Hidden 'gotcha' fees are bad enough, but how does a 'credit' become a fee?
Penny Williams provided this bill to me. Odd how a 'credit' is really a debit, no?
Penny Williams watches her bills very closely, so she noticed right away when her CenturyLink high-speed Internet bill rose mysteriously by $1.88. A glance at the paperwork revealed two new fees accounted for the difference, but the listed explanation didn't make much sense. One line of the bill included the phrase "Internet Cost Recovery Fee -- 0.99." Given that Williams already pays about $30 monthly for Internet service, the $1 fee, seemingly for Internet service, made little sense to her. But the line item was even more confusing.
"Internet Cost Recovery Credit -- 0.89," it said. Despite that friendly-sounding name, the "credit" offered by CenturyLink actually increased her bill by 0.89. Was it possible CenturyLink had changed the definition of the word credit?
A version of this story first appeared on CNBC.com
A note to customer service shed a little light on the issue, but no light on the 89-cent credit.
"As of May 10, 2013 CenturyLink, began charging a Cost Recovery fee to our High Speed Internet users. The Internet Cost Recovery Fee is a monthly charge of $.99 that helps cover the costs associated with the building and maintaining of the Internet network," said a response from the firm sent to Williams. A follow-up query about the 89 cent charge produced no response.
"I was highly annoyed. I watch my bills very carefully for any changes...I'm not getting any additional or better service," said Williams, who lives near Seattle, where CenturyLink Field is home of the Superbowl chamption Seahawks.
Louisiana-based CenturyLink, which has 5 million broadband customers around the U.S., already faced a round of criticism last year when it first began to impose the 99-cent Internet Cost Recovery Fee. After all, when consumers pay a monthly fee for Internet service, why would they also have to pay a 99-cent "Internet Cost Recovery Fee?" It's not like getting Net access is an optional feature when paying for ... Net access. The fee is not unlike a coffee shop charging a "coffee bean acquisition fee" or a grocery store charging a “fresh fruit delivery fee.”
In many industries, such fees might sound farcical, but they have been fair game in the telecommunications industry for years. Some other industries -- the hotel business, for example -- have also seized on the base-price-plus-fee structure, as summer travelers will soon be reminded.
Tack-on fees help companies make their monthly charges appear lower than they actually are. Critics say they are just a sneaky way of simply raising prices, particularly when line items are broken out that seem to be an inherent, non-optional part of a service. In a book called "Gotcha Capitalism," I called this phenomenon "The death of the price tag." Consumers today are often confused by the real price they pay for monthly services, and why it differs from advertised prices. Such confusion -- these tack-on gotchas -- often serve as pure profit for companies.
Tell me about hidden, tack-on, Gotcha fees that you've spotted recently on your bills. I'll be focused more on this topic for the next few months for features on CNBC. Write below, or email me at bob at bobsullivan.net
As for CenturyLink's "credit," the firm never answered my question when I asked for CNBC. Read the rest of this story on CNBC.COM