July 2007
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This monthly letter to subscribers from Consumers Union President Jim Guest highlights the critical consumer issues behind our current reports. See archived letters.



Fees: Eight we hate

Jim Guest
DOLLARS AND SENSE
Absurd fees are increasingly showing up on consumer's bills.
Remember Mr. Whipple? It was bad enough that he whined when shoppers squeezed the Charmin. Now picture him overcharging for the toilet paper and slapping on a fee for restocking the shelves.

That’s what some hotels are doing with their already overpriced minibars. You’re used to paying outrageous prices for your bag of 15 peanuts; now get ready to pay $2.50 more to have hotel staff replace them. Which got me to wondering what other absurd and offensive fees consumers are paying. I asked experts around the office. A finance reporter replied, ”Where to start?”

You’d think that all the automation in banking would make it an easy place to save a few dollars, but banks are among the worst nickel-and-dimers:
  • A paper statement can cost you $2 a month; you could pay $3 to see your checks or a copy of your checks. But going electronic isn’t always a bargain; some banks charge you $6 a month for access to your statement through a money-management program such as Quicken.

  • Too little money sitting in your account? That’s $25, please, and more if you bounce a check. And just because the bank approves a debit-card purchase doesn’t mean it won’t slap on an overdraft fee if the purchase sends your account into the red. The Center for Responsible Lending reported that the median fee for such transgressions is $34. The median purchase that triggered that fee? $17.24.

  • Too many phone calls to the bank’s service center (and by too many, they mean more than two per statement period): $2 each.

You already know how we feel about the wireless industry’s unfair billing; we’re the ones who call it “cell hell.” Some of the worst burns you’ll get:
  • Paying to start. Activation fees of $35 and up are common.

  • Paying to stop. Canceling your service before your contract is up--even a few weeks before--triggers early-termination fees as high as $240 for each number linked to an account.

  • “Regulatory cost recovery fees” and the like sound like government-initiated charges but are in fact a way for telecom companies to pass their costs on to you.

Yippee! Aunt Ida remembered your birthday. Your joy may be short-lived.
  • If she gave you a bank gift card, you should know that it not only cost her $2 to $10, but you’ll pay as well: up to $5 every month you carry it. A replacement might cost $15, and a new card up to $25 if yours expires.

  • Decided you didn’t like that new camcorder? Electronics stores and Web sites regularly charge a restocking fee of 10 to 20 percent if you had the gall to open the box.

Your turn. We’d like to know what fees drive you nuts. Tell us by going to Fees I Hate on the Customer Service page. Enough consumer pressure might just persuade the fee-mongers to back down or regulators to step up.

Jim Guest's signature.

Jim Guest
President