The 5 Most Outrageous Examples of Hidden Charges Companies Pass Off on Consumers -- And How to Fight Back
Photo Credit: meddygarnet on Flickr
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It seems like consumers are being squeezed from every angle these days. Our grocery bills are getting larger and other expenses going through the roof at the same time that many of us are losing jobs and having to downsize.
The Occupy Wall Street movement has helped spur a national dialogue about the financial sector’s role in the erosion of the U.S. middle class. But Wall Street mega banks aren’t the only corporations that have swindled American citizens; many of the companies we rely on for our food, transportation, and communication needs are also treating consumers unfairly by saddling them with a plethora of hidden fees and surcharges.
The average U.S. adult pays at least $942 each year in hidden fees, according to research conducted by the Ponemon Institute in 2006. Six years later, it’s unlikely that this number has gone down. If anything, industries that took a financial hit during the recession are passing more fees onto consumers than ever, regardless of whether they’ve recovered.
A comprehensive list of the sneaky fees companies palm off on consumers could go on forever, but here are five particularly egregious examples that every consumer should be aware of – followed by a list of ideas for fighting back.
1. Banks and credit card companies
The financial industry is infamous for its shady fees, and with good reason. You’re probably familiar with many of the charges banks and credit card companies impose, for things like account overdrafts, cash advances, stop-payment services, balance transfers, purchases made outside the U.S., late payments, payments made over the phone, lost card replacements, account minimums, and even the “privilege” of speaking to a bank teller.
Credit card and bank fees have become both more common and more expensive in recent years, even as new regulations have sought to keep institutions from taking advantage of consumers. In fact, some of the newest – and sneakiest – charges are in direct response to government regulation. For instance, after rules were passed in 2010 limiting banks’ use of overdraft fees, banks responded by quietly increasing maintenance, wire transfer, and other fees and implementing new charges on services like mobile phone deposits. Banks have responded to consumer outrage in a similar fashion; after consumers revolted against Bank of America’s plan to introduce a $5 monthly charge for some debit card users (a plan other big banks intended to implement as well), the banks instead turned to ATM surcharge increases to pad their bottom lines.
The fees are bad, but even worse is the fact that many of the charges are not disclosed to consumers. According to a recent report from the Pew Charitable Trusts’ Safe Checking in the Electronic Age project, the ten biggest banks disclose an average of 49 fees on their websites – but there are many fees that are hidden, most commonly regarding account overdrafts. The report recommends that the new Consumer Financial Protection Bureau require banks to offer customers a one-page fee disclose box, as credit card companies are now required to do. (Although it is an imperfect system, it's at least a start.)
2. Cell phone companies
According to one estimate, most American pay $300 a year more than they should for cell phone service. For anyone with a cell phone, that is not hard to believe. In recent years, carriers have greatly increased charges for directory assistance, text message overages, Internet access, and “early termination” of one’s contract, especially for smartphones and other hot devices.
Consumer Reports says that one of the biggest ways cell phone companies rip consumers off is by encouraging them to sign up for plans that leave them with large quantities of unused minutes.