Corporate Crime by Nickel and Dime
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What's the fastest growing corporate crime in America?
Corruption? Pollution? Market manipulation? Securities fraud? No.
It's hidden fees.
It's how the giant credit card, cell phone, cable, and banking corporations nickel and dime you to death. And there are literally scores of hidden fees with more being proliferated every day.
Bounce a check? That will be a $39 bounced check fee.
One day late on your credit card payment? That will be a $39 late payment fee -- and we'll hike your interest rate from the introductory 0.00 percent to 15.99 percent.
Towel fee. Towel fee?
Yeah, you get one of those deals on a swank hotel. And you show up at the hotel and get hit with a $30 a day resort fee -- including a towel fee. In case you go to the pool and use the towels. Or even if you don't. Pay the fee.
Here's one of my favorites -- the ATM denial fee. You go to your ATM machine and ask for $400 in cash. You get back a note from the ATM machine saying -- sorry, but your daily limit is $300.
So, you ask for $300. The machine spits out the $300, you grab your card and walk away. Next month, you get your statement. And there it is -- $1.50. ATM denial fee.
Bob Sullivan has written one of the best consumer books of recent decades -- Gotcha Capitalism: How Hidden Fees Rip You Off Every Day -- and What You Can Do About It (Ballantine Books, 2008). Call him the Upton Sinclair of the modern corporate jungle.
It has yet to be reviewed by the mainstream press, but on the weight of a couple of interviews on National Public Radio, it has already broken into the New York Times Paperback Advice Top Ten.
And that's not an easy list to break into. Five of the top ten books on that list are diet books -- with the top two being Skinny Bitch and Skinny Bitch in the Kitch .
If there were a top ten corporate crime books of all time list, Gotcha Capitalism would be on it.
In an interview with Corporate Crime Reporter, Sullivan said he knew something was up with the book because every time he's interviewed about it, he gets a few minutes into his pitch and the interviewer interrupts with a horror story.
And in fact, that's how Sullivan compiled the stories for his book. A couple of years ago, he was in New Orleans covering Hurricane Katrina for MSNBC.com. He started a blog called the Red Tape Chronicles about the problems facing victims of the Hurricane.
But pretty soon, people were contacting him from all over the country about consumer problems of their own. It became clear that corporate rip-offs were a huge problem. Since starting the column two years ago, he has received 50,000 e-mail messages from consumers around the country. The biggest culprits were credit card companies, banks, cell phone companies and cable companies.
Sullivan conducted a survey of consumers nationwide, asking them to identify hidden fees in their most common purchases. And he estimates that the average consumer gets hit with $1000 a year in hidden fees. That comes out to $45 billion a year.
But that's clearly an underestimate. Consumer Reports magazine says that hidden fees cost consumers $215 billion a year -- or $4,000 a year per consumer.
That's more like it.
And then you have your $25 billion a year that brokerage firms skim off your retirement funds every year for essentially doing nothing. Or the real estate fees when you close on a house. Sullivan has a whole book of them.
The rise of the hidden fee corporate crime wave parallels the corporate attack on consumer fraud enforcement. Sullivan says that hidden fees have flourished largely because laws governing false advertising aren't enforced.
"There are great folks who work very hard at the Federal Trade Commission (FTC)," Sullivan said. "They don't like it when I say this, but the truth about the FTC is that in 1979, it had 1,700 full time employees. Since then they have become responsible for huge areas like identity theft, the do not call list, internet security. And our population has grown by 75 million since 1979. But today, the FTC has 1,000 full-time employees. So, they have been cut almost in half. The budget is more of a flat-line. And you see that same trajectory at all of the other consumer protection agencies."
If you are having problems with high blood pressure or heart palpitations, or if you are manic, you might want to leave this book for another day. I mean, do you really want to read that AT&T sought consultants to design a mailer so that you, the average Joe consumer, would be more likely to throw it in the trash?
And why would they want you to throw a mailer in the trash? Because if you throw it in the trash, you agree to giving up your right to sue them if there is a dispute over your phone bill.
Do you really want to know that the hidden fee rip-off artists have two complaint desks -- one in Southeast Asia for the regular folks, and one in corporate headquarters in the USA for the sophisticates?
That's right. Consumers are divided into two categories -- suckers and sophisticates. For suckers who don't know how to complain, you get the help desk in Thailand, or India, or the Philippines.
For people who know how to work the system, and struggle to get their money back, you get the VIP treatment -- and a good chance to get at least some of the ripped off money back.
I experienced this first hand earlier this month. The Verizon DSL at our home went out. I spent five days talking to very kind people at Verizon help centers throughout Southeast Asia.
Then one day, I wrote about my problems on a blog. It got picked up by some corporate person in the U.S. And within 30 minutes of writing the piece, I got a call from Verizon telling me that someone from "escalation" will be calling me.
Within five minutes, Wendy from "escalation" calls me.
Within an hour, the problem is fixed.
I haven't followed all of the presidential debates. But as far as I can tell, Wolf Blitzer hasn't asked any of the presidential candidates about the fastest growing corporate crime in America.
Maybe that's because the corporate criminals sponsor the debates or own the television networks -- and contribute to the candidates.
In any event, the bottom line is you can buy three of Sullivan's books for the cost of a bounced check fee. Or a late payment fee.
Buy a bunch and pass them around. It teaches us how they rip us off.
And how to get to Wendy at escalation.