Stealth Inflation 796
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?"
everyone knows this is a scam... (Score:2, Insightful)
Oh yes (Score:5, Insightful)
Damon,
Human nature (Score:5, Insightful)
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:Sad state of affairs... (Score:5, Insightful)
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
its those that cause inflation, not a 0.02 here and there.
Is there a difference? (Score:5, Insightful)
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.
Re:Sad state of affairs... (Score:5, Insightful)
You don't need a conspiracy theory (Score:5, Insightful)
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.
Re:Oh yes (Score:4, Insightful)
Traditional buisness practice (Score:2, Insightful)
Re:Sad state of affairs... (Score:5, Insightful)
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.
Re:Sad state of affairs... (Score:5, Insightful)
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:
Sure, some doctors ( NOT ALL! ) make a pretty good living, but you'd be surprised to see how slim their profit margins probably are.
Re:Sad state of affairs... (Score:5, Insightful)
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
The *real* stealth theft ... (Score:2, Insightful)
couple suggestions (Score:3, Insightful)
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' +
I think it is reasonably easy to not make 'mistakes' with todays computerized billing systems.
Re:Sad state of affairs... (Score:2, Insightful)
I believe what the parent was saying was that he was charged for having the concept of an EKG explained to him. Are you going to defend that? (Perhaps that's not what he was actually charged for and the doctor was charging him for her reading of the EKG but he appears to present it as her telling him what an EKG is as he puts his coat and hat on before leaving.)
Re:Sad state of affairs... (Score:4, Insightful)
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
Re:Sad state of affairs... (Score:5, Insightful)
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.
Re:Sad state of affairs... (Score:3, Insightful)
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 for less than cost (indigent care, etc.) All in all, it's not too different from MyCorp, where an outsider that wants to purchase my time must pay MyCorp about 2.5 times what I make to include all of the overhead (as well as benefits, etc.).
Recently I read where some doctors have actually thrown in the towel and refused to have anything to do with insurance claims processing and the micromanagement that goes with it. They just take cash, check or credit card. It's simpler all around.
The broken U.S. health care system is a very inefficient market in a large number of ways. Eg. [kuro5hin.org]
Unfortunately, fixing it requires considerable force because there are several different kinds of organisms making good money based on those inefficiencies.
Re:Sad state of affairs... (Score:2, Insightful)
Re:Sad state of affairs... (Score:5, Insightful)
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.
Car Rental (Score:5, Insightful)
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.
Re:Sad state of affairs... (Score:2, Insightful)
It takes much more intensive training to be a doctor, there's much more at stake for the customer, and the equipment is quite a bit more expensive. That machine that goes "Ping!" costs more than half your data center, laddie!
Re:Sad state of affairs... (Score:3, Insightful)
More simply put, two wrongs don't make it right.
Re:Sad state of affairs... (Score:3, Insightful)
Now, the float's in your favor, and now the bogus authorization for an extra $300 will go against a credit line where you have thousands of extra room that you'll never use, so you won't care about having those "virtual" dollars tied up. What's more, that 1% kickback basically comes out of the murchant fee, so the card issuer is able to provide you a no-fee card and pay you to use it. If you can just get half of that $100,000 a year to run through the card as purchases that's $500.00 a year that lands in your pocket.
Using a credit card is much safer than using a card tied to your credit account. If you ever have a fraudulent transaction made against your "Visa Check Card" the disputed money will be missing from your bank account while the situation is looked into... while on a credit card the disputed transaction sits in a walled off area of your credit limit, which you don't have to pay interest on and eventually gets washed out by the chargeback.
Those Visa Check Cards are just plain a bad idea if you have the ability to get a regular credit card. Granted, there's many un-cardable people with bad credit histories who need such a card just to keep up, but if you're not one of them, why are you sentancing yourself to their punishment?
Re:The BusinessWeek article (Score:4, Insightful)
I agree with most of what you have written, but I take exception here. Let me explain why...
I work at a fairly successful mom-and-pop computer retailer (the store has been in operation for 22 years). We charge no restocking fees, and are more than reasonable about refunds. Here are the consequences of our honesty and generosity:
EVERY DAY, LITERALLY, we have customers who come into the store and buy ink cartridges for printers that they don't own. They sit in front of their computer and printer for eight hours every fucking day, but they've never noticed the make or model. They buy an ink cartridge from us, rip it out of its packaging when they get it back to their home or office, and then expect a full refund or no-fault exchange when they return it to us the next day. Sadly, we almost always oblige them in the name of keeping-the-customer-happy, and it costs us hundreds of dollars (if not thousands) a year. First, the store has paid me to handle both the sale and the return, which has very little margin, so the return renders the "sale" profitless. Then, because no one will pay full-price for an obviously (and inexpertly) opened ink cartridge, we sell it for our cost (or less) to a subsequent customer, and the store also pays me for that transaction.
Or the customer who buys a cat5 cable or a wireless ethernet card on a Friday, casually asking what our return policy is. When I tell them that we like the item back within a week, unless it was defective or there was some other reason that reasonably delayed its intended return, their eyes light up. This tells me that I have just encountered one of our "borrowers," who have a LAN party to attend that weekend, and don't want to spend any money. This happens with extreme frequency, and come Monday they return the item.
Or those who are vacationing in our fair city, and brought their laptop, but forgot their power adaptor, so they buy one fron us only for the duration of their holiday.
Or those who buy five different cables (of different lengths, USB and parallel, etc) because they don't know what type their printer uses or the length they require, and it is easier to buy five and return the other four than it is to have checked or measured before they left the house.
We don't charge any re-stocking fee, and we take things back nearly 100% of the time as a general policy, but it is awfully hard to continually smile about it considering the abusers I've just described.
Re:Insurance isn't for what you think it's for. (Score:3, Insightful)
Re:Sad state of affairs... (Score:2, Insightful)
Insurance companies are essential to US fiscal policy. They keep money in the markets that would otherwise not be there, and in payment, the companies make healthy profits. When they lose money in the markets, your premiums rise, since they establish premiums against net profit, whcih is calculated against all expenses and losses and gains.
It seems that when gains are reaped from portfolio investments the primary costs rise (e.g. medical costs) to absorb the gains without affecting revenue, and there is little squawking from anyone since premiums don't rise, net company revenue does not fall and the payees get richer. If primary cost side did not rise then company revenue from premiums would have to fall (a zero-sum effect), and the underlying business would look flat, and equity share prices would fall.
Thus, when the insurance company's market losses accelerate, coverages get cut (the payees get less) and premiums rise, to mostly pay for the secondary (market) losses, and everybody then squawks (like now).
Shared risk pools have given way to veiled communism, which must fail; pure 'tragedy of the commons.'
Re:Sad state of affairs... (Score:5, Insightful)
What if one of the guys hurts himself while performing this unsolicited mowing? Why should my homeowner's liability insurance rates have to go up when I didn't even want the guy there in the first place?
At the very least, they should ask first.
Re:Small Claims Court (Score:3, Insightful)
First off, when a collection agency gets your "debt", they send you a letter stating the amount, some of their bs, and a notice that you have 30 days to dispute the amount. You dispute it, claiming (truthfully) that you didn't have the service you were being charged for. Then it's their responsibility to get full accounting of the issue from the original "creditor". If that never happens, the account is dropped. If it does happen, you do some back and forth until the truth is shown.
Now as for the threat of Speakeasy countersuing, that's bs. They can't sue you for their costs in defending and losing the case you bring against them.
And lastly, if someone were to take you to court over some amount they believed they were due (rare for small $), the most they can get is a civil judgement. Then they still have to try to collect that.
Now, I'm no lawyer, but I've been back and forth about this kind of crap with someone who is a lawyer. Make friends with some lawyers. They need PC advice/tech support, and you need occasional advice
Compuserve did this 15 years ago (Score:3, Insightful)
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.
Re:Sad state of affairs... (Score:2, Insightful)
Re:Mmm... (Score:2, Insightful)
Apparently they don't have one where Paris Hilton is from.
Re:Mmm... (Score:3, Insightful)
As for ATMs, another poster already told you of the virtue of using your card for debit purchases. Here's another tip that will save you from buying a couple of cases of soda. Federal law mandates that a merchant may not impose a minimum limit on credit card purchases. I know this as I own a retail store. Go to any grocery store, buy a pack of 25 cent gum (e.g. juicy fruit), and get cash back. Most places will allow you a minimum of $30 back. Even if you throw out the gum, it's still cheaper than the ATM fees that you're paying.
One final thing. On my way into work each morning, I stop at my local convenience store and get a cup of coffee for the drive. The ATM here is free and requires no purchases. The chain is named "WaWa" and they're all over this part of the state.
The point is, if you know where to look, you should never have to pay an ATM fee again.
Now, if you really want something to get pissed off about, consider that not only do some banks charge you for using the ATM (yours and someone elses), some banks even charge you for using their tellers. I believe Fleet or FirstUnion used to do this. How's that for chutzpah?
Nextel Class Action (Score:3, Insightful)
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.
Re:Intentional or Mistaken? (Score:3, Insightful)
I once called SBC about getting DSL service. I just wanted to find information about it. They said they'd have someone call me back. Months later, I get DSL equipment and setup software in the mail. I'm very confused by this, and spend my time finding out what is going on. I certainly don't want any bills showing up for this since I didn't order it in the first place (and once it is on a bill, it is harder to get rid of). They said I signed up for service. I explained that I did not. They said to just return the equipment.
Of course, because I didn't order it in the first place, I didn't have to pay for the equipment (by law). I considered it payment for the time I had to spend finding out what was going on with my account. Later, I find installation charges on my bill in the hundreds of dollars. I again call and tell them that I did not order the service and to remove the charges. It takes them a month to do this.
The unrequested free equipment was in my favor. The unrequested hassle for it was definitely not.