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The Future of Shopping: Trapping You in a Club You Didn't Know You Joined (bloomberg.com)
Just a word of caution: the next time you spot a great deal on a shopping portal, you will want to carefully look for all the radio buttons, and tick boxes -- and perhaps also skim through the ToS -- before placing the order. Bloomberg has an in-depth piece on the ordeal of a customer who purchased a lingerie item from an e-commerce website called Adore Me. Little did the customer know that the $19.95 she was spending to purchase a piece of cloth would end up costing her -- partly because of her own ignorance -- more than $300. Adore Me, you see, maintains a subscription model in which it charges users a fee of around $40 a month, even if they don't purchase anything. It might surprise many, but Adore Me isn't the only shopping portal or service that runs this sort of tactic. "It's the new thing," says Francisca Allen, the deputy district attorney of California's Santa Clara County. "There's thousands and thousands of companies that do this." What's more, these companies have made it frustratingly difficult to cancel these subscriptions -- it often requires you to sit through a one-hour call to the customer representative and listening to a bunch of funky songs that you suddenly don't adore as much. Bloomberg reports:Hundreds of customer complaints against Adore Me and other subscription e-commerce businesses are stacking up at the Federal Trade Commission, according to records obtained by Bloomberg. They follow a pattern: Shoppers believe they've been tricked into signing up for recurring credit card charges, often for a relatively small amount that can be easily overlooked in a monthly bill. Then companies make it an exasperating hassle to quit and get a refund.
Capitalism is philosophically based upon perfectly informed rational consumers, which these guys aren't, by definition
There is, in fact, no such thing as a perfectly informed rational customer, there never has been and there never will be. Those two "simplifying" assumptions are typical of the fundamental defects that render economics almost worthless in its present form. Of course economists like simplifying assumptions, because otherwise their field would be far too complicated to make any sense out of. Unfortunately the assumptions mean that the resulting rules and laws apply only in an abstract world which hardly bears any resemblance to the real world we live in.
1. "Perfectly informed". Even in the simplest possible model of a market, a village produce market where fruit and vegetables are being sold from a collection of stalls, perfect information is far from guaranteed. Who knows what Fred has been spraying on his pumpkins? And have those delicious-looking peaches been previously frozen, transported, and defrosted? Usually the vendors will know, and maybe a few others - but then it is in the interest of the vendors to keep the information secret, even at the cost of a bribe or quid pro quo favour. Thus the concealment of important product information actually becomes part of the market, with its own price. Consider now a more sophisticated, "evolved" market such as the electronic stock exchanges where corporations will pay huge sums of money to have their servers a few feet closer to the exchange's own servers. That may give them a few nanoseconds' head start, which may be enough to make the difference between winning billions and losing billions. Again, we see payments (this time, very large ones) being made precisely to prevent information being perfectly shared. And the pattern is repeated everywhere.
2. "Rational customers". This one departs even further from reality and common sense. If you think about it for five minutes, you will see that the very concept of a "rational customer" is wholly artificial and almost meaningless in relation to the real world. We are all rational, more or less by definition, as a function of being human. But what does that really mean? I think you'll agree that virtually all humans use reason (facts and logic) as a tool when they need to, never as a way of deciding what it is they want. To suggest that all customers can be "rational" is, in effect, to make the ridiculous assumption that they are wholly focused all of the time on making financial gains! It would be more realistic to say that a rational person is one who devotes as little time, effort and attention to economic necessaities as possible, the better to enjoy the good things of life - which are NOT money (as such) or buying and selling. It is true, to some extent, that those who do best at the economic "game" are those who focus on it most unremittingly - spending almost all their waking time in business activities and reckoning their success in life solely by their net worth. For such people, the Bible has a warning.
"And he spake a parable unto them, saying, The ground of a certain rich man brought forth plentifully: And he thought within himself, saying, What shall I do, because I have no room where to bestow my fruits? And he said, This will I do: I will pull down my barns, and build greater; and there will I bestow all my fruits and my goods. And I will say to my soul, Soul, thou hast much goods laid up for many years; take thine ease, eat, drink, and be merry. But God said unto him, Thou fool, this night thy soul shall be required of thee: then whose shall those things be, which thou hast provided? So is he that layeth up treasure for himself, and is not rich toward God". (Luke 12:16-21) http://biblehub.com/kjv/luke/1...
I am sure that there are many other solipsists out there.
DON'T DO THIS ON A REGULAR BASIS!!! This will negatively affect your credit score and will cost you much more than some paltry couple hundred bucks in comparison in the long run.
I never thought I'd say this, but there is safety in shopping at big chains (Wallmart, Amazon, etc) -- they get much heavier scrutiny and can't get away with sleazy business practices for long. They are regulated, they have to report their finances, etc. On the other hand, small operations run from a garage in a third-world place, don't have to abide by the same laws so the only buffer between you and them is your credit card company. The CC company *will* protect you, but if you fall into the category of a habitual scam victim, you'll be flagged as a high-risk customer and your credit score will take a beating.
Speaking of sleazy companies, I was almost scammed by a VPN company advertised here on ./ -- they had a "lifetime" membership that looked too good to be true. I did my due diligence and contacted the company to get assurance that "lifetime" meant forever. At that point I went in and got the promotional 3 day trial and both the service and customer support were pretty good, so I ended up contacting them again and getting the lifetime package. First they sent me a paypal invoice for a recurring payment type of service. That should have been the red flag, but like most people, even those who believe can spot a scam a mile away, I got greedy and ignored my gut feeling that things that are too good to be true, are never truly good. After getting reassured that the recurring payments invoice was a clerical error, I proceeded to pay via paypal. At this point I saw that the paypal payment was actually a recurring payment service. Long story short, I kept contacting their Tech Support department every day for a week and getting the run arounds, until I decided that enough was enough and opened a charge dispute with paypal. A day later I got a vindictive letter from the VPN company telling me that now that I had opened a dispute with Paypal, they will await Paypal's decision and if the case was decided in their favor, they would neither issue a refund, nor provide service to me. It was so childish that I could not stop laughing. However, minutes later I got another email that the VPN company had decided to refund the full amount on an exceptional basis.
So the moral of the story -- stay away from questionable internet outfits. And keep one thing in mind -- no matter how smart you believe yourself to be and how discerning and cautious, there are people out there who spend the time and effort to hone their con artistry skills so well that you won't realized you were had until you've parted ways with your money. If it's too good a deal, it's a scam.
Also, try to put a a few buffers between you and questionable merchants. In my case, I deliberately chose to pay via PayPal, because I knew they have a good dispute process and because my instinct told me I may have to come to rely on it. I was right. My absolutely last resort would have been my credit card issuing bank.