Recently, I booked an airline ticket through United Airlines and decided to pop for the “Economy Plus” seating. It added $54 to one leg and $64 to the other but I figured: why not. The ticket was actually less than I’d expected and I’m an adult with long legs and a little money in the bank. I deserve it. When I happened to check my bank statement on-line (I pay for everything with my debit card) I noticed that I’d been charged twice for each of the economy plus additions; a total of $118 that United, essentially, stole from my bank account. Trying to reverse these charges has plunged me into a bureaucratic rabbit hole of hell that has gotten me thinking: just how much is corporate America filching from us, right beneath our noses?
If I hadn’t happened to check my bank statement (I don’t often, frankly) I never would have seen the fraudulent charges. Was United counting on that? I’m not much of a conspiracy theorist and that ascribes a particular level of venality to the company; they claim, of course, that it was just a blip, some computer error, a burp in the system. But how many of these blips occur that people never catch? How much could that add to the company’s bottom line? Now that I’m trying to get my money back from them, I’m finding the process so onerous, so complicated, so time consuming, that I can’t help but wonder if this isn’t, indeed, all part of an insidious revenue generating plan. A plan to ever so subtly, quietly, under the radar, chip chip chip tiny bits of cash from consumers and just hope they never get caught.
The airlines sell about 700,000 tickets a year. Let’s just say they “accidentally” tacked (for simplicity’s sake) a $100 overcharge to only 10%, or 70,000, of those transactions. That’s $700,000 in ill-gotten gains right there. But to be fair, let’s assume 90% of those overages are caught by customers (I’m being generous here) who manage to whack their way through the thicket of processes required to reverse said charges. (I’m three weeks, three phone calls, and two e-mails in, but no closer to getting my money back.) Just the 10% remaining—customers who didn’t notice the false charge, or gave up before they could get it reversed—would be transferring over $70,000 in illicit, illegitimate profits to the airlines. In an industry as massive as the airlines that doesn’t seem like a lot of money—but it’s totally free money. When companies are routinely counting on tiny charges—a dollar here, three dollars there–to pad their bottom line, why not? Can’t you just imagine some number cruncher at [Your Corporation’s Name Here] floating this as an actual profit generating scheme? In a pretty binder emblazoned with some cleverly opaque title like Affected Adumbrate Revenues?
My suspicions about this were further engaged when I bought an HDMI cable at Radio Shack and they tried to up charge me into a three-year warranty for the low, low price of $1. Now, this sounds like a tiny bit of money and not a bad deal; if anything goes wrong with the cable in the course of that three years and you’ve bought the warranty, they’ll replace it for free. But how many of these cables—inert objects that sit right where you connected them and don’t exactly experience wear and tear (they’re not snow tires, for heaven’s sake)—develop problems? When’s the last time an ancient co-ax cable just up and died? (Um…never? I have the perfectly fine, snaking piles of them—useless now—to prove it.) And even if you did purchase that $1 insurance plan and your cable somehow malfunctioned, what are the chances you’d a) remember you had purchased the warranty and b) had the paperwork on hand to lope on over to Radio Shack and get your new, free cable? Radio Shack is counting on the fact that none of these things will occur—your cable won’t spontaneously stop working, you won’t remember you have the warranty, you won’t still have or be able to find the receipt and paperwork three years on—to squeeze an extra buck out of you.
On the blog The Consumerist a lively debate ensued when a former Radio Shack employee wrote of being pressured to “up-sell” these “RSSPs” (Radio Shack Replacement Service Plans). While there was some disagreement about whether Radio Shack management actually pushes its employees into selling these RSSPs–with their very jobs on the line–the consensus still seemed to be that buying a warranty for most things is a sucker’s game; the company rarely will actually honor the warranty (slipping out by claming whatever problem your product has—so sorry!–isn’t actually covered) and even when they do, the process is so complex (forms to fill out, websites to visits, third parties to complain to, gift cards instead of actual cash refunds) that often consumers just give up.
One former employee wrote on the forum, “It seems like everyday i would sell a couple of wall chargers or car chargers or something. (It has a $6 RSSP) And of course the customer would refuse. (And why not, you’d have to be an absolute moron to get and [sic] RSSP with something like that) I would heckle him some more and tell him i “recommend” getting the service plan for whatever reason.(I never could come up with a good reason for any of the cables, SD cards, or chargers)”. So if we believe this guy (hideous typos aside), buying that $1 “warranty” on an HDMI cable is moronic; I certainly thought so. But how many people do it? And how many thousands of dollars does Radio Shack bank “selling” something useless—air, essentially–that their customers will never need or use?
How much money do corporations generally make by adding on little amounts we’ll never see? “Accidentally” multiplying a charge and then counting on you either not noticing or not having the time or dedication to chase it down? Think about that $118 of mine that United still has. I assume I’ll get it back eventually. But how much interest are they making on it, zipping around the globe in their gigantic bank accounts for the 3-4 weeks (here’s hoping!) that they’ll have it? And if you multiply that by the number of customers who get caught in the same vortex?
When your bank insists a deposit you just made won’t be available for a week, but we all know full well it was electronically debited from the issuing bank immediately, how much does your bank make in interest on the lag time? Again, multiplied by every single customer. How much money do movie theaters make tacking a $1 “fee” onto the ticket you bought on-line? Even though having you buy said ticket on-line actually saves them money (in box office employees’ salaries, benefits, etc.). The same for ATM transactions; banks have been charging for these babies for years, despite the fact they’ve no doubt saved billions in tellers’ salaries.
In reference to an actual scam that managed to bilk millions from consumers by putting small, utterly fraudulent chargers on their credit cards, the FTC noted that “Most consumers either didn’t notice the charges on their bills or didn’t seek chargebacks because of the small amounts – charges ranged from 20 cents to $10…” We’re all busy. Our lives are filled with piles of dense paperwork and on-line accounts that are often difficult to decipher. And there are a lot of us. So in an economy as massive as ours, how much money are corporations making in the margins, counting on us just not noticing in the first place or being vigilant enough to complain about? I’d like to know. And I’d like mine back. Particularly that $118, United. Now please.
Photo Credit: 401k’s photostream
