Sneaky Fees

Two bucks to get a paper statement? $15 to book airline tickets online? Wireless providers, cable companies, and other firms are increasingly nickel-and-diming us to death. Here’s how to fight back.

Recently, I renewed my XM Satellite Radio subscription. I had expected the service to cost $13 per month, since that was the amount the company advertised. I found out, however, that in addition to the $13, Sirius XM had implemented a new, monthly $2 "music royalty fee." I was annoyed, but I grudgingly agreed to the new add-on charge and said, "Send me the bill." Well, the Sirius XM rep replied, there was one more thing: I'd have to pay a $2 "invoice fee" if I wanted a paper bill mailed to my house.

That relatively reasonable $13-per-month service I thought I was signing up for ended up costing me $16.95 each month, or 30 percent more than expected, through fees that Sirius XM never bothered to mention in its pitches to renew.
Sneaky fees drive me mad. The number of these nickel-and-dime charges I pay each month has my head spinning. Where did all of the extra fees, charges, and taxes tacked onto my cable, wireless, and Internet bills come from?

Sneaky-Fee Economy

Sneaky fees cost each U.S. resident an estimated $950 each year, according to the Ponemon Institute, a research group specializing in consumer privacy. They show up on bills under names like "OVS fees," "network access charge," or "federal subscriber line fees." None of them are outlandish--maybe $1 here or $3.95 there. But they add up, boosting the total cost of your monthly wireless bill or of an airline ticket you book online far beyond what you thought you were going to spend.
For companies, such miscellaneous charges work like a charm, says Bob Sullivan, author of the book Gotcha Capitalism. "How does a $39 cable bill become a $70 bill? How does a $55 wireless plan cost you $75? The answer is fees," he says. According to Sullivan, surveyed companies from ten markets make $45 billion annually in hidden fees.
Perhaps the most annoying are the fees that make a "free" offer not free at all. For instance, in an effort to keep PC sales strong, many computer makers offered customers who bought a system right before the introduction of Windows 7 a "free" upgrade once the new OS was available. What the companies neglected to tell customers is that many of them would have to pay "shipping, handling, and fulfillment fees" to get their copy of Windows 7. Lenovo is charging all of its customers $17.03. Acer and some other PC makers are waiving the fee, but Compaq, Dell, Hewlett-Packard, Sony, and Toshiba are making some customers pay fees between $11.25 and $14.99.

Wireless Fees

Nowhere do consumers find fees more confounding than on their wireless bill. Maybe it's a $3-a-month charge for a daily horoscope you don't remember requesting. Maybe it's an $18 "upgrade fee" that your wireless carrier failed to mention when you bought your snazzy new 3G touchscreen phone. Or maybe it's a charge for a ringtone you never wanted but came with a "free" offer. Whatever the source of the fee, if you've had it with your cell phone company's billing practices, you're not alone.
The U.S. Government Accountability Office determined that one-third of cell phone owners found unexpected charges on their bills or complained to the agency about having problems understanding their bills. Worse, according to the GAO, one in five customers who contacted their wireless carrier were dissatisfied with their carrier's efforts to resolve the problem.
What gives? Experts say cutthroat competition drives wireless carriers to push down the advertised monthly cost of their plans. The companies make their real money with ancillary fees. "Once you sign that multiyear contract, you're right where they [wireless carriers] want you--trapped," Sullivan says. And if you want to part ways, you'll have to pay an early-termination fee.

Full Story: PCWORLD