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Say No to the Feeconomy
by Dr. Andrew Burt

It's absurd how we're morphing into a Feeconomy — an economy based on charging separate fees related to the ordinary cost of doing business, which should instead be covered by the normal prices one is charged for the product or service you're buying. These are, in other words, nothing more than hidden extra-profit fees, and often nonsensical and outright deceptive.

Hi, thanks for visiting this web page. Please remit the following convenience charges:

  • Convenience Charge1 - $5.00
  • Server Hosting Surcharge2 - $0.87
  • Network Bandwidth Fee3 - $1.21
  • Electricity Surcharge4 - $0.20
  • Web Site Access Charge5 - $0.18
  • Disk Space Fund6 - $1.00
  • Author Writing Time Recovery Fee7 - $2.32
  • Not Enough Google Ad Clicks Recovery Fee8 - $1.17
  • Convenience Charge Collection Convenience Fee9 - $0.50
  • Author Needed A Larger Monitor Fee10 - $0.52
  • Author Needed A Larger Monitor Fee Pickup Fuel Surcharge11 - $0.25
  • Author Was Thirsty and Needed a Beer Charge12 - $2.07
  • Author Needed To Take A Leak While Writing This - Water Usage Fee13 - $0.07
  • Author Needed To Take A Leak While Writing This - Sewer Usage Fee14 - $0.03
  • Insufficient Number Of Visitors So I Feel Like I Wasted My Time Writing This Fee15 - $0.92
  • Fee Collection Costs Recovery Fee16 - $3.00
  • Bend Over And Take It Fee17 - $6.66
  • Extra Profit Fee18 - $52.67
  • Extra Profit Collection Fee19 - $.42

        1For costs associated with making this web page available to you, rather than, say, having you visit my cave to read it on the wall.
        2Well, I have to pay for hosting, right?
        3Networking too.
        4And that all takes electricity.
        5For costs associated with having a web site. (Doesn't mean anything to you? Me either. It's only 18¢. Just pay it.)
        6I'll need a new hard drive sometime, I'm sure.
        7For costs associated with the author's time writing this article instead of doing something else.
        8Self-explanatory.
        9For costs associated with documenting and collecting the Convenience Charge.
        10And it's very nice, too.
        11Hey, I had to drive to the store, that's not free.
        12You're getting a deal here. This will probably increase in the future.
        13What, you think water is free?
        14Somebody forced me to have a sewer system so you should pay for it fee.
        15Similar to footnote 8 but there's also a donation button over there you didn't click.
        16Similar to footnote 9, but I realized there are costs for all the other fees
        17For costs associated with us being big and you being small and unable to do anything about our fees. It's hard being big.
        18Well, you fell for all the others so we're getting lazy.
        19For cost associated with collecting extra profit, and because we wanted to end the list with a small number so you didn't notice the big ones. It's just a small amount. Nothing to see here. Move along.
        20There is no footnote 20, but there's a $7.23 fee for costs associated with our notification of the nonexistence of this footnote and your reading of it. Be glad there's no footnote 21 either, because that's a really expensive one.

If I buy loaf of bread at the grocery store, I pay my $1.29 and that covers it. I don't separately pay a fee for the cost of baking it, or the cost of the yeast, or growing the wheat, or the cost of the water used in growing the wheat, or installing shelves on which to place the bread, or the cost of gas for the shelf-installer, or for the new boots worn by the shift supervisor at the refinery who produced the gas used by the shelf-installer. I pay for those as part of the price. The difference is that when companies get away with splitting it out, you pay more.

The number of fees one could charge for, if one wanted to break out every element of producing a good or service, is quite literally infinite. And I don't mean figuratively infinite, as in "very large." Literally, mathematically infinite: Each step of production can be subdivided into at least two more components, and those into at least two components each, ad infinitum. Yes, any task. "Paper billing fee" could be "Paper bill printing fee" & "Paper bill mailing fee." The latter could be "Paper bill envelope stuffing fee" and "Paper bill envelope fee" and "Paper bill stamp fee" and "Paper bill sealing fee" and "Paper bill carrying the envelope to the mailing bin fee." Let's not forget the costs of electricity, water, sewer, janitorial etc. associated with the labor of carrying the envelope to the mailing bin. Wow, that's expensive! Want more infinity? Add a fee for the collection of each fee. Including the collection fees. T-Mobile's new logo

T-Mobile, my cell phone provider, recently announced they're charging everyone $1.50/month to send them a bill. Funny, I sort of thought you needed to send bills to your customers so they'd know how much to pay you. They offer you the "convenience" of logging into their web site to find out your balance if you don't want to pay the $1.50. Of course, their web site is painfully slow, and I've found it takes 5-10 minutes to retrieve my bill. I'm about ready to send them an invoice for $10/month for my time. (Instead I wrote an iMacro Firefox script to retrieve my bill automatically. I should bill them $120 for the two hours of my time it took to find a macro plugin for Firefox, debug the conflicts with my other plugins, and get the script working correctly.)

Note also the fine print on the T-Mobile $1.50 billing fee. It says "The charges may exceed our cost to provide these services" — in other words, "We're making a profit from this fee."

I don't pay the grocery store a separate fee for the cost of the checker, the checkstand, the cost of the paper to print me a receipt, etc. Of course I pay for all these things. They're all wrapped up in that $1.29 I paid for the loaf of bread. But I don't pay a fee specifically for them to collect the money I owe. That's just insane.

Far too many places adopted the "fuel surcharge" bandwagon. Excuse me? Fuel is just one of your many costs. Yes, it's gone up. So what? Raise the price of your good or service to cover it.

The guy who used to mow my lawn added a $0.50 "fuel surcharge" a couple years ago. I had this talk with him, and told him if he needed to raise his price $.50 to cover extra costs I would gladly pay it, but I would not pay a separate line item fuel surcharge. We agreed he would raise his base price and that was that.

"Convenience Charges" when you buy tickets online? Separate from the fee they charge for the online ticket service itself. Nothing "convenient" about the charge at all; just extra profit for them.

Nonsensical Fees

Qwest, my DSL and landline provider, wanted to charge $3/month for not having a long-distance carrier on the line. (I should just dump the landline, which I only use for sending occassional faxes to Luddites. Separate topic.) If I have a long distance carrier, Qwest charges me nothing. I don't make long distance calls on the landline, so I found the cheapest long-distance carrier I could find (PNG), who had no monthly fee or minimum usage charge.

This worked for over a decade (as in, $0, since I used no service, and they didn't even spend postage sending me a $0 bill). Until they imposed a $0.99 "Telecom Infrastructure Fee" — which, when you research it is just an extra profit fee for them intentionally disguised as a government-sounding fee. Then they charge taxes and other fees on top of that fee. So now my cost for not using long distance is about $1.17 month. $14/year for... nothing. At least I save $22.

My bank sends me paper statements each month. I like that, because they don't keep online ones very long, so if you want to go back, you need paper. (Here's why you should keep paper records.)

So, the bank mails me statements every month. They don't charge for that. They make money from me by being a bank, and doing what a bank does, namely lending my deposited money out to others. Good business model. Worked for thousand of years. (Except when banks stop operating like banks, of course.) So they're happy enough to keep me as a customer because they make a profit off me via their core business. That's how it ought to work.

However, when they added online banking, they took a left turn into absurdity. They offered free online banking. (As they should; it saves them labor costs of me coming into the branch.) However, they added a twist: The free paper statements, if you sign up for online banking, will now cost $3/month.

Yes, that's right, a service they'll provide me for free (and still do), they will charge extra for if I save them money by using online banking. If I save them money, they'll charge me more. Uh huh.

That long-distance place I use decided they weren't making enough profit off me at $1.17/month for using no service, so they imposed another $1 a month minimum usage fee. Now, my cost to them is virtually nil: I don't use their network when I don't make calls. Yes, they have some small amount of overhead for having a database record that I exist. Disk space is dirt cheap. As of this writing, you can get 1Tb of storage for under $100, so if my customer records take, at the outside, 1Mb of space (let's see, name, address, phone#... um...) that's 1/100 of a penny in space. No CPU or network traffic since I'm not using their service.

I called them on this and said I would quit if they didn't remove the fee (having found another $1/month place), and they quickly removed it. At $1/month I'm a profit center for them, and they know it. They were just greedy.

How about a fee to keep your costs down? Qwest has not one but two fee $1+ fees it charges "to keep rates affordable." Riiiiight. People pay an extra fee to keep their rates down.

Deceptions & Outright Lies

Typical of many fees, Qwest calls one of their fees a "Federal Access Charge" and lists it in the same subheading as Taxes. But it isn't a tax. (See the FCC web site about it.) The federal government doesn't get a dime of it. The federal government doesn't require or even ask them to charge it. The FCC allows them to charge it (now that was a bad move), and in fact places a maximum on it. It's purely an extra profit fee.

Ask your phone company to remove it, however, and you'll likely get told it's a government fee. I did. I pointed the customer service agent to the FCC web page above. He said huh, he never knew that. He went away for a while, came back and said no way would they remove it. Of course not. It's a juicy hidden extra-profit fee.

However — if you complain sufficiently, they will give you a cash credit on your account. Every so often I call up and get $100 or so credited to offset this fee, until such time as they roll it into their single cost for the service. At 20 minutes a call, that's $300/hr for my time. (If it was an option I could choose, it should be split out. If it was a legally required cost someone else gets, like taxes, it should be split out. Extra profit fees are neither; they're simply an anti-competitive, deceptive business practice to raise your prices.)

T-Mobile added a $1.21 "Regulatory Programs Fee," described as a "Fee we collect and retain to help cover our costs related to funding and complying with government mandates, programs and obligations." They initially listed it under "Government Fees and Taxes" — until they apparently got in trouble since it was no such thing. They now list it under a heading of "Other Charges / Communications Related".

Of course they have costs of complying with regulations. They also have to pay the janitor to sweep the floor of the office, and pay the electricity for the servers, ad infinitum. If they included it in the quoted monthly price, they'd have to raise that price and then you might take your business elsewhere. By pretending it's a government fee — that is, lying — they think you won't question it. They think you're stupid. It's nice extra profit for them.

Fees like this also allow them to raise your price even if you had a contract agreement on that price. T-Mobile still "charges" the specific amount I contracted for, but by increasing fees (for things they had to pay for then — it's not like paper bills are new) they sidestep our agreement.

Can I do the same in reverse? Charge them a fee? Decide I should get more service for the same price? Of course not.

Why It Matters

I called Comcast to inquire about their phone service for that fax line, and was told it was $X/month. "Are there any fees, surcharges, etc.?" I asked. "Oh, yes, but they're not much." "How much is not much?" I inquired. "I don't know." He couldn't or wouldn't tell me.

Voila! I can't even know how much the service will cost. I can't compare apples to apples if I can't know the actual cost I'll pay. (They didn't get my business, either.)

That's the biggest harm to the consumer from the Feeconomy — it reduces your ability to shop the market, to get competitive bids. It's anti-competition, which is to say, it's anti-capitalism. Basically, it's bad for you.

Why Do People Put Up With It?

Because the fees are often deceptive, for one thing. And people just seem to overlook extra fees, so companies know they can take advantage of you, and stick their hand in your pocket, and you won't notice. Yup, they think you're stupid; and if not stupid, powerless.

So — notice. :) Push back.

Bottom Line

Fees are a deceptive way for companies to make competition more difficult and for them to sneak in cost increases to you, often by giving a false impression they're governmentally required.

My health insurance company, Blue Cross, added a whopping $5/month billing fee if I wouldn't sign up for automated withdrawals from my bank. I pay my bill on-time, every time, electronically, and have never missed a payment. They simply wanted some extra profit. Amazingly enough, people complained to the state insurance commissioner, and they backed right off, removed the charge, refunded the amount they'd already collected.

Update! After many complaints and threat of a class action lawsuit, T-mobile backed off. Paper bills are free again. Evidence that pushing back works!

In other words, pushing back pays off.

So Just Say No: When a company imposes a new fee on you, call them on it. Demand it be removed. Say they can raise the cost of the primary service if they'd like, and you'll evaluate whether they're still cost effective or not. But demand they cease imposing absurd, line-item, hidden, and deceptive fees.

Don't let them treat you as stupid.

The health of the economy is relying on you. Say No to the Feeconomy.


Thank you for reading this free article. You owe $79.06.

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See also:

The Cure for Bad Customer Service

Hello, Corruption, My Old Friend — How Craigslist is Killing Local Democracy

Share your thoughts:

What crazy fees have you run into? What did you do about it?

[ 22 comments | Add a comment ]

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Comments on critique.org/feeconomy.ht

Postby CrittersMinion » Fri Oct 12, 2012 3:39 am

[Reposted from old comment system, from Wendell on Sat, 04 Aug 2012 21:49:47 0000]

It's like the frog in cool water analogy. Things start out comfortably enough but keep adding the heat (fees) little by little and before the frog realizes it he is a boiled frog.
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Comments on critique.org/feeconomy.ht

Postby CrittersMinion » Fri Oct 12, 2012 3:39 am

[Reposted from old comment system, from Wendell on Sat, 04 Aug 2012 21:49:27 0000]

It's like the frog in cool water analogy. Things start out comfortably enough but keep adding the heat (fees) little by little and before the frog realizes it he is a boiled frog.
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Postby CrittersMinion » Fri Oct 12, 2012 3:40 am

[Reposted from old comment system, from Wendell on Sat, 04 Aug 2012 21:49:07 0000]

It's like the frog in cool water analogy. Things start out comfortably enough but keep adding the heat (fees) little by little and before the frog realizes it he is a boiled frog.
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Postby CrittersMinion » Fri Oct 12, 2012 3:40 am

[Reposted from old comment system, from Bethany on Tue, 13 Dec 2011 05:13:34 0000]

Thank you Nick! I've thought this for years. Steve has a point, however. Tipping is a nice way to reward good service. This unhappy system of underpaid waiters originated when tipping became mandatory. Ideally, we shouldn't tip poor servers. We shouldn't even tip average servers. Only good servers. Then there would be incentive AND no hidden costs. However, it's hard to help undo the status quo without individually harming your waiter.
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Postby CrittersMinion » Fri Oct 12, 2012 3:40 am

[Reposted from old comment system, from Zach on Mon, 07 Nov 2011 05:25:25 0000]

It's like Urinetown! Pay to Pee, due to the lack of water on the planet. It's horrible to see what companies are trying to pull on us.

So... do I get my $0.63 fee for spending time to respond? >.>
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Postby CrittersMinion » Fri Oct 12, 2012 3:40 am

[Reposted from old comment system, from Zach on Mon, 07 Nov 2011 05:25:04 0000]

It's like Urinetown! Pay to Pee, due to the lack of water on the planet. It's horrible to see what companies are trying to pull on us.

So... do I get my $0.63 fee for spending time to respond? >.>
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Postby CrittersMinion » Fri Oct 12, 2012 3:41 am

[Reposted from old comment system, from Joy Fleisig on Thu, 03 Nov 2011 22:16:14 0000]

I'm reminded of that line from _Les Miserables_ (the musical): "Charge them for the lice, extra for the mice, 2% for looking in the mirror twice..."
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Postby CrittersMinion » Fri Oct 12, 2012 3:41 am

[Reposted from old comment system, from Terry on Wed, 27 Oct 2010 14:23:36 0000]

Just say no to land lines.

You can have a Skype phone number and unlimited calling for about $90/year.

You can send faxes using faxzero.com and efax.com will give you a fax number and email your received faxes.

Google Voice is on the verge of replacing Skype for free. Already, you can get a free phone number from Google, and use their web based voice mail, and now you can call land lines with no charge from within gmail in a compatible browser. International calls, as with Skype, are very cheap.

And as for those ubiquitous tip jars that have become a fixture on every retail counter in the country, just ignore them. The person behind the counter is paid to serve you. If they don't serve you, they will be fired, or you will go somewhere else. The best "tip" a customer can give is repeat business, plus word-of-mouth advertising. Emptying your wallet into these tip jars as a sort of bribe to get the clerk to treat you nicely is foolish and thankless, even though they may mutter "thanks" (if they notice).
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Postby CrittersMinion » Fri Oct 12, 2012 3:41 am

[Reposted from old comment system, from john on Fri, 07 May 2010 09:38:18 0000]

Pretty much the VAT :o
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Postby CrittersMinion » Fri Oct 12, 2012 3:42 am

[Reposted from old comment system, from Steve on Fri, 09 Apr 2010 03:46:40 0000]

At most restaurants this is not included in the bill. The idea is that this way it's up to you to decide how good the service was and thus how much it was worth, giving your waiter the incentive to be attentive. But yours is a common reaction, and it explains why the level of service you receive drops noticeably when American waiters and waitresses hear your accent.
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