardcore). This phone thing really pissed me off because it was a switch of providers that I agreed to because it was going to save me $10 a month. Being that I was writing a check for over $26 before and after, I do not see how I was saving anything. These extra costs make price comparison imposible and I think that it should be illegal.
    • Re:This sucks (Score:3, Informative)

      by hackstraw (262471) *
      I usually think its tacky replying to oneself, but I just remembered something.

      I rented a PODS [podsusa.com] storage unit. Upon ordering it I was suckered into a $5 charge for "POD insurance". It was only $5, and I assumed a one time fee, so I said sure.

      I then found out that I was being billed $5 a month for said insurance.

      Get this. The insurance was for their property on their property. I inquired as to how I could be in any way shape or form responsible for anything if I didn't pay this insurance, and noone coul
    • Re:This sucks (Score:4, Informative)

      by Rinikusu (28164) on Thursday December 04, 2003 @03:32PM (#7631581)
      I can relate to the phone thing. I encourage every one here with a landline (I dont' have a cell, so I don't know how those things run) to check your local phone bill. I had BellSouth with AT&T as my Long Distance Provider.
      I don't carry all the bells and whistles, just touch tone. Think about that last one. I get billed .50 for that. While that in and of itself is borderline ridiculous, here's what I discovered a few months ago after paring my services back to almost minimum.

      With "full" services (well, call-waiting), my typical phone bill was $25. Well, I cancelled call-waiting ($3/month) and found my next bill to be $26. WTF? So I go digging. Ah, there we go, I had a couple of long distance phone calls. For a total amount of around .50. Fifty fucking cents. So I dig more and find that AT&T charges $1 to "consolidate" the bill, plus the various taxes, and then there was a VERY suspicious charge. Some kind of "fee" for about $3. Reading the fine print, it stated that the fee was not federally mandated, and was used to pay for "Property taxes, maintainence on lines" and other stuff. Now, maybe I'm fucking retarded, but I thought all that stuff should be factored into an actual RATE as part of a regular business. It's not my fault that AT&T has to maintain their shit, so why are they trying to pass this off as a monthly "fee"? Anyway, .50 in LD calls cost me over $5, which pissed me off. So I call their customer service.

      Hey! A girl with an Indian accent answers my call! (But she spoke very good english and provided good service, I just thought it was a bit ironic). I complain. She explains that she will take the $3 "fee" off and will also discharge the $1 consolidation fee, but AT&T will send me a bill for charges every month. She also says that the $3 "fee" will not appear on my bill ever again, leading me to think that it's a "sucker's" bill, hoping people won't notice it. Anyway, the experience infuriated me so much that I just cancelled my LD service right there and had LD completely removed from my phone line at home, but thought better of it and just went with BellSouth, who guaranteed there'd be no odd charges for "service" and no "consolidation" charge.

      Because of this experience, however, I've now started combing over my power bill and other stuff, too, because who knows what else I'm paying for. In fact, I found out my bank charges me $1.25/month for "ATM service." Huh? Last I checked, using debit cards SAVE the bank something like .25/transaction because they dont' have to handle paper checks. But yet, I PAY for this "convenience". It's frustrating, but unless I want to start toting around a checkbook...

  • by rm007 (616365) on Thursday December 04, 2003 @02:45PM (#7630971) Journal
    Things such as deregulation, increased competition and globalization etc. have all squeezed profit margins. Adding these charges or systematically making mistakes that only a minority will catch all help to increase profits while keeping the headline cost of the product or service the same. Of course it makes comparing genuine prices impossible, but that's the point. It's also the point of making things like cell phone plans as complex as possible - they don't want you to be able to compare between competitors.
  • couple suggestions (Score:3, Insightful)

    by cristipp (190840) on Thursday December 04, 2003 @02:48PM (#7631017)
    I've been through countless overinflated medical bills. One instance of double billing: they charged 900$ for an ecography and separately $900 for the personel handling the aparat. After months of back and forth figts with the clinic and the insurance company they finally dropped one of the bills. If you ask me, $900 for a 1h examination is way overinflated to start with.

    I would have a some suggestions:
    1. Pass a law that a company is required to pay back a customer 50% of each 'mistaken' billing they make. The % amount is just a suggestion.
    2. Pass a law that a company can't charge 'a posteriori', they have to inform you exactly of what they are going to bill you up front, before doing you any service. Better make them need your signature on it. While at that, limit the depth level of financial obfuscation to a (very) small number, even zero. No more 'mail in rebate 1, 2, 3' + 'bonus points a, b, c' + ..., just state the damn final price upfront. If things follow current trend, in 20 years it will take three hours on a Pentium 15 to compute the final price on any service.

    I think it is reasonably easy to not make 'mistakes' with todays computerized billing systems.
  • by nolife (233813) on Thursday December 04, 2003 @02:55PM (#7631115) Homepage Journal
    The trend in rebates is getting annoying also. Take a look at a BestBuy ad. 90% of the products have rebates to get the advertised price. These people are driving themselves into the ground with trying to manipulate the lowest advertised price. I assume at some point consumers are going to have enough and stop buying there, maybe it will be when every single product in the store has a $20 rebate.

    Off topic but I went there on black Friday. I did not expect the door busters to still be there but I thought at least a few of the Fri/Sat only things would still be there. I looked for about 15 things in the ad and the only thing that was still in stock was a pair of $15 speakers. They've been in business long enough to get a general idea of what to stock and how much, "15 per store" is insane and not even worth the printing space in the weekly ad. Thier lack of stock was NOTHING but a blatent attempt of bait and switch to get you in the store. Walmart has it's flaws but they were still putting out pallets of $29 DVD players at 2:00pm. BestBuy probably sold all 5 of thiers (5 indivudual units, not pallets) by 6:01am and the probably were $119 with 3 different $30 mail in rebates that all required the original UPC code and 12-26 weeks to deliver.

    These tactics are all "hidden costs" that consumers are subjected too.
  • by rawshark (603493) on Thursday December 04, 2003 @03:02PM (#7631199)
    Ever go out for dinner, order an entree, and come up a few bucks short because of tax, tip, charges for water, blah blah blah?

    Its ridiculous. Most other countries (such as Japan) have a "What You See is What You Pay" system, tax and tip rolled in.
  • by mesocyclone (80188) on Thursday December 04, 2003 @03:07PM (#7631265) Homepage Journal
    For some time, credit card issuers have made almost all of their profit on late charges. The interest primarily pays off fraud losses.

    I know of one large issuer which has processing centers in many states. It intentionally mails its bills from the one with the longest average snail-mail delivery to your address (a friend of mine was in the meeting where this strategy was hatched at that company). Credit card companies have also greatly increased their late fees (they used to be trivial) and a late payment will usually cause any interest rate deal that you had to disappear, with your rate going very high.

    In the good old days, paying your credit card bills on time was the best way to have good credit. Today, credit card companies prefer people who pay late, but always pay, and also those who keep big balances on the cards. Pay your card late and watch the increase in credit card solicitations in your mailbox!

    I have a couple of cards that account for almost all my credit card usage. I use automatic electronic payments monthly out to eternity to those cards... payments exceeding the minimum payment expected. This avoids any late payment charges (and the loss of my mileage points) should I not get around to processing the bill and sending in the full payment in time.
    • I've had an interesting experience with credit cards that's sort of related. In high school I got a $200 limit credit card. Never missed a payment. Fast forward two years and I miss my first payment. Three days later they increased my limit to $500. Odd, I thought, but I wrote it off as a strange coincidence. A year or so later I missed another payment, and within the week, I got a letter saying that my new limit was $1,000.
    • by aquarian (134728) on Thursday December 04, 2003 @08:01PM (#7634474)
      Household Bank, a major player in the screw-the-poor subprime market, has been caught for this kind of thing. But I've heard stories of even worse.

      A friend of mine is a financial planner, and now whistleblower. She's brought several of these sleazy operators into court and won.

      A couple of her clients with recent bankruptcies have Household Bank credit cards. They're always having problems with web payments or automatic debits going through, being assessed usurous late fees, and then overlimit fees when the late fees put them over their suddenly-lowered limit. My friend suspects these "problems" are carefully programmed into the system, and has been gathering evidence to support this. So if anyone from Household is reading, we're on to you!
  • MCI is the Worst. (Score:3, Interesting)

    by groebke (313135) <groebke@earthlink.net> on Thursday December 04, 2003 @03:10PM (#7631303)
    I used to work for MCI as a analyst. My job was to "fix" problems in the billing systems. If an issue was over $20,000 then we would consider resolving it. On several occasions, I came across unreported problems that were costing the customer more money than advertised, and I was told that we' "only resolve issue that are brought to us by customer complaint." Also, if an issue impacted more customers than the complaining customer, no refund was granted, except to the customer that complained. 99% of the issues I was assigned had one complaintant, but impacte 100's if not 1,000's of additional MCI customers.

    One issue that sticks out in my mind dealt with the personal 800 service users being charged international rates for a domestic call. Someone forgot the jump in a nested loop. Oops. That COBOL can be trickey. lol.
  • by owlmon (696565) on Thursday December 04, 2003 @03:16PM (#7631377)
    When I saw the headline of this posting, I was hoping that the article would be about the Federal Reserve Bank. What a disappointment.

    The Fed has been printing money like mad, for several years now. This is inflation, big time. The published rate of inflation is below 2% per annum, but this is deceiving. Consider an example: an electric table saw.

    Perhaps its price has barely changed in the last two years. Is this an example of low inflation? No. The price changed only a little, but the table saw changed a lot. Two years ago, most of the manufacturing that went into the table saw was performed in the U.S. or Japan, or possibly Taiwan. Today, most of the manufacturing took place in China. The cost of this production decreased dramatically. The price did not. Where did the difference go? Was it turned into profit? Doubtful. Except for markets where a monopoly exists, profits are constrained by competition.

    A similar story has developed for services. Consider an insurance policy, a home equity loan, or the interpretation of your last mammogram. Over the past several years, all three of these services became much cheaper to provide, due to offshoring. The labor used to provide these services gradually moved to India. The phone support, the analysis of creditworthiness, the medical transcription, the inspection of X-ray images, all of this (and much more) is steadily moving overseas.

    The price, in dollars, of these goods and services has not changed much. The nature of these goods and services has changed tremendously. How is this possible? It's because the government has been printing money like crazy. It's not easy to figure out how much new money is being created. For some reason, newspapers love to report changes in the interest rates controlled by the Fed. They even report rumors of future changes in this rate. The byproduct of these rate manipulations is usually an increase in the money supply, and this information is rarely reported. If mentioned at all, it is in the form of an aside to a more "important" development. I've seen figures ranging from 6% per annum to 12% per annum. I don't know what the true figure is. But I do know that prices on goods and services should be in free fall right now. This, because every month, more of these goods and services are being produced by dirt cheap overseas labor.

    We're enduring lower pay and more frequent spells of unemployment, due to offshoring. We're being denied the benefits of cheaper foreign-made goods and services, due to the Fed.
  • I can agree with a lot of the thoughts on this subject, but people are leaving out a Very Big part of the equation.

    Say you're Joe Average. Your family salary is average (say $60,000 a year, combined), with 2.5 kids and a dog.

    Joe Average needs a Coronary bypass which conservatively costs $200,000.

    Without insurance, Joe Average is dead. With insuance, his outlay is something between $0 and $5000.

    Sounds like Joe just won the Lottery. As stated before, my twins and their complicated pregnancy probably would have cost me half amillion dollars out of pocket. As it is, it didn't cost a dime. (well, _maybe_ $200 in co-pays.)

    So, Half a million for the birth of two healthy boys. How much has my family paid into insurance? A helluva lot less than that. Perhaps $12,000 over the last 5-10 years.

    It's not the annual checkups the insuance covers for you, it's the absolute destruction of all past and future income.
    • by Cyno (85911) on Thursday December 04, 2003 @03:38PM (#7631651) Journal
      This stealth inflation really must be true..

      Half a million for the birth of two healthy boys? Just think humans used to do that for free. :)

      Times really have changed and money has no value. What does a million mean to you?

      Absolute destruction of all past and future income? You act as if that's a bad thing.

      Look, I'd rather die than live a long life in this system of metrics, insurance and taxes. I know how much people like you love paying bills and managing your coins, but its not worth having 2.5 kids and a dog for me. I would rather not bring an innocent child into a fucked up world like this. You can have your capitalism and eat it too.
  • a cautionary tale (Score:5, Interesting)

    by theCat (36907) on Thursday December 04, 2003 @03:28PM (#7631533) Journal
    I am married and my wife raises the kids and manages the home. She also does the bills. We try to do as much electronic commerce as we can, and pay our bills online. Since she knows very well what our expenses ought to be, and has access to detailed statements online and time to go over them, she finds things constantly. Mostly it is just random stuff where you say "wtf?" and make a phone call to get your bill adjusted. But we had a real dust-up with [cell phone service starting with S] over our family cell phone plan, where they were charging us hundreds of dollars extra on our phone bill for months on end. Every month we knew we would have to call them to get $100-$400 worth of charges removed, 8 hour calls to places we never even heard of, totally off the wall. Finally they "fixed" it and we have not been troubled for over a year. If we had not annoyed them so furiously for most of a year before, would our billing ever have straightened itself out? Not on your life! But what in the world actually *changed* in their system to shield us from bogosity I could not tell you!

    I am dead certain that most (if not all) [cell phone service starting with S] customers are being overbilled on their mobile phone usage just as we were, and I suppose [cell phone service starting with S] spends a lot of time adjusting bills. There must be some really horrendous software blackhole in their billing system that gravitationally slings stray phone charges all over the database like so many loose asteriods.

    Why we sucked up so many nasty stray bits remains a mystery. Were they testing us because we were new with a one year lockin? Rather more a mystery is how it stopped. I can tell you *why* it stopped, and it was because of my wife. So they have control of some kind, which they exercise at need.

    What makes you reach for the tinfoil hat is the thought that maybe they don't "fix" the problem at the core because as a business matter it makes them money. Someone did the math and elected to a) invest less in expensive engineers doing process debugging, b) spend a little hiring low-paid phone jockies in Nevada to debate billing issues with irate customers, and 3) scrape off whatever is not adjusted as easy money.

    It is the lure of easy money, and avoidance of hard work, that creates this nonsense. Now that we have transferable mobile numbers let's see how long it takes service providers to clean up their act. And, let's see if honest billing impacts the bottom line.
  • Car Rental (Score:5, Insightful)

    by linuxwrangler (582055) on Thursday December 04, 2003 @03:32PM (#7631572)
    Last month I visited a friend in North Carolina and rented a car. When we returned the car there were all sorts of fees with names like "Airport Surcharge Recovery Fee", "County Mandated Foo Fee", etc. The fees and taxes added up to roughly an additional 30%.

    I have mixed feelings on this. On one hand I like it when the government tax gouging is made obvious. On the other hand I want things to be standard from place to place.

    What lots of companies have been doing (hotels, car rental firms, and telcos are among the worst), is to make their prices look lower by "converting" a bunch of their overhead to "fees" that get tacked onto the bill (always phrased to sound like taxes but often including the overhead of handling the supposed manditory tax) .

    It's like buying a cup of coffee for $0.30 but going to the cash register and finding your receipt reading:
    Coffee: $0.30
    Property tax recovery fee: $0.10
    Business license recovery charge: $0.02
    Government mandated workers compensation surcharge: $0.25
    Health board inspection fee: $0.08
    Employee income tax recovery charge: $0.35
    Corporate tax surcharge: $0.20
    Sales tax: $0.05
    City waste disposal charge: $0.15

    That will be $1.50, sir.

    As an aside, in a country where one of the rallying cries was "No taxation without representation" our politicians try to subvert that wherever possible. The prime example is outrageous hotel room taxes. Soak the tourists, they won't be able to vote against me.
  • by Krelnik (69751) <timfarley AT mindspring DOT com> on Thursday December 04, 2003 @04:40PM (#7632574) Homepage Journal
    I used to work with someone who was a former Vice President of CompuServe, back before it became a little known part of AOL. This was back in the days when dialup services like this were the only way to stay connected, and the Internet was just becoming available to the public.

    Another VP had as his yearly goal a target for revenue growth. Subscribers were very sensitive to the rates for the service, because it was very expensive, so he knew he couldn't just raise the hourly rate. So he sat down with some spreadsheets and crunched numbers, and noticed that they had two groups of subscribers. The ones who used the service constantly and ran up huge monthly bills, and those who used it occasionally and often had a zero balance at the end of a given month.

    He instituted a new policy where a new minimum charge was added to the subscriber agreement, something like $2 or $4, but was only charged if you didn't already spend at least that much in hourly charges. As a result, this new fee would have no effect on the big-time users of the service, who naturally would be the most vocal users.

    But there were thousands of users who fit in this low-usage camp, so once instituted, this new fee resulted in a couple million extra dollars a month rolling in. And with no extra work on the company's part, it was like free money! A month after insituting this fee, they had gotten like maybe a dozen complaints.

    Needless to say the VP who made this decision got his million dollar year-end bonus, and everyone was happy. Except the few subscribers who paid attention to their bills.

    I think this is where most of these junk fees come from. Executives who have little else to do than to play with a spreadsheet all day, play with numbers on end until they come up with some little slice of their user base that they can charge an extra fee to that is unlikely to complain, but will still affect the bottom line.

    But as my story points out, this is not a new thing. Its been going on for decades or more. A couple of years ago I noticed AT&T and the other long distance services instituting a minimum monthly charge as part of their standard rate plans, and I thought back to that VP at CompuServe.

  • Double billing (Score:3, Interesting)

    by Garwulf (708651) on Thursday December 04, 2003 @04:45PM (#7632650) Homepage
    The worst practice I've come across is double billing. I got hit with this one around February and March, as the power was deregulated. Around that time, the price of electricity was also capped after some people had a very hard time with soaring electrical bills.

    The cap goes into action, and I get a bill that is about double what I expect. When I look over it, I realize that I've been billed twice for the same electricity. I complain about it, and I'm told that it was a mistake because of the cap, and that it will be credited to my next bill.

    The next bill comes, and the charge is still there, and earning interest. I'm now at the point of having to manually calculate my bills (partially because when the cap went into effect, the utilities company took about three months to adjust their billing system), complaining every couple of months, and even writing the occasional letter regarding these errors.

    And then, in October, I get a notice that because of my debit, I have to pay what I owe ASAP or they will require a deposit. Let's just say I didn't take this well. After calming down, I wrote them a polite letter where I pointed out that you cannot bill somebody twice for the same electricity, enclosed a copy of the bill where the mistake first appeared, and requested a meeting within two days.

    The bill was corrected the next day, and both the double billing and the interest it had accrued were removed. I swear, though, if they had charged me a deposit fee, I would have gone to my lawyer and sued their asses. Nobody screws around with me like that and gets away with it.
  • by payndz (589033) on Thursday December 04, 2003 @07:17PM (#7634115)
    I was once lucky enough to go on a junket to LA as part of a visit to Warner Bros. All expenses paid, yadda yadda. The hotel I was staying at was the Mondrian, which if you haven't heard of it (which to be honest I hadn't before going) is a multiple-star, high-rolling place. (The trendy Skybar where George Clooney is fond of a tipple is part of it and I had pointed out to me some apparently famous person who I didn't recognise - one of TLC, I think - in the lobby.)

    Very nice place, it had to be said. The room - well, suite - I was staying in was the size of my flat back home.

    The problems came when it was time to check out. Although Warners were paying the basic expenses, additional ones (phone calls, room service, etc) were expected to be covered by us.

    Now, I hadn't touched the minibar (there was a convenience store just down the street for booze and snacks), the premium cable had been left alone because Warners had taken me out every night, I had no girlfriend (hey, I'm a /. reader!) so there hadn't been any phone calls, I hadn't made any calls for room service, I hadn't connected my laptop to the internet, I hadn't thrown the TV out of the window or taken a big shit in the middle of the living room requiring special cleaning... hell, I even left a decent tip.

    Go to reception to check out? I'm handed a bill for $95 dollars of assorted 'additional services'.

    Needless to say, I went ballistic and all the charges magically vanished. But it was a lesson in how places like that operate. They obviously assume that guests have all their expenses met by somebody else, so couldn't care less if a wodge of charges are added to the bill.

    Now, I know that if I'd presented those expenses to *my* employer expecting them to be paid, they would have laughed in my face and told me to fuck off...

  • by Skin n Bones (571292) on Thursday December 04, 2003 @07:45PM (#7634371)
    A year or two ago I read a great book "Naked among cannibals", which was an inside story about the Australian banking system. With the reduction in interest rates and increase in competition from other lenders there was a very definite and deliberate move to replace interest margins with fee income. The bank that the author worked at 'pioneered' the range of loan fees in Australia - application fees, duplicate statement fees, break fees, .... Another trick was to offer deposit accounts with relatively high interest rates. After heavy advertising and signing up customers, the bank would move to a 'new' deposit product (ie just a name change) and then lower the interest rates paid on the old product. The author noted several times, that the reason the could get away with doing this and still make money is because we let them.

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