The 12 most outrageous fees
By Karen Aho
In the age of Web commerce, shoppers can find the lowest price with a click. The grim reality for businesses is that the lowest price tag usually wins.
How can a business raise prices and still compete? Isolate a cost, tack it on to the bill and call it a fee. The price tag is intact, and "fee" and "surcharge" sound almost inevitable, even downright governmental.
"Increasing the price creates challenges for companies," said Tim Calkins, a clinical professor of marketing at Northwestern University's Kellogg School of Management. "But creating fees is a little out of sight and out of mind."
At hotels, cable companies, banks, airlines, stores -- nearly everywhere -- the fees are mounting.
"I call it the death of the price tag," said Bob Sullivan, who writes MSNBC's Red Tape Chronicles blog and is the author of "Gotcha Capitalism: How Hidden Fees Rip You off Every Day and What You Can Do About It." In his survey of 2,000-plus consumers, charges added to everyday bills averaged $950 per year.
Here's a sampling of our "favorites" (you can share yours here):
The careful-what-you-ask-for fee. If your Air Canada flight is delayed due to weather or heavy traffic, agents will be happy to help you find a hotel, restaurant or flight -- as long as you've paid a $25-to-$35 "On My Way" fee. Once this was something airline agents did, you know, just to help out. But in this age of fees in flight, the travel experience has been deconstructed.
For example, check out this list of fees from Delta Air Lines, which will now charge a $3-per-bag "administrative fee" for curbside check-in and a $25 "handling charge" for awards tickets that use another airline.
What do the airlines say? Basically, you asked for it. You wanted cheap flights, and you still demand cheap flights. But with already slim profit margins and rising fuel prices, fees are the only way airlines can remain competitive.
The some-are-more-equal-than-others fee. Even one-class-for-all Southwest Airlines has entered the mix. Pay a "business select" fee of $10 or $20 and you get first boarding, an extra reward point and a free cocktail. The value? Southwest hauled in $7 million in the program's first eight weeks alone, spokesman Chris Mainz said.
"Instead of charging for things we're already giving them, we're trying to get creative," Mainz said. "We can't just raise fares in response to the cost of fuel rising."
See "10 'sneaky' airline fees" for more.
The it's-not-easy-being-green fee. In March, U-Haul started charging $1 to $5 to offset its waste-disposal costs, calling it an "environmental fee." The trailer- and truck-rental company said that mechanics and oil-change shops charge similar fees, and that for years it had been absorbing these costs.
Poster "gcallaghan" at The Huffington Post wrote, "It's like an implicit threat to toss the stuff in the nearest wetlands if we don't pay."
The Sierra Club agrees the term "environmental fee" can be misleading, implying the company is taking extra steps to help the Earth by purchasing carbon assets, for example, or setting aside land. "But properly disposing of waste is something everyone should do," said David Willett, a spokesman for the nonprofit group.
The overworked-landlord fee. So you and the roommates swung the nonrefundable credit-check fee, pet fee and cleaning fee for your new apartment. Now make sure not to send in more than one rent check to avoid a "processing fee." Slocum Apartments in Pullman, Wash., explains that its $20 multicheck fee is to simplify the owner's bookkeeping tasks.
The put-it-back-where-you-got-it fee. Along with the banquet of fees that hotels have added in recent years is one of $5 to $10 to restock the minibar. Yes, that's after the $10 charge for the peanuts. (And some minibars now come with electronic sensors that automatically bill your hotel room if you even pick up a Snickers.)
PricewaterhouseCoopers reported that hotel fees brought the industry $1.6 billion in 2006, triple the amount in 2002.
Airline customer service in a tailspin
Consumer complaints were up over 60% in 2007, and overall performance declined to its lowest level ever, according to an airline-quality survey.
The $30-or-we'll-lecture-you-for-eight-hours fee. Get hitched in Texas and you'll pay an extra $30 for your marriage license if you don't complete an eight-hour prenuptial counseling course. It's one of several states with the requirement. One argument is that couples are better off economically than singles.
The one-ringy-dingy fee. Oklahomans with AT&T land lines started coughing up a 2% "line inspection fee" in February. The company's rationale had a familiar ring: The city makes us maintain the rights of way, and we've been paying the cost ourselves for decades.
If that doesn't fly, there's always Telephone Company Explanation No. 2: Everyone else is doing it! At least that's what a spokesman told the Oklahoman newspaper.
The we-don't-need-your-stinkin'-taxes fee. Residents of Ironton, Ohio, will pay two more years of an $8 "public safety fee" to help pay for police officers' salaries and equipment, items typically covered by taxes through the city's general fund.
Bob Cleary, the only City Council member to oppose the charge, argued that "the people of Ironton are being 'feed' to death," The Ironton Tribune reported. He was overruled; the other six members liked the $529,000 it saved Ironton money in . . . taxes.
The world-is-shifting fee. The University of California, Santa Cruz, recently raised its "seismic safety fee" from $25 to $40 a term. Yes, that's seismic, as in earthquake. The money goes to improving the integrity of campus buildings to protect students in a quake. These students may live on shaky ground, but the long list of fees they pay has become part of the financial bedrock of universities everywhere.
The convenient-for-whom fee. Companies love it when you order a ticket or register online yourself. It saves labor costs. So how do they thank you? By charging you a convenience fee, of course.
Ticketmaster, the behemoth provider of event tickets, generates its revenue from fees. The company says convenience fees, which vary, are in exchange for the convenience of 24/7 ticket buying without having to drive to a box office.
Convenience fees don't cover order processing or ticket delivery. Those costs are paid through . . . other fees.
The inconvenience fee. Of course, you can choose to drive to a location to make a transaction, as in the old days. But beware of the growing number of face-to-face fees.
Virginia legislators passed a $5 fee for drivers who renew their licenses at the Department of Motor Vehicles instead of online or through the mail, saying the fee replaced a proposed $5 increase for all licenses. Legislative aide Anne Korman says it costs the state $7 to renew a license in person, $2 by mail and $1 online.
A bonus, its sponsor says: cutting down wait times that can stretch for hours.
The you-snooze-you-lose fee. Wachovia doesn't charge its new banking customers a fee for speaking to human tellers. But it used to, and if you didn't know enough to switch accounts, you could still find a surprise in the mail. One customer noticed an $8 teller "transaction fee" and, after writing the company, learned he'd been billed $2 for each of four teller services in one month. His account allowed for two a month, but once customers go over they're charged for each.
Wachovia says original policies remain in effect until customers request a change and that they don't have the resources to contact millions of people.
For more on bank fees, see "Bank fees are more outrageous than ever" and this undercover Government Accountability Office investigation (.pdf file) into bank-fee disclosures.
What to do? Smile and fight right
Last year a Chicago consultant faked his death in an attempt to escape his cell-phone cancellation fee. (He got caught and paid the $175.) Later, a 75-year-old woman with heart trouble used a hammer to take out her frustration with Comcast. (She paid $2,500 in damages for the office equipment.)
Sadly, these strategies leave the fee machine unmoved.
Michael Shames, the executive director of the California nonprofit Utility Consumers' Action Network (UCAN), where he's dubbed the "World's Greatest Consumer," does know what works. He's gotten his own fees removed and launched lawsuits to change company practices. Even Dr. Phil calls on him for advice. (See Shames' Web site for resources.)
The problem, Shames says, is that no government agency really oversees these fees. As long as a company tells you about it, it can try to add any fee and call it what it likes.
"Often these things are large enough to rankle you but small enough not to justify spending an afternoon dealing with it," Shames said.
Airline customer service in a tailspin
Consumer complaints were up over 60% in 2007, and overall performance declined to its lowest level ever, according to an airline-quality survey.
In the end, people see red but lose cash. Instead, do this:
* Give a clerk the power to remove the fee. Be calm and respectful. "You smile, you say, 'I don't feel happy about this fee. I'd feel much better about this transaction if you took it off,'" Shames said. "Treat them as your confidant. Tell them something about yourself. . . . More often than not, they have the discretion to do this."
* Don't ask for a manager, get indignant or turn into an act worthy of "The Jerry Springer Show." "You can put on a show, but you're not going to win anything," Shames said. "Don't put on a show; make something happen." Instead, ask for the address for headquarters and open a discussion about the problem. The clerk just might tell you what others have said. "It's a good way to get information from the clerk," Shames said, "and now you're armed."
* Use professionals. E-mail the state consumer-affairs division, or do an online search for the company and "excessive fees" to find a consumer-advocacy group working on the issue. They know how to leverage power against the company, Shames said. "At a maximum, you could force the company to not only give you your money but maybe hundreds of thousands of people their money."
* Consider filing a complaint online with the Federal Trade Commission, or call 1-877-FTC-HELP (382-4357). In a competitive marketplace, companies can charge what they like, but by law they must be upfront, including about their fees. "Even if they stated it in tiny print, that wouldn't be full disclosure. It has to be clear and conspicuous when they talk about fees," said Frank Dorman, an FTC spokesman.
* Let it go. Spend 30 minutes and move on. Any more time and the true cost of that fee skyrockets.
By Karen Aho
In the age of Web commerce, shoppers can find the lowest price with a click. The grim reality for businesses is that the lowest price tag usually wins.
How can a business raise prices and still compete? Isolate a cost, tack it on to the bill and call it a fee. The price tag is intact, and "fee" and "surcharge" sound almost inevitable, even downright governmental.
"Increasing the price creates challenges for companies," said Tim Calkins, a clinical professor of marketing at Northwestern University's Kellogg School of Management. "But creating fees is a little out of sight and out of mind."
At hotels, cable companies, banks, airlines, stores -- nearly everywhere -- the fees are mounting.
"I call it the death of the price tag," said Bob Sullivan, who writes MSNBC's Red Tape Chronicles blog and is the author of "Gotcha Capitalism: How Hidden Fees Rip You off Every Day and What You Can Do About It." In his survey of 2,000-plus consumers, charges added to everyday bills averaged $950 per year.
Here's a sampling of our "favorites" (you can share yours here):
The careful-what-you-ask-for fee. If your Air Canada flight is delayed due to weather or heavy traffic, agents will be happy to help you find a hotel, restaurant or flight -- as long as you've paid a $25-to-$35 "On My Way" fee. Once this was something airline agents did, you know, just to help out. But in this age of fees in flight, the travel experience has been deconstructed.
For example, check out this list of fees from Delta Air Lines, which will now charge a $3-per-bag "administrative fee" for curbside check-in and a $25 "handling charge" for awards tickets that use another airline.
What do the airlines say? Basically, you asked for it. You wanted cheap flights, and you still demand cheap flights. But with already slim profit margins and rising fuel prices, fees are the only way airlines can remain competitive.
The some-are-more-equal-than-others fee. Even one-class-for-all Southwest Airlines has entered the mix. Pay a "business select" fee of $10 or $20 and you get first boarding, an extra reward point and a free cocktail. The value? Southwest hauled in $7 million in the program's first eight weeks alone, spokesman Chris Mainz said.
"Instead of charging for things we're already giving them, we're trying to get creative," Mainz said. "We can't just raise fares in response to the cost of fuel rising."
See "10 'sneaky' airline fees" for more.
The it's-not-easy-being-green fee. In March, U-Haul started charging $1 to $5 to offset its waste-disposal costs, calling it an "environmental fee." The trailer- and truck-rental company said that mechanics and oil-change shops charge similar fees, and that for years it had been absorbing these costs.
Poster "gcallaghan" at The Huffington Post wrote, "It's like an implicit threat to toss the stuff in the nearest wetlands if we don't pay."
The Sierra Club agrees the term "environmental fee" can be misleading, implying the company is taking extra steps to help the Earth by purchasing carbon assets, for example, or setting aside land. "But properly disposing of waste is something everyone should do," said David Willett, a spokesman for the nonprofit group.
The overworked-landlord fee. So you and the roommates swung the nonrefundable credit-check fee, pet fee and cleaning fee for your new apartment. Now make sure not to send in more than one rent check to avoid a "processing fee." Slocum Apartments in Pullman, Wash., explains that its $20 multicheck fee is to simplify the owner's bookkeeping tasks.
The put-it-back-where-you-got-it fee. Along with the banquet of fees that hotels have added in recent years is one of $5 to $10 to restock the minibar. Yes, that's after the $10 charge for the peanuts. (And some minibars now come with electronic sensors that automatically bill your hotel room if you even pick up a Snickers.)
PricewaterhouseCoopers reported that hotel fees brought the industry $1.6 billion in 2006, triple the amount in 2002.
Airline customer service in a tailspin
Consumer complaints were up over 60% in 2007, and overall performance declined to its lowest level ever, according to an airline-quality survey.
The $30-or-we'll-lecture-you-for-eight-hours fee. Get hitched in Texas and you'll pay an extra $30 for your marriage license if you don't complete an eight-hour prenuptial counseling course. It's one of several states with the requirement. One argument is that couples are better off economically than singles.
The one-ringy-dingy fee. Oklahomans with AT&T land lines started coughing up a 2% "line inspection fee" in February. The company's rationale had a familiar ring: The city makes us maintain the rights of way, and we've been paying the cost ourselves for decades.
If that doesn't fly, there's always Telephone Company Explanation No. 2: Everyone else is doing it! At least that's what a spokesman told the Oklahoman newspaper.
The we-don't-need-your-stinkin'-taxes fee. Residents of Ironton, Ohio, will pay two more years of an $8 "public safety fee" to help pay for police officers' salaries and equipment, items typically covered by taxes through the city's general fund.
Bob Cleary, the only City Council member to oppose the charge, argued that "the people of Ironton are being 'feed' to death," The Ironton Tribune reported. He was overruled; the other six members liked the $529,000 it saved Ironton money in . . . taxes.
The world-is-shifting fee. The University of California, Santa Cruz, recently raised its "seismic safety fee" from $25 to $40 a term. Yes, that's seismic, as in earthquake. The money goes to improving the integrity of campus buildings to protect students in a quake. These students may live on shaky ground, but the long list of fees they pay has become part of the financial bedrock of universities everywhere.
The convenient-for-whom fee. Companies love it when you order a ticket or register online yourself. It saves labor costs. So how do they thank you? By charging you a convenience fee, of course.
Ticketmaster, the behemoth provider of event tickets, generates its revenue from fees. The company says convenience fees, which vary, are in exchange for the convenience of 24/7 ticket buying without having to drive to a box office.
Convenience fees don't cover order processing or ticket delivery. Those costs are paid through . . . other fees.
The inconvenience fee. Of course, you can choose to drive to a location to make a transaction, as in the old days. But beware of the growing number of face-to-face fees.
Virginia legislators passed a $5 fee for drivers who renew their licenses at the Department of Motor Vehicles instead of online or through the mail, saying the fee replaced a proposed $5 increase for all licenses. Legislative aide Anne Korman says it costs the state $7 to renew a license in person, $2 by mail and $1 online.
A bonus, its sponsor says: cutting down wait times that can stretch for hours.
The you-snooze-you-lose fee. Wachovia doesn't charge its new banking customers a fee for speaking to human tellers. But it used to, and if you didn't know enough to switch accounts, you could still find a surprise in the mail. One customer noticed an $8 teller "transaction fee" and, after writing the company, learned he'd been billed $2 for each of four teller services in one month. His account allowed for two a month, but once customers go over they're charged for each.
Wachovia says original policies remain in effect until customers request a change and that they don't have the resources to contact millions of people.
For more on bank fees, see "Bank fees are more outrageous than ever" and this undercover Government Accountability Office investigation (.pdf file) into bank-fee disclosures.
What to do? Smile and fight right
Last year a Chicago consultant faked his death in an attempt to escape his cell-phone cancellation fee. (He got caught and paid the $175.) Later, a 75-year-old woman with heart trouble used a hammer to take out her frustration with Comcast. (She paid $2,500 in damages for the office equipment.)
Sadly, these strategies leave the fee machine unmoved.
Michael Shames, the executive director of the California nonprofit Utility Consumers' Action Network (UCAN), where he's dubbed the "World's Greatest Consumer," does know what works. He's gotten his own fees removed and launched lawsuits to change company practices. Even Dr. Phil calls on him for advice. (See Shames' Web site for resources.)
The problem, Shames says, is that no government agency really oversees these fees. As long as a company tells you about it, it can try to add any fee and call it what it likes.
"Often these things are large enough to rankle you but small enough not to justify spending an afternoon dealing with it," Shames said.
Airline customer service in a tailspin
Consumer complaints were up over 60% in 2007, and overall performance declined to its lowest level ever, according to an airline-quality survey.
In the end, people see red but lose cash. Instead, do this:
* Give a clerk the power to remove the fee. Be calm and respectful. "You smile, you say, 'I don't feel happy about this fee. I'd feel much better about this transaction if you took it off,'" Shames said. "Treat them as your confidant. Tell them something about yourself. . . . More often than not, they have the discretion to do this."
* Don't ask for a manager, get indignant or turn into an act worthy of "The Jerry Springer Show." "You can put on a show, but you're not going to win anything," Shames said. "Don't put on a show; make something happen." Instead, ask for the address for headquarters and open a discussion about the problem. The clerk just might tell you what others have said. "It's a good way to get information from the clerk," Shames said, "and now you're armed."
* Use professionals. E-mail the state consumer-affairs division, or do an online search for the company and "excessive fees" to find a consumer-advocacy group working on the issue. They know how to leverage power against the company, Shames said. "At a maximum, you could force the company to not only give you your money but maybe hundreds of thousands of people their money."
* Consider filing a complaint online with the Federal Trade Commission, or call 1-877-FTC-HELP (382-4357). In a competitive marketplace, companies can charge what they like, but by law they must be upfront, including about their fees. "Even if they stated it in tiny print, that wouldn't be full disclosure. It has to be clear and conspicuous when they talk about fees," said Frank Dorman, an FTC spokesman.
* Let it go. Spend 30 minutes and move on. Any more time and the true cost of that fee skyrockets.
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