Sunday, 27 April 2008

• The 12 most outrageous fees

  Would you pay $5 to stand in line at the DMV? Or $10 to $20 to get on your plane first? Companies are nickel-and-diming consumers to death. But you can fight back.
  

  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 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.

  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.

  
  

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