Top 7 Legalized Ripoffs

We busted the trusts! Oil! Rail! Coal! Kapow! You just got Tafted! Yeah, but that was a century ago. Industries have had more than enough time to mutate and adapt, especially when it comes to technology, and figure out new anti-consumer ways to develop and maintain hegemony. You get higher prices, lower product quality, and fewer rights. They get more yachts to waterski behind. In no particular order, here are some of the top 7 legalized ripoffs consumers face today:

Banks – Cascading overdraft fees
When several debits hit your account, they process the largest one first, even if it wasn’t the first one to arrive. This is fine, unless you overdraft. Processing the last one first increases the chance you’ll overdraft, and then you can get hit for ~$30 overdraft fee per debit. Consumer advocates have pressured banks for years on this issue, who say they’re doing you a favor because it’s worse if your rent check bounces than your cable bill. But when was the last time a bank did something so systemic just to be nice?

Cellphones – Handsets
Because of legalized monopolistic controls, consumers in the US are stuck with crippled handsets inferior to the rest of the world. Many phones are manufactured with extra features that most Americans can’t access because of carrier-mandated lockouts. Savvier consumers know to to buy an unsubsidized GSM phone and swap their SIM cards around, but then you can use only AT&T or Tmobile. The average buyer gets shunted into buying 2-year contracts and subsidized phones. These come complete with requisite early termination fee that creates a high barrier for consumers who would otherwise punish bad service by switching carriers. Until recently, you would get hit with that same $175 fee whether you canceled on the first day or the last day of your contract. Carriers were finally forced to let the fee reduce per month, although, unlike true prorating, it never reaches $0.

Verizon – Makes phones so you’re likely to accidentally hit $1.99 button
If you have a Verizon phone, you’ve probably at one point accidentally hit a button that connects you to “Get It Now” or “Mobile Web.” Arg. And it’s double-arg when it turns out that even if you cancel the action right away, you still get hit with a $1.99 1MB data charge. Verizon denies it, but a Verizon insider told NYT’s Pogue that it’s totally on purpose. Whatever the reason, by calling Verizon and asking for them to block the data service, you can disable the GetItNow and MobileWeb functions, and prevent the fee from being incurred.

Cellphones – Multiply intentionally long carrier voicemail messages by millions of calls = sweet sweet profit
Every time you leave a voicemail for someone you have to sit through an annoyingly long (15-seconds) automated instruction from the cellphone company on how to do so. Don’t people know how to leave a message by now? The length of the messages are no accident. Wireless carriers have entire conferences devoted to getting you to spend more time on the cellphone, and these really long messages are one of their favorite tricks. Good news though, if you press 1, * and #, pausing between each key, you can skip the voicemail instructions of most major carriers.

Legalese – The dread mandatory binding arbitration (MBA).
If you ever rented a car, bought a cellphone plan, or got acupuncture, you’ve probably signed away your rights. Many of the contracts you sign with companies make you agree to waive your right to sue or take part in a class action and instead use mandatory binding arbitration. This method of resolving legal disputes was developed for businesses to expedite their own intra-legal wars that strips the participants of many of the rights of due process or appeal. Probably fine when you have two titans of comparable resources battling one another, but companies love to use it against consumers now, whom they vastly overmatch. Plus, since the companies pay the arbitration firms’ fees, there is an inherent conflict of interest. Equally troubling is news that firms who mostly find in favor of corporations are the ones that get the most business. With the increased scrutiny surrounding the passing of the CARD act, most credit card companies have done away with MBA, but you still can’t enter into most contracts with a business without signing away a good chunk of your legal rights. Jordan Fogal, for instance, bought a dream house that became riddled with mold, had windows installed upside-down, and a jacuzzi that dropped 100 gallons of water through the ceiling. The arbitration firm ruled against her and the developers walked away clean and with their money. Oh, and you probably have a mandatory binding arbitration clause in your employment contract too. Happy working!

Cable – No real competition = no real trying
“Right of way” municipal contracts give cable companies a monopoly in the regions that they’ve managed to tie up, leaving them free of competition or being forced to improve service or customer service. They’ve argued for years that satellite and dish services offer consumers alternates and thus competition, but no one is making it so that they have to compete with other cable companies. The result is prices that have continued to jack up way ahead of inflation while service and satisfaction has remained poor. Why else would you to put up with a system where you take a sick day from work to wait for a technician, only to have him cancel the appointment and say you weren’t home, and then you spot him across the street eating a sandwich?

Phonecards – ¿Dónde están los minutos?
Several studies have found that phonecards often offer only 60% of the minutes that they advertise to hold. 27 lines of 4.5 font print on the back, with language that can vary wildly from card to card, outline a myriad of arcane fees that can chew up your minutes, even charging if the call isn’t completed. Some fly-by night guys will plunk down $10,000, buy a switch that allows them to connect to a large telcos network and start purchasing wholesale excess capacity, on credit. They paste their PIN on a bunch of cards and flood the market offering lots of minutes, then after the word gets out to several layers down the pyramid, start cutting back on the minutes and racking up the fees. After enough complaints rack up and bill start coming due, they close up shop and reopen under a new name. Unsophisticated customers think it’s the people who buy the cards at the end of the cycle that are getting ripped off, but really it’s everyone. However, at ~3 cents per minute, it’s still a way better deal than phone cards solid in Walmart/drug-stores, and definitely cellphone or payphone, even after accounting for fees. Catering to an immigrant community with a distrust/fear/lack of knowledge about the authorities, the ripoff goes way underreported. And an antiquated “common carrier exemption” that partially protects the industry from oversight can be a significant barrier for the FTC to overcome when they want to take legal action against the worst players.

What are your favorite legalized ripoffs to hate? Sound off in the comments.