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Telecom Carriers Use Deceptive Advertising
theodp writes "Regulatory Programs Fee. It sure sounds like a government tax. It isn't. The latest addition to T-Mobile's monthly bill is merely the latest example of telephone companies passing their own cost of doing business to customers with an array of surcharges that one might easily mistake for taxes being collected on behalf of the government. With millions of subscribers at each company, these less-than-forthright fees add billions of dollars per year in extra revenue without raising advertised rates."
Although these tactics could be seen as immoral and lame, it doesn't look like they're actually breaking any laws. From the article, "Actually, T-Mobile's monthly charge of 86 cents is among the more clearly labeled.". As well, "though thankfully there's at least a footnote below owning up to the fees as Nextel's doing."
Like EULAs, they are taking advantage of the fact that nobody reads them.
Vonal Declosion
Telephone companies have been doing this for many years.
One of the companies I worked for even listed the surcharges at the end of the taxes so that when people called the first five or so things they asked about would get an answer of "that's a tax, there's nothing we can do about it," that way they usually stopped asking before getting to the surcharges.
Most companies won't even list them though, they just put "Other taxes and surcharges... $X" on the bill.
Have you tried Linux yet?
Another example is airline's fuel surcharge.
This is a boring sig
Personal Telco
Phone companies have been pulling this crap for years, banks too. Doesn't mean they should or that people like it. Tempted to try this on my next government grant budget, but will probably have an attack of integrity. Deceptive but not illegal is still sucky. And that's the technical term.
Professor of Astronomy, Author of Spider Star & Star Dragon (Tor)
I just signed up with AT&T wireless not a week ago. They were very clear and up front about the fact that it is not a tax, but it is used to cover the expenses of follosing the various regulations. I signed up anyway, knowing full well what they were doing.
They call it a "Regulatory Programs Fee", like Verizon does.
Maybe some other carriers have problems with this - and maybe AT&T has their own problems, I haven't been signed up long enough to know - but I can't at all fault them for this.
In all fairness, the article did not single them
out.
--Russell (not logged in because it's Sat. Night and I'm a lazy f*ck)
Looking at my last Nextel bill: Wife's phone plan charge was $17.59. "Taxes" were $6.66 to bring the total to $24.25. That's 37% in taxes. The * ones ("Fees Nextel elects to collect to recover its costs of funding and complying with Gov't mandates and initiatives") were $3.11, or a grand total of almost 18% of my wife's bill.
.25 for the USF and 0.60 for the Regulatory cost fee.
To break it down, the Federal TRS charge was only 0.073% (0.01). The Univ Serv Assessment was 1.25% (0.27). The Cost program recovery fee was a flat $2.83.
My account plan rate was $47.54. Taxes were $10.98 to bring the total to $58.52. That's 23% in taxes. The * ones were: TRS Charge: 0.073% (0.04), Univ Serv Assessment 1.25% (0.65) and Cost recovery fee ($2.83). Result? $3.52 in these charges, or only 7% of my bill.
What makes me sick is this:
I was paying $65.13 a month to Nextel plus a total of $17.64 in taxes and fees. (A 27% tax rate!!!!).
Take my last Cingular bill (I just switched). My monthly service charges were $47.97. The fees on the account were $6.52 on the line with a $38.98 charge, and $2.71 on the line with the $8.99 charge. That's only 19%! Cingular charged me 17% on one line and 30% on the other (well, the second one is skewed since it only has a $8.99 plan.)
Cingular charged me only $1.07 for the Federal USF, and 0.60 for the "Cost Recovery Fee". The rest was a Federal/State and 911 tax. On the other phone, they charged me
I find it real sneaky how these providers are doing this.....
There is nothing wrong with what T-Mobile is doing.
And that's entirely what's wrong with the picture.
And while this may indeed be Yet Another Reason to Bitch to Government with some requests for some regulation, keep in mind there WILL always be loopholes for accountants (just as crafty as lawyers, just not as loathed (ever seen an accountant on CNN defending high profile clients?), so all it would amount to is a finger in the dyke.
What you need here is full disclosure... and correct me if I'm wrong, is already mandated THAT IF YOU ASK THEY MUST GIVE. So next time ask the sales rep to outline all the surcharges and taxes BEFORE signing up for service and do the obligatory second opinion from a competing carrier. But chances are they will be roughly the same.
Federal Excise Tax: $1.29
Federal Universal Service Fund: $0.56
State Gross Receipts Tax: $0.15
State Sales Tax: $1.76
State Telecom Excise: $1.00
County Surcharge: $0.05
County Telecom Excise: $0.79
MCTD Surcharge: $0.24
Local Sales Tax: $1.81
State 911: $1.20
County 911: $0.30
Regulatory Programs Fee: $0.86
It seems that the real issue there is that the charges are named strangely. This is certainly nothing new.
I remember the first AT&T local service bill - charges like 'line charge' and 'access charge'... Why these are itemized on a bill makes no sense to me.
Even worse are medical bills. I got a bill with 25 different charges that looked like LOCKBOX 54345333453345 - $45.55. Why even break it down? It would be nice if there were some kind of 'transparency in billing' law that required bills to make some kind of dang sense.
+++ ATH0 +++
Several others have posted comments regarding the legality of such fees and the deception surrounding them. Not a lawyer, and I don't understand exactly where the line is drawn, but I can tell you that a lawsuit would hold up. Case in point: Verizon.
I'll be the first to come out against the obesity lawsuits against McDonalds -- Frivolous court-clogging litigation ranks quite highly on my list of pet peeves. By that token, suing your wireless carrier to recoup $2.93 per month to the tune of legal fees, court costs, and simply the time involved would be quite outrageous. However, were I to take up such a matter, it would be not for the money involved, but for the principle. I've no problem with a corporation recovering extra costs due to the imposition of federal fees and standards from consumers assuming such fees are small and reasonable. I do not appreciate being lied to or otherwise misled -- it is one thing to pass costs back onto the customer, but quite another to masquerade a cost as a state or federal mandatory tax.
In any case, Verizon made this mistake. I never had much of a problem with receiving a $40.21 bill for my $36 plan sans overage -- I've more or less accepted that I'm going to get screwed over no matter what. Apparently a few were a little more upset than I; in November, I received notification that I was part of a class-action lawsuit of fellow customers against Verizon and its affiliates dating back to 1993. Due to their engagement in such practices, the company has been ordered to pay these customers something like $20, offer free text messaging, or free wireless web for a period of time. Nothing required to claim it either...apparently it is all automatic.
So, as silly of an idea as a lawsuit may seem, litigation seems to be a viable option, assuming you have an incredible amount of free time on your hands and are bothered by such deceptive practices enough to take the issue upon yourself.
Of course, knowing T-Mobile, I'd be more likely to go after them for their lack of coverage or decent service than slight-overbilling ;-).
-Scott
The telcos can still itemize all they want IF they tell people what they are doing. But they aren't, they are tacking on all these charges after the fact and not including them in the prices they advertize. This is different than sales tax in that sales tax is the same for all goods in the same catagory and doesn't vary from company to company.
Damn telephone companies.. next thing you know, McDonald's will start charging enough to cover the health insurance costs for their employees, Radio Shack price mark-up will include their retail store expenses, and ISP's will start raising fees to cover the cost of their electricity. It's as if these companies are trying to make money or something.
Check this out, EarthLink was $19.99/mo until it began outsourcing it's call centers overseas. Even after getting the super-cheap labor, they turn around and raise rates to $21.95/mo.
Yeah, all of this is really good for the economy. But only if your name is Gary Betty.
Here in Canada at the moment there is some controversy over cell phone companies who are deceptively marketing their phones by claiming that they have to charge a monthly "Network Access" fee that is supposably required by the government. In fact since the law covering this fee changed April 1 the government is actually only getting a small fraction of the amount that customers are being charged. Yet they're still pitching it to customers as a government fee.
One thing that blows me away. Sprint does this; I wouldn't be surprised if other carriers do as well, but when I get my statement, I get a list of the phone calls and time used, but I don't get a total. No total of minutes?? WTF is that? It seems like this is an obvious attempt to keep you from looking at whether or not your total monthly usage would make a different plan more economical. Now maybe you can hit some buttons on your phone and get totals, I don't know, but it seems ridiculous for a carrier to list all your calls, yet not sum it all up in a total!
And what if Starbucks printed a price of $3.50 for a grande mocha espresso, but asked for $5.37 when you ordered one and then explained that it was "coffee ground disposal fee" that increased the price? I can tell you that I certainly wouldn't buy coffee there. Actually I don't now, but I would be even more disinclined to buy coffee there.
Hell. When gas prices surged 3 years ago, I was assessed a 'temp' surcharge on my GARBAGE bill. Gas prices leveled off but the surcharge has been going up ever since.
some people have reported that you may be able to use a fee hike to your advantage. since it is a modification to your existing contract, you may be able to reject the fee and have your contract cancelled without paying an early termination fee. YMMV
. SLASHDOT: Home of the vicious nerd.
AT&T Wireless, I know, did not add the fee onto the services of customers under contract unless they did a rate plan change, at which time reps had a statement that needed to be read about it. Customers out of contract got a notice on their bill prior to it being added(previous invoice or something).
Other carriers, I don't know.
As for the grandparent's claim that these fees don't appear until you're locked into contract, I still call BS, at least where AWS is concerned. The RPF is mentioned in calling plan brochures and is listed online(in the footnotes along with other T&Cs, but there). Also, wireless carriers are obligated to give some sort of trial period before the contract is locked in. AWS, for instance, gives you thirty days. Stores that aren't owned by AWS, mind, can have truly draconian return policies for their equipment, but that's another issue altogether.
If you don't read the contract or the literature until after the fact, it's your own fault. Complain all you want, but there's no recourse for legal action - they did tell you so, you just didn't pay attention.
NB: YMMV. IANAL. Take the above with a grain of salt.
While everyone is ranting and complaining, I would love to throw my rant out.
I have a wonderfully cheap sounding cell plan from Cricket. It's wonderfully crappy local coverage only. But hey, it's only 29.95 a month right?
Now lets add in all the special "fees" and "taxes" and the "company pofit margain" and the bill comes out to 45.65 a month.
Now I don't want to claim that they are being deceptive about their advertising or anything... But that extra $15 they tack on could pay half of what my bill "should" be.