On Monday I was listening to an interview on Fresh Air with Terry Gross that really resonated with me. Terry was interviewing Bob Sullivan, a correspondant with MSNBC, who has just written a book called “The Red Tape Chronicles.” In it he details how corporations have worked to include more and more hidden fees into everyday purchases.
For example, haven’t you ever wondered how that $39.99 monthly cell phone plan you signed up for turns in a $52.09 a month plan? I mean, wouldn’t that mean there was a 30% tax rate?! That can’t be, not in this “ownership society” we live in; piloted by our fearless, feckless leader in Washington. So where do all of these charges come from? As Sullivan describes, some of them indeed are taxes, but many fees are actually made up fees by the companies to look like taxes! They charge you fees to cover their costs of maintaining their network and collecting taxes. Jeez, I thought that what I was paying them for! I haven’t read this book yet, but I’m planning on it and I suggest that you consider doing the same.
Sullivan also spends some time uncovering the companies’ intent. With monthly bills like cell phones, the intent is obvious even if the manner in which they collect the extra money is deceptive. But there’s even a more insidious thing going on here: these companies are trying to get you to not pay them… well, not pay them on time at least. Through bad, terrible, shameful website design, cell phone, internet, utilities, banks and many other types of companies are able to obfuscate the payment process so much that it is virtually impossible to find out how much you owe or if you’ve even already paid them. Sullivan uncovers at least one case where there is written evidence that executives intentionally misled their customers so they could extort more money from them. The rest of the time it’s hard for us to know whether it’s intentionally bad design or just incidental. Either way it benefits the company and hurts the consumer.
This is a failure of the market and the government should do something to fix it. That’s Sullivan’s conclusion and it’s also mine. As someone who’s just started paying bills, I’ve already experienced many examples of ‘gotcha capitalism.’ I do my best to fight giving companies money they don’t deserve, but who has time to catch all of it. It’s completely unclear to me why some enterprising populist politician hasn’t made a huge stink about this. Even a small step of requiring companies to advertise the final cost of your first month BEFORE YOU SIGN THE CONTRACT would be a huge step in the right direction. The Information Age means great things for a free market place, but if companies prevent consumers from receiving more information, it’s impossible for us to make informed, efficient decisions. Any advocate of liberalism or capitalism should see this as a severe threat to the very foundations of the American economic system. It needs to be fixed.
