9780345496133

What is Gotcha Capitalism? Coughing up $4 fees for ATM transactions. Iron-clad cell phone contracts you can't get out of with a crowbar. Paying big bucks for insurance you don't need on a rental car or forking over $20 a day for supposedly "free" wireless internet. Every day we use banks, cell phones, and credit cards. Every day we book hotels and airline tickets. And every day we get ripped off. How? Here are just a few examples of how big business can get you: You didn't fill up the rental car with gas? Gotcha! Gas costs $7 a gallon here. Your bank balance fell to $999.99 for one day? Gotcha! That'll be $12. You miss one payment on that 18-month same-as-cash loan? Gotcha! That'll be $512 extra. You're one day late on that electric bill? Gotcha! All your credit cards now have a 29.99% interest rate. But not for much longer. InGotcha Capitalism, MSNBC.com's "Red Tape Chronicles" columnist Bob Sullivan exposes the ways we're all cheated by big business, and teaches us how to get our money backproven strategies that can help you save more than $1,000 a year. From the Trade Paperback edition.

Preface	p. xi
The World of Gotcha Capitalism
Shrouding, Reverse Competition, and Other Corporate Tricks That Attack the American Way of Life	p. 3
Sneaky Fees in Everything
Credit Cards	p. 39
Banks	p. 57
Retirement/401(k)s	p. 73
Mortgages and Rentals	p. 84
Cell Phones	p. 100
Home Phones	p. 115
Pay TV	p. 128
Internet Access	p. 144
Travel	p. 156
Groceries	p. 169
Gift Cards	p. 178
Rebates	p. 184
Student Loans	p. 191
Sneaky Fees Everywhere	p. 205
Using a Loan to Buy a Car	p. 205
Auto Insurance	p. 209
Homeowners Insurance	p. 210
Health Clubs	p. 211
Website Shipping Charges	p. 215
Toolkit
Customer-Service Calls	p. 221
Sample Phone Scripts	p. 231
Get a Refund	p. 231
Get a Manager on the Phone	p. 232
Negotiate a Lower Interest Rate	p. 233
End a Sales Pitch During a Customer-Service Call	p. 234
Sample Letters That Work	p. 236
Sample Complaint Letters	p. 243
Cable Fees	p. 243
Cable Fees, Part II	p. 244
Bank Fees	p. 246
Bank Fees, Part II	p. 248
Cell-Phone Fees	p. 250
Cell-Phone Fees, Part II	p. 251
Hotel Fees	p. 252
Hotel Fees, Part II	p. 253
A Wayward Rebate	p. 254
A Wayward Rebate, Part II	p. 255
The Legal Options	p. 256
Sneaky-Fee Survey	p. 278
Conclusion	p. 293
Appendix
Gotcha Glossary	p. 303
Looking for Help? Consumer Advocacy Groups	p. 307
Sample Troubleshooting Worksheet	p. 311
Notes	p. 317
Acknowledgments	p. 341
Table of Contents provided by Ingram. All Rights Reserved.

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Chapter 1

Shrouding, Reverse Competition, and Other Corporate Tricks That Attack the American Way of Life

Some will rob you with a six-gun. Some with a fountain pen.

Woodie Guthrie

I. Paranoia?

Let me make a confession. I hate getting cheated. I mean, really, really, really hate getting cheated. I mean veins-pop-out-of-my- forehead, glad-I'm-not-getting-my-blood-pressure-checked-today hate getting cheated.

And yet, I feel like I'm getting cheated all the time.

I often open the mail with dread. It makes the hairs on the back of my neck stand up, as if I were some primal creature readying for a fight. I walk into a cell-phone store, check my online statements, or just turn on my television, and I feel like everyone is out to get me. I suffer from what a therapist might call low-level, background anxiety. I think someone is always trying to steal something from me.

Am I crazy?

When I was a child growing up just outside New York City during the 1970s, I learned to be afraid of getting mugged. But this is not that. The criminals I'm talking about don't bop anyone over the head and steal hundreds of dollars. These criminals slowly take $5, $10, and $20 from me, often with a smile. They pop a surcharge onto my monthly phone bill. They pad my TV bill with services I didn't ask for. They drain my bank account-drip, drip, drip-when I'm not watching. These hidden fees keep me up at night like the sound of a leaky faucet. I feel like I have to watch everything all the time because it's so easy to miss some statement on some form with some asterisk that means the company can take even more money from me. And when that happens, I suffer from what I call small-print rage.

Am I crazy? Or am I just paying attention? One thing I know for sure: I'm not alone.

I'm not a therapist, or a sociologist, but I feel on firm ground saying that small-print rage is a close second only to road rage as a source of stress in America today. As author of The Red Tape Chronicles on MSNBC.com, a twice-weekly column that exposes small print, corporate sneakiness, and other twenty-first-century headaches, I invite readers to share their woes with me. Tens of thousands have e-mailed and left comments on my blog as a desperate last attempt to get justice. I can see the exasperation in the amount of CAPITAL LETTERS that show up in their notes.

So I know: You suffer from small-print rage, too.

Sneaky fees peck away at us like a swarm of mosquitoes that ruin an otherwise beautiful summer evening. And like mosquitoes, an individual bite might seem trivial, barely more than a nuisance, but repeated bites can actually change the way you live. They chase you inside, make you build a screened porch, and in extreme cases make you sick.

As a too-sticky summer night breeds mosquitoes, today's business environment breeds sneakiness. Companies under pressure to keep advertised prices low have seized on trickery to pump profits up. The most successful firms are now the ones that hide their prices best: under asterisks, deep inside terms and conditions, in fees they call taxes, bills that come months after the fact, even around dark corners in auto dealerships where the manager's office is. Then, right when you think you just got a good deal, an unexpected bill comes, or a car salesman jumps out from behind the corner and yells:

Gotcha!

One Gotcha might be irritating. A few might make you angry. But Gotchas are everywhere you turn now. They are a way of life for consumers. They are our new economic system, replacing our former system, the free-market economy. In Gotcha Capitalism, your personal finances are under siege. Mosquitoes might threaten your life with death by a thousand bites; Gotcha Capitalism threatens your finances with death by a thousand fees.

"C'mon, Bob," you might be thinking. "We're talking about nickel and diming. It's not that bad."

Yes, it is. I've got research to prove it.

During November 2006, I asked independent researcher Larry Ponemon of the Ponemon Institute to conduct a nationwide survey of fees and surcharges. Together, we asked consumers around the country how much they believed they'd lost to sneaky fees in the past twelve months. To be fair, we didn't allow much speculation; instead we asked consumers to identify the amount of hidden fees they'd later discovered in ten important product lines one at a time, such as cell phones, groceries, and travel.

The result? Those $5 and $10 charges really add up. Even with these limitations, Americans told us they lose $946 to sneaky fees every year, enough to stock a sizable retirement fund. And when you add up all sneaky-fee revenue, the total is simply massive. According to the survey, corporate America's take in the ten industries surveyed was $45 billion. To put that number in context, $45 billion is about equal to the amount of money stolen through the fastest-growing crime in the country, identity theft. ID theft is such an epidemic that presidential task forces have been formed to fight it. There are entire divisions of law-enforcement officials being trained to stop it. There is an entire industry of companies that has grown up to prevent it. However, I know of no single agency or company devoted to stopping the explosion of hidden fees, which cost our society just as much as identity theft.

Of course, the crime of hidden fees is not so dramatic. There are no spectacular million-dollar diamond heists accomplished in the name of deceased CEOs. Instead, hidden fees are a slow drip-drip-dripping out of Americans' hard-earned salaries. Cell-phone users, for example, reported to us that they pay about $5 to $10 more a month-on average- than they expect to, thanks to sneaky fees. That doesn't sound like much, until you consider there are more than two hundred million cell- phones user in the United States alone.

Now perhaps you'll think like I do, that the proliferation of hidden fees-and not identity theft-is the fastest-growing white-collar crime in America.

For consumers making $45,000 or less a year, that $946 in hidden fees can mean one less vacation per year, or no evening classes for additional job training. It can take a huge bite out of a family's retirement savings.

And that number is conservative. For starters, to make the study manageable, we limited the survey to ten likely culprits: cellular phones, credit cards, banks, airline travel, hotels, cable TV/ satellite, home Internet access, retirement services, insurance, and groceries. Detailed industry-by-industry discussion of these fees can be found in the Toolkit Section, Chapter 4.

Remember, this $946 total is an average. So for every consumer who manages to exert Herculean effort and minimizes hidden-fee expenses to a tidy $200 or $300, there's another who pays nearly $2,000 a year. It also only represents the sneaky-fee take among those ten industries-obviously, other kinds of companies stick their customers with fees, too.

Finally, this $45 billion total-that's just the sneaky fees consumers know about. Others are surely lurking out there underneath mountainous monthly bills that busy consumers miss, and couldn't reveal to us when asked.

It's easy to calculate sneaky-fee estimates that are much higher. Simply adding up analysts' estimates of total fee income from credit- card late fees, homeowners' title insurance, wacky hotel-resort fees and the like, consumers lose well more than $100 billion a year to hidden surcharges.

But the real total is probably even more than that-in 2004, Consumer Reports guessed it was around $216 billion annually. Your family's portion of that would average closer to $4,000 each year.

Gotcha! Perhaps those mosquito bites are starting to itch. But I have yet to describe the biggest bite of all.

That $4,000 annual drain is nothing compared to what Gotcha Capitalism is doing to your retirement. In the biggest fee swindle ever invented, hidden fees-siphoned off in total silence by Wall Street-will force you to work four, five, even six years longer than you should. They're stealing roughly one-third of the money the average American has set aside for old age. And get this: the better the investor, the greater the penalty. Later in this book, I'll show you how Wall Street fees can suck up fully 80 percent of the money a twenty-year-old invests for retirement. Eighty percent!

Hidden fees are so drastic now that they may even be screwing with the national inflation rate. Companies often don't supply surcharges and fee data to the Bureau of Labor Statistics, so when it computes inflation rates, fees aren't reflected. As a result, our national inflation rate is held artificially low.

Yes, hidden fees are a big deal.

These numbers might surprise you, but I'll bet you've had a sixth sense that something was amiss for a while. You wondered why the government keeps saying inflation is the lowest it's ever been, yet you feel squeezed tighter and tighter by monthly bills. And I'll bet you feel small-print rage once or twice a month. You know the feeling well. There you are, lying in bed at night, trying to convince yourself to forget how irritated you are at that $39 "courtesy overdraft fee" you just paid to your bank for buying a $3 hamburger with your cash card one day before your paycheck cleared.

But you don't have to take all this lying down. In my paranoia to avoid getting cheated, I've discovered something, and I want to let you in on the secret. We don't have to pay sneaky fees. And if you've already paid, don't worry: There are ways to get your money back. Gotcha Capitalism will tell you how.

Companies have spent years and billions of dollars conducting extensive research, learning just how to confuse you and take away your rights to a fair deal. This book will show you how they do it, and then show you how to reclaim both your money and your rights. With any luck, we can all start a movement to reclaim our economy from hucksters with huge market capitalizations, and create a marketplace where fair companies actually stand a fighting chance.

II. Tales from the Mouse Hole

The journey into the world of Gotcha Capitalism may temporarily increase your sense of rage when you find out what they think of us. You'll discover, for example, that corporations have armies of fee consultants who study more and more sneaky ways to separate you from your money. You'll see that they snicker behind your back while they trick you into one-sided contracts using typography that's so tiny, industry insiders call it "mouseprint." You'll learn that while you weren't paying attention, the idea of customer loyalty was thrown overboard by many American firms, and they now believe that pissing off customers is good business. You'll find out the U.S. Supreme Court has ruled that mailing you a single notice, even one you may or may not read, can constitute a binding contract.

Now to really learn how to hunt down hidden fees and kill them, you've got to know your enemy. You've got to learn to think like the enemy. To really understand mouseprint, you've got to meet the mice. So let's crawl into the mouse hole for a bit and have a look around.

AT&T: "NOT EVEN LIKELY TO OPEN" THE ENVELOPE

What if, as a company, you want to be really, really sure consumers won't read the contract you give them? You ask your marketing people to study the problem. Marketers are experts at getting people's attention. So couldn't marketing tactics be thrown into reverse, and used to make sure some fine print slips by unnoticed?

In 2001, AT&T wanted its sixty million customers to quietly agree to waive their right to sue the company. It wanted no fuss, and no mess. So it carefully crafted a mailer that was specifically designed to be discarded.

This tale of deception dates all the way back to the breakup of AT&T's monopoly. After reading it, you might never toss junk mail into the recycling bin again.

The telephone behemoth was dissolved back in 1982, but the firm's complete deconstruction took decades. Almost twenty years later, regulators were still dealing with the fallout.

Before the breakup, AT&T had to obtain approval from federal regulators to increase prices. The process was called "submitting a tariff." But after the breakup, AT&T's monopoly was dissolved, and the tariff process was eliminated. AT&T was told by regulators to form normal contractual relationships with its customers by sending a contract home to every one. The company took the opportunity to stuff the contract with goodies, and took the concept of small print to new lows.

As AT&T prepared to send notices to sixty million people, a special "detariffing" team was formed. It carefully prepared a mailing that no one would notice.

Getting consumers to ignore the mailing was critical, because that meant they would silently submit to the new contract terms, however one-sided they were. No uproar, no bad publicity. The detariffing team decided the document would utilize what was called the "negative option"; consumers who didn't respond to the mailing were assumed to be in agreement. No "yes" required, no signature. Silence meant consent. Recycling meant surrender.

In July and August 2001, millions of the notices were mailed across the country. AT&T was not worried they would cause a stir. Its research had concluded that many of its customers were "not even likely to open" the letter. The company expected every one of them would be fooled into consenting to this absurd contract.

But not Berkeley resident and AT&T consumer Darcy Ting. She actually read the document. A Taiwanese immigrant and professional consumer advocate, Ting spent her days helping educate Asian Americans about consumer rights for San Francisco-based nonprofit group Consumer Action. Ting knew enough to scour AT&T's fine print. She noticed that the detariffing notice included a "legal remedies" section that forced consumers to surrender their rights to sue the company under virtually all circumstances. Disputes were to be taken to mandatory binding arbitration instead. The contract also barred consumers from participating in class-action lawsuits. Disturbed by the prospect of waiving so many basic rights so quietly, Ting enlisted the help of Consumer Action, and sued. Court documents from the case reveal just how far AT&T was willing to go to sneak its customer-service agreement past consumers.

The detariffing team at AT&T extensively researched the letter's language before sending it out. As a member of AT&T's detariffing team put it: "I don't want [the letters] to tell customers . . . pay attention to the details."

So the firm made sure to put in bold type near the top of the cover letter, "There's nothing you need to do." And in a research document called the "Qualitative Study," AT&T team members wrote that "after reading the bolded text . . . [at] this point most would stop reading and discard the letter."

Note: When a company says there's nothing you need to do, watch out.

Even the most enterprising consumers who scanned the document and went to the trouble of calling AT&T with questions faced still more hurdles. In a document titled "Detariffing-Customer Handling Experience," which was circulated to customer-service managers, the strategy for distracting consumers from the real point of the mailing was made plain.

Excerpted from Gotcha Capitalism: How Hidden Fees Rip You off Every Day-and What You Can Do about It by Bob Sullivan
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.

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Gotcha Capitalism

Gotcha Capitalism

0345496132

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