Bob Sullivan’s Gotcha
Capitalism begins with an entertaining story of being ripped off by a hot dog vendor in mid-town New York. Having been charged $3, he mentions he works right around the corner at which point the street vendor forks over the rest of the change and apologizes profusely for mistaking him for a tourist.
I work in NYC and can almost hear their conversation in my head. Next time I wear a Beirhoff Bros ski jacket, perhaps I need to actually count the change.
We’re all tourists
We’re all tourists, every single day. Instead of hot dog vendors, we get ripped off by car rental outlets, banks, insurance companies, airlines, grocery stores, gyms, cell phone and cable companies, etc. An unexpected charge here and there doesn’t seem like much, but they add up. Some charges,
such as your first cell phone or cable bill, actually cause bottom-line shock. This is gotcha capitalism in action:
An unfair, lawless playing field that’s replaced American’s former economic system, the market economy. Hidden fees are its most recognizable characteristic. The system rewards the sneakiest companies, rather than the most efficient companies with the best products.
Airlines. Besides Jet Blue and Southwest, the Deltas of America neither innovate nor improve their horrible service and are hamstrung by antiquated union obligations. The only recourse they see is to levy charges on everything under the sun, all the while providing inferior service. The same goes for U.S. auto makers.
In the age of the Internet, just-in-time manufacturing, and
globalization, companies find themselves fighting to keep prices low like
never before. Their response, almost universally, has been to compensate by
lying about the true price of things. They’ve systematically dismantled
other important market pressures, too, by tricking consumers into long-term
contracts that virtually end real competition. […] They’ve abandoned
old-fashioned ideas about consumer loyalty and actually set out to drive
away consumers their computers identify as less profitable. And they’ve
created contracts with typography so small that they’ve had to make up a
word—mouseprint—to describe it.
“Mouseprint” is where gotchas usually hide. Or the scam is hidden behind cryptic fees. For example, when you shop for mutual funds to invest with for retirement, pay attention to expense ratios. Even a single percentage point can make a huge difference! The higher the expense ratio, the more active the fund, the more you get ripped off. On these management fees alone Wall Street can pocket 80% of your money; you get only 20%. How’s that for a fair game?
Surrender of privacy
One insidious side-effect of various rip-off schemes is your surrender of privacy. While you’re salivating over a new gizmo, they stuffed the purchase agreement with goodies to rob you of legal options and serve you a rotten deal.
Bob cites grocery “loyalty cards” as one of the effective scams. To sign up for one, you fork over personal information in exchange for savings which don’t save you anything! As Bob brilliantly puts it, “No one can tell you
what the future cost will be for the surrender of privacy today.”
The takeaway
The book covers a wide range of other ripoff avenues. Even though Bob Sullivan puts a host of disgusting schemes in the spotlight, more are invented every day. With this come a couple of valuable lessons:
- Stay free agent! This is how I like to roll. I abhor debt and lock-ins. Per author’s advice, “avoid long-term contracts as much as possible. Always opt for the shortest contract [when purchasing goods and services]. Companies want to tie you up and then take advantage of you; don’t let them.”
- Complain. The book has sample letters to companies, if you dispute issues directly with them, as well as federal agencies when nothing else works. You need to learn how to complain effectively and whether it makes sense to complain at all. In some cases, you bring doom upon yourself by being inattentive, so even your state Attorney General office won’t help you. Educate yourself how the system you’re up against works.
The cover of the book irks me a little. “Learn how to save $1,000!” can be easily construed as a false statement. You will save money by staying vigilant, but your mileage will vary.
