Telecom Carriers Use Deceptive Advertising 285
theodp writes "Regulatory Programs Fee. It sure sounds like a government tax. It isn't. The latest addition to T-Mobile's monthly bill is merely the latest example of telephone companies passing their own cost of doing business to customers with an array of surcharges that one might easily mistake for taxes being collected on behalf of the government. With millions of subscribers at each company, these less-than-forthright fees add billions of dollars per year in extra revenue without raising advertised rates."
Five cents turns into 16.37 cents? (Score:5, Informative)
Sure, that's only pennies of difference, but nickeling and diming in volume adds up.
Re:How the hell is this news? (Score:5, Informative)
So who is supposed to pay for increased overhead? (Score:5, Informative)
I'd be more likely to call things like this "unfunded mandates". People groan about getting screwed by companies and then groan again when the companies charge them for services that they mandate.
Personally, I'm a little ticked by this way of recovering costs. I'm now paying monthly for other people to have number portability. This seems akin to having a monthly charge on my bank account for other people to use non-network ATMs. I don't like paying for non-network ATMs, so I don't use them. Similarly, I don't like paying to move to a new network, so I don't do it.
But honestly, if services are going to be mandated, we have to expect to pay for them. You can't really complain too much about
My Favorite Deceptive Cell Phone Advertising (Score:5, Informative)
Re:Some of these percentages are pretty high too! (Score:2, Informative)
Bottom line: Nextel is charging me 8% more to make money.
Re:Big Fat Duh! (Score:4, Informative)
Look at the State if you want the Crooks (Score:5, Informative)
http://www.nytimes.com/2004/05/10/nyregion/10ph
A not-so-funny side (Score:4, Informative)
You laugh, but T-Mobile UK just started charging one pound per month just to send you an itemized paper bill.
That would seem less serious if I hadn't just caught them double-charging me for text messages supposedly included in my monthly allowance, based on the itemized records from previous months' bills.
Re:uh (Score:4, Informative)
What the phone companies are doing is making the costs of service look cheaper than it is. They quote you $50, but in fact are charging you $55. The $5 is not going to an government agency. The $5 is revenue. It is what you pay for the private company for the service, which most of us would consider the real cost of the service.
The problem with this is that limits your ability to compare prices. Many mail order places use this shady tactic to make their inferior products seem less costly. For instance, a music service may list prices for CDs that are, on average, $8. However, after adding the handling fee, a fee that is in fact revenue to the company, the real costs of the CD may be closer to $12. Note that is not the shipping fee that is paid to the carrier, which may be as low as $1.50. By quoting an intentionally deflated price, they deceive consumers. Many of the shady mail order place, like fingerhut, play the same game. I believe UPS paid a fine for doing this with the insurance charge.
As an example, suppose car insurance companies were allowed to add a statutory loss fee that would pay the expected claims of the year. In this way the insurance company could quote you a price that would only cover their administrative costs, which might be 65%-75% of the real quote, and then add the fee onto that. When you compare prices, you would not be able to find the cheapest quote because of this large percentage that was unknown. The companies that were in fact the cheapest would tell you this missing bit. This might make these companies seem more expensive.
In the end there is no reason for a telco not to quote the actual money the customer will have to pay everyone month. It is generally going to be the same for all providersin a region.. In fact, them not doing this is costing the major telcos business. The smaller companies are doing one of two things. Everyone knows how much they pay for the land line every month, but not everyone know how much basic service costs. The small telcos are taking advantage of this. Some telcos are targeting the good customer looking to save a few bucks. These are quoting basic service that is one or two dollars cheaper the the major telco, but are doing it in such a way that it looks like this is all the customer will have to pay, therefore making the service appear much cheaper than it is. Other telcos are targeting the customers that don't always pay their bills. These companies set their basic service charge to the average amount the customer would pay at the major telco, and then add taxes on top of that. They advertise in such a way that it looks like the customer would be paying the same as if they went with the major telco.
Clearly it is deceptive and we should not tolerate it. If Walmart charged a two dollar store use fee on every transaction, fewer people would shop there.
TracFone (Score:2, Informative)
I suspect that traditional cell phone plans are good for very high volume users, but for me TracFone works great. I know this sounds like an advertisement, but I really do use and like the service.
P.S. If you want to sign up, let me "refer" you and we'll both get 100 free minutes. Just leave your email address in a reply and I'll sign you up for the offer. (You'll just get one email solicitation.)
Re:Deceptive, not illegal (Score:3, Informative)
If your carrier adds a fee (as T-mobile just did) you can cancel your contract without penalty. Of course, they don't exactly advertise this fact, but it has happened with both T-mobile and Sprint in the last year. Check out some of the threads on Fatwallet.com about this issue.
Keep this in mind (Score:2, Informative)
Re:Deceptive, not illegal (Score:2, Informative)
Re:Deceptive, not illegal (Score:2, Informative)
In theory, the sales tax to be paid by the customer is 4%, and the business pays 4% of what is collected, resulting in an effective tax rate of 4.167%. In reality, all business just charge the customer the full 4.167%.
Technically, it's not a sales tax at all, but a General Excise Tax.
This page has some further information: http://www.hawaii.gov/dbedt/hecon/he98sp/compare.h tml [hawaii.gov]
Re:Deceptive, not illegal (Score:3, Informative)
They were funny as hell, made at least one plane ride go by faster. Scott Adams is a seriously funny man.
Re:Big Fat Duh! (Score:3, Informative)
I used to have my business accounts at a bank and when they told me that they intended to deduct 2% from my cash deposits (real cash, not cheques or anything like that) for a "service fee", I told them that I was taking my business elsewhere. I walked down the street and got an account at the local credit union and have never regretted it. That was six years ago.
Canada Rules? (Score:2, Informative)
However, in Canada, you cannot charge these fees and mislead customers about where the money goes. The Government of Canada is Trademarked and fees which are collected cannot be ascribed to the TM Entity without consent.
Roundabout, but at least I know where my money is going
Son, you're not that tricky (Score:3, Informative)
Actually the transportation fee is not a dealer based fee and represents what the dealer pays to Toyota (or the regional association) to get the car delivered to him.
When you say that you get it "waived", you're merely being naive. Cars are routinely discounted from the sticker price; in fact except for hot cars every car is available for less than sticker, and sometimes considerably less than sticker.
Therefore if a car costs $20K, and transportation is $500, they may say, "Oh Mr. Jason, you're a hard bargainer, we'll sell you the car for $20K and 'waive' the 500 transportation fee", you're really getting ripped off.
Advertising fees are a bit fuzzier in that dealers in certain areas actually pay this fee, but you as a consumer don't know how and why. I always consider them illegitimate because advertising is a cost of doing business; its like GM charging you extra because they had to mow the lawn outside the corporate office.
Other fees are lies, such as "dealer prep". A dealer has to "prep" the car to sell it. Why would you pay extra to get what the dealer is obligated to provide? An old one that used to be a rip off was "undercoating" later became "rustproofing". A common one today is "administrative fee" or "papework fee". In my county, the dealer is limited to $25 for this fee.
All fees to a certain extent are deceptive, the primary difference is transportation fee is right on the Mulroney and is more legitimate, and is an actual cost to the dealer.
Re:Deceptive, not illegal (Score:3, Informative)
Re:TracFone (Score:2, Informative)
I'm guessing math wasn't your strongest subject in school. It works out to 12.5 minutes a month. I also said it is easy to get another 100 minutes free, plus 100 minutes for referring a friend. I've done that each year, so I've had at least 350 minutes a year for $95 a year. That's 29 minutes a month, which is more than I use.
Please tell me that you meant to say you're paying $95/year for 150 minutes/month. Even at that, you can get twenty times the minutes for about four times as much.
You read me right. 150 minutes per year. Twenty times the minutes doesn't do me any good if I don't use them. That's the trap cellular companies try to get you to fall into.
And if you don't need the minutes, you can buy a prepaid "emergencies only" phone to carry in your car's glove compartment for far less than $95!
TracFone is prepaid service. Please show me one that is "far less" than TracFone and has the same (or similar) features. TracFone works anywhere in the US (roaming is double the rate), long distance is included no matter where you are, caller id, voice mail, call waiting, etc.