October 15, 2012 |
Unless you’re a child, Amish, or you live in an off-the-grid commune in the boondocks, you probably pay a number of monthly bills. Many of those bills are likely paid to major corporations that may be monopolies in your area, which means that you, the consumer, should always be on alert for various ways they may be trying to screw you.
You’ve also likely been pressured to sign up for an automatic bill payment system from somewhere like your bank or cell phone company. Obviously these sorts of arrangements are great for companies, ensuring they’ll get their money on time each month. They may be right for some consumers as well; if you have regular paychecks coming in and aren’t concerned about over-drafting, it can be nice to “set it and forget it” with your bills. But one danger with auto bill pay systems is that users may not give their bills a close read each month. The whole point of signing up for automatic bill pay is so you don’t have to think about your bills each month, so why would you?
It’s this sort of mentality corporations are banking on. (Yes, sometimes companies make honest mistakes, but if you think mistakes account for all or even most of the incorrect bills on this planet, you’re fooling yourself.)
In a way we do corporations’ work for them, because the vast majority of us don’t read our bills as thoroughly as we should. There are lots of reasons for this -- denial, laziness, a wariness of confusing corporate-speak and pages upon pages of line items -- but there are even more reasons for us to be more vigilant. Here are some of them.
1. Your bill may contain gross inaccuracies.
A story about a French woman who got hit with a €11,721,000,000,000,000 ($15 quadrillion) phone bill made headlines this week, for obvious reasons:
Ok so a $15 quadrillion overdraft probably wouldn’t go unnoticed by you or your bank. It’s an egregious case, to be sure. But what about Grace Edwards, the Connecticut woman whose electric company incorrectly charged her roughly $35/month for some streetlights outside her house? That would be easy enough to miss if you didn’t know how to read your electric meter. The catch in the Edwards story is that she was overcharged like that for 25 years, and Connecticut Light & Power recently had to reimburse her more than $10,000 because of the mistake. The lesson here: small billing inaccuracies can add up.
2. Phone companies are notorious for “cramming.”
If “cramming” sounds gross to you, that’s because it is. The FCC defines cramming as “the practice of placing unauthorized, misleading or deceptive charges on your telephone bill.”
These sorts of charges often show up as innocuous-sounding line items like “service fee,” “other fee,” “voicemail,” or “monthly fee.” Who’s going to take three hours out of their day to call the phone company and ask about a $5 charge labeled “other fee”? Not most of us.
The FCC has rules about cramming: “The Federal Communications Commission’s (FCC) Truth-in-Billing rules require telephone companies to provide clear, non-misleading, plain language in describing services for which you are being billed.” But apparently those rules are flagrantly ignored. This Baltimore Sun report from last month illustrates that the practice remains widespread, costing Americans some $2 billion each year.
3. “Gray charges” and errors on your credit card bill can eventually become irreversible.
Compared to cramming, “gray charges” sounds downright charming, but the practice is just as dangerous for consumers. Gray charges are small, recurring fees that many consumers sign up for without realizing it. To use an example from this Detroit Free Press article published in March, you might buy a pair of earrings online for $30 and not realize that the fine print says you’re enrolling in a monthly jewelry club and giving permission to charge your credit card $30 each month for the next three months.
Think you’re more savvy than that? According to BillGuard, a company founded by Yaron Samid to help consumers fight gray charges, the average person pays roughly $300 each year in gray charges.
Gray charges can be difficult to fight, because in the eyes of the credit card companies they don’t constitute fraud. (Remember, technically you did agree to sign up for that jewelry club -- you just didn’t realize you were doing so.) If you don’t notice such charges on your credit card statement in a timely manner, you’re even less likely to successfully dispute them. If you let it go long enough, some dumb service you didn’t know you signed up for can permanently affect not only your credit card balance, but potentially your credit score. It’s worth noting that the same is true for charges that even the credit card company would agree are bogus; if you let an incident of identity fraud go unchecked for long enough, it can become difficult or impossible to dispute those charges as well.
4. You might be paying for services you never use, or a promotion that was once a great deal might have run out.
Cable customers, think back to the time when you set up your service. It probably wasn’t a happy experience -- phone calls with the cable company rarely are. But think about it anyway. Was the company running a promotion? Maybe three months of service at a discounted price? A free year of Showtime? Or perhaps the customer service rep pushed you to sign up for HBO, which at the time sounded like a worthwhile deal.
Now think about whether you’re still paying for channels you signed up for but never watch, or whether any of those promotions, which seemed so awesome at the time, have run out and are now costing you money each month. The cable company sure as heck isn’t going to sift through your bill to weed out the fat. It’s up to you.
5. Bank fees keep going up and up.
Although the government has imposed new regulations on large banks in the past few years, those rules haven’t kept the banks from trying to squeeze every last dime out of consumers, especially those who are lower income.
As I wrote in March, the days of fee-free and “no hassle” checking accounts are going by the wayside, as big banks quietly increase their fees. Some fees are now illegal; for instance, banks can no longer charge $35-per-transaction overdraft fees unless consumers opt into “overdraft protection.” But rather than make the banks more consumer-friendly, the fee regulations have just prompted mega-banks like Bank of America, Wells Fargo and Citibank to get creative. The banks have especially been targeting customers who do not or cannot maintain a minimum account balance ($7,500 at Wells Fargo and $15,000, up from $6,000, at Citibank). These sorts of fees are in line with a general shift toward focusing on “up-market” customers rather than the “mass market.”
So always keep an eye on your checking account statements: who knows what new fees might pop up?
6. Companies count on you not always being able to accurately read your bill.
Willfully ignoring your bills is one thing, but not having the tools to be able to read your bill is another. And companies count on both.
Let’s go back to the woman who was erroneously charged $10,000 to power the street lamps outside her house. For all we know, she might’ve read every one of her electric bills during the 25-year period she was being overcharged, but if she didn’t know how to read her electric meter, it hardly matters -- she wouldn’t have the tools to protect herself from false charges.
Similarly, when credit card companies send customers long credit card agreement forms written in legalese and printed in a 6-point font, the consumer is at an unfair disadvantage. Who’s going to read all that fine print? And even if you did, would you be able to understand it?
The Consumer Financial Protection Bureau has proposed a streamlined credit card agreement form that’s written in plain English and designed in such a way that the average customer can make sense of it. The idea is that customers shouldn’t be asked to agree to terms that they don’t understand.
Again, you can’t accurately check your bill if you don’t know exactly what’s supposed to be on it.
The bottom line is that you have to read your bills each month, or there’s a high likelihood you’ll get screwed over at some point. Companies won’t do it for you (many of them even say that explicitly), and in fact many design their fee structures and agreements in an intentionally confusing manner. Fight back by being your own consumer watchdog, each and every month.
You’ve also likely been pressured to sign up for an automatic bill payment system from somewhere like your bank or cell phone company. Obviously these sorts of arrangements are great for companies, ensuring they’ll get their money on time each month. They may be right for some consumers as well; if you have regular paychecks coming in and aren’t concerned about over-drafting, it can be nice to “set it and forget it” with your bills. But one danger with auto bill pay systems is that users may not give their bills a close read each month. The whole point of signing up for automatic bill pay is so you don’t have to think about your bills each month, so why would you?
It’s this sort of mentality corporations are banking on. (Yes, sometimes companies make honest mistakes, but if you think mistakes account for all or even most of the incorrect bills on this planet, you’re fooling yourself.)
In a way we do corporations’ work for them, because the vast majority of us don’t read our bills as thoroughly as we should. There are lots of reasons for this -- denial, laziness, a wariness of confusing corporate-speak and pages upon pages of line items -- but there are even more reasons for us to be more vigilant. Here are some of them.
1. Your bill may contain gross inaccuracies.
A story about a French woman who got hit with a €11,721,000,000,000,000 ($15 quadrillion) phone bill made headlines this week, for obvious reasons:
After she terminated a contract with the phone company Bouygues Telecom early, San Jose was told that she would have to pay a cancellation fee. The exact amount would be sent in a final bill to her home in late September, the company said, according to the French news provider Sud Ouest....
"There were so many zeros I couldn't even work out how much it was," San Jose told Sud Ouest. And though it seemed like an obvious billing mistake, San Jose had a hard time convincing the phone company that was the case.
According to Sud Ouest, representatives at Bouygues Telecom initially insisted the amount -- nearly 6,000 times larger than France's 2011 GDP -- would automatically be withdrawn from her bank account.
2. Phone companies are notorious for “cramming.”
If “cramming” sounds gross to you, that’s because it is. The FCC defines cramming as “the practice of placing unauthorized, misleading or deceptive charges on your telephone bill.”
Crammers rely on confusing telephone bills in an attempt to trick consumers into paying for services they did not authorize or receive, or that cost more than the consumer was led to believe....
If a local telephone company, long distance telephone company or another type of service provider either accidentally or intentionally places unauthorized, misleading or deceptive charges on your bill, you may have been “crammed.”
The FCC has rules about cramming: “The Federal Communications Commission’s (FCC) Truth-in-Billing rules require telephone companies to provide clear, non-misleading, plain language in describing services for which you are being billed.” But apparently those rules are flagrantly ignored. This Baltimore Sun report from last month illustrates that the practice remains widespread, costing Americans some $2 billion each year.
3. “Gray charges” and errors on your credit card bill can eventually become irreversible.
Compared to cramming, “gray charges” sounds downright charming, but the practice is just as dangerous for consumers. Gray charges are small, recurring fees that many consumers sign up for without realizing it. To use an example from this Detroit Free Press article published in March, you might buy a pair of earrings online for $30 and not realize that the fine print says you’re enrolling in a monthly jewelry club and giving permission to charge your credit card $30 each month for the next three months.
Think you’re more savvy than that? According to BillGuard, a company founded by Yaron Samid to help consumers fight gray charges, the average person pays roughly $300 each year in gray charges.
Gray charges can be difficult to fight, because in the eyes of the credit card companies they don’t constitute fraud. (Remember, technically you did agree to sign up for that jewelry club -- you just didn’t realize you were doing so.) If you don’t notice such charges on your credit card statement in a timely manner, you’re even less likely to successfully dispute them. If you let it go long enough, some dumb service you didn’t know you signed up for can permanently affect not only your credit card balance, but potentially your credit score. It’s worth noting that the same is true for charges that even the credit card company would agree are bogus; if you let an incident of identity fraud go unchecked for long enough, it can become difficult or impossible to dispute those charges as well.
4. You might be paying for services you never use, or a promotion that was once a great deal might have run out.
Cable customers, think back to the time when you set up your service. It probably wasn’t a happy experience -- phone calls with the cable company rarely are. But think about it anyway. Was the company running a promotion? Maybe three months of service at a discounted price? A free year of Showtime? Or perhaps the customer service rep pushed you to sign up for HBO, which at the time sounded like a worthwhile deal.
Now think about whether you’re still paying for channels you signed up for but never watch, or whether any of those promotions, which seemed so awesome at the time, have run out and are now costing you money each month. The cable company sure as heck isn’t going to sift through your bill to weed out the fat. It’s up to you.
5. Bank fees keep going up and up.
Although the government has imposed new regulations on large banks in the past few years, those rules haven’t kept the banks from trying to squeeze every last dime out of consumers, especially those who are lower income.
As I wrote in March, the days of fee-free and “no hassle” checking accounts are going by the wayside, as big banks quietly increase their fees. Some fees are now illegal; for instance, banks can no longer charge $35-per-transaction overdraft fees unless consumers opt into “overdraft protection.” But rather than make the banks more consumer-friendly, the fee regulations have just prompted mega-banks like Bank of America, Wells Fargo and Citibank to get creative. The banks have especially been targeting customers who do not or cannot maintain a minimum account balance ($7,500 at Wells Fargo and $15,000, up from $6,000, at Citibank). These sorts of fees are in line with a general shift toward focusing on “up-market” customers rather than the “mass market.”
So always keep an eye on your checking account statements: who knows what new fees might pop up?
6. Companies count on you not always being able to accurately read your bill.
Willfully ignoring your bills is one thing, but not having the tools to be able to read your bill is another. And companies count on both.
Let’s go back to the woman who was erroneously charged $10,000 to power the street lamps outside her house. For all we know, she might’ve read every one of her electric bills during the 25-year period she was being overcharged, but if she didn’t know how to read her electric meter, it hardly matters -- she wouldn’t have the tools to protect herself from false charges.
Similarly, when credit card companies send customers long credit card agreement forms written in legalese and printed in a 6-point font, the consumer is at an unfair disadvantage. Who’s going to read all that fine print? And even if you did, would you be able to understand it?
The Consumer Financial Protection Bureau has proposed a streamlined credit card agreement form that’s written in plain English and designed in such a way that the average customer can make sense of it. The idea is that customers shouldn’t be asked to agree to terms that they don’t understand.
Again, you can’t accurately check your bill if you don’t know exactly what’s supposed to be on it.
The bottom line is that you have to read your bills each month, or there’s a high likelihood you’ll get screwed over at some point. Companies won’t do it for you (many of them even say that explicitly), and in fact many design their fee structures and agreements in an intentionally confusing manner. Fight back by being your own consumer watchdog, each and every month.
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