The battle for the buck is far from over. Consumers need to know what’s going on and learn to protect themselves from fraudulent hidden fees.
I have collected some of the best resources on the net about the top 13 hidden fee riddled industries, to help you be better prepared. That way you can protect yourself, save money and share a tip or two with your friends.
If you want to skip ahead to any particular industry, use the links below.
Deceptive pricing damages a brand’s image and its customers’ loyalty over time.
Nobody likes being nickel and dimed.
However, there are nationwide ramifications. In an economic report directly from the White House:
Hidden fees deter customers from making accurate pricing comparisons. This results in a higher likelihood of making “wrong” shopping choices.
Deceptive pricing raises the barrier to entry for legitimate cost saver businesses. This is because expensive options initially look cheap at face value when the full cost is hidden.
Undisclosed or hidden fees support collusion, the working together of large companies with regards to price fixing, which is in direct violation of antitrust laws.Once one larger player starts using hidden fees to maximise profits, others in the industry will follow suit until the fees become standard pricing practice. (e.g., hotel resort fees).
However, although hidden fees offer certain short-term gains, studies indicate that they are bad for business over the long term.
Hidden fees create market imbalances and poor customer experience.
Types of Hidden Fees
“A little now, a sprinkle later“.
Sometimes vendors create slowly accumulating costs as you progress through check out.
Pens”R”Us.com advertise a pen for $1.00 on their site.
But once you click the Buy Now button, a new window says that you also need to choose what color ink you want, at an extra 50 cents.
Then there is an upsell for two pens…
Next, they tell you there is a pen tax and that shipping and handling will be an additional $5.00
By the end of it all…
You may be $7 out of pocket for a $1.00 pen.
This is where an online retailer has boxes automatically ticked for product or shipping upgrades, by default.
This is especially sneaky, as many customers do not pay close attention:
This leads shoppers to accidentally purchase items and upgrades when it wasn’t their intent to do so.
Surcharges are additional fees which are added to a product or service. Shipping and travel are industries frequently include these in the form of fuel surcharges.
Most transactions incur additional fees.
Most of us never really know how much they are until we have already paid them.
This all becomes especially confusing once moving money overseas.
However, with a limited number of options for consumers…
…Most are faced with unavoidable and costly fees.
(Shouldn’t everything be cheaper if it is done automatically by computers?)
Undisclosed means they didn’t notify you beforehand.
They are commonly known as hidden fees. They can be legal, or in some cases – such as falsely advertised price discrepancies – illegal.
When are hidden fees illegal?
Hidden fees are illegal when they are deceptive, fraudulent or the result of false advertising. If you feel that a company has charged you fees illegally, contact your attorney for advice.
Owning your own home is the American dream.
Everyone wants a piece of the pie, too. Where large sums of money are moved around, hidden fees are sure to follow.
Take for example…
Loan origination fees.
Most lending institutions ask for origination fees, but the amounts can vary anywhere from .5% to 2% of the total value of the mortgage.
That means origination fees can vary by up to 400%!
What most home buyers don’t realize is that: These are fully negotiable fees.
So, before you hand over $4,000 for a $200,000 loan, try to shop around or negotiate a lower fee. You will be happy you did.
Buying a house can be expensive.
General closing costs, attorney’s and lender’s fees, inspections, escrow fees and bridging loan interest payments can cost you up to an additional 5% of the purchase price.
All in all:
If you buy a new family home at a modest $200k:
You could end up spending an extra $10,000, just to walk in the door.
Next time you want to buy a home or refinance your home, do not let the mortgage broker or realtor get away with giving you quotes of “estimated fees”. Get the exact numbers and question every cost. A little due diligence can quickly save you thousands.
Resources you need to be prepared for property transactions
If you have ever gone shopping for a new car, you know what is coming:
You see a nice new car at a price you like.
Next, you sit down, to have a chat with the salesperson about the bells and whistles.
However, once it gets to the paperwork, this happens:
You find a slew of additional fees and charges added to the “sale” cost before handing you the keys.
Dealer prep fees
Some are legitimate taxes. But, there are many flexible fees which can be avoided. When buying your new car, do your research first and negotiate every point. If one dealership does not give you what you want, go to the next.
Make sure you aren’t being taken for a ride:
Here’s are useful resources to help you drive away with the best deal:
When companies lower advertised prices or provide “budget” options, hidden fees tend to follow.
This is certainly the case for the most popular phone carriers.
In recent years…
You’ve probably seen lots of phone deals offering lower minute fees, phones “included” in long-term plan pricing and more baited marketing ploys.
After signing up for such great deals, customers once again:
Receive bills riddled with:
additional service fees
Ambiguous taxes they had never heard of before.
(By the way, did you know that you may be entitled up to $1,000 for illegal “hidden fees” on your bills? – contact us to find out more)
But perhaps the most heinous of bill surprises is what is commonly known as “cramming”.
“To add a fee to your phone bill for a service you didn’t sign up for from either your service provider or even a 3rd party provider.”
They are often small amounts, added to your bill, which helps them slip by unnoticed.
Here are a few common cramming fees:
Additional Service fees & charges
Mail server fees
Minimum monthly usage fees
Premium text messaging fees
Although cramming is legal, that does not mean you have to put up with it. As a customer, you have the right to call up ask the company why they are charging you the additional fees and negotiate a better deal.
However, if you see items on your account which you think could be fraudulent, let us know.
Here are some great resources to better understand what you’re paying.
It has only been five years since the 401k industry has legally been required to publically disclose its fees?
Think about it…
401k started in 1978. So for 35 years, 401k companies never had to tell you how much they were charging you!
Now the industry is more transparent. However, it is still confusing to most and far from perfect.
In fact, current estimates believe hidden, and back-end 401k fees are still costing millions of Americans a total of $17 Billion dollars per year.
That is the last thing you want to hear after spending your whole life working hard to save every penny.
These added costs are taking a severe toll on pensioner’s lifestyles. Fees, rising living costs, longer lifespans and increasing medical costs are all serious problems many retirees are facing. No matter your age, career or culture, this is an issue we will all face.
Educate yourself with these great resources about hidden 401k fees
“That will be $30 for the pills and $6.25 for the service, thanks.”
No, we’re not kidding.
It is no secret:
The medical industry is full of the most overpriced charges.
It is almost sickening how much it costs to be ill (pun intended).
To make things worse…
There is an increasing trend in the medical industry to charge hidden fees and patient payments, which have seen an incredible 700% jump in the overall proportion of hospital’s revenue in just the last two decades.
Although practically unheard of in the past, doctors’ offices are now starting to charge “facility fees.” These were previously only ever seen in hospitals and just there to raise revenue.
Although most medical costs are entirely within their legal (although perhaps not moral) rights, it is good to know what is going on.
Resources to keep you up to date with hidden and rising medical fees