- Nov 20, 2009
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[h1]http://money.cnn.com/galleries/2010/news/1001/gallery.americas_biggest_ripoffs/index.html[/h1]
[h1]America's Biggest Rip-offs[/h1][h2]Areyou infuriated every time you open your cell phone bill? Livid when youbuy a snack at the movies? These are nine of the rawest deals around.[/h2]
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Text messages - 6,500% markup
Text messages are short, quick and cheap to transmit. So why are they adding so much to your wireless bill?
Themessages are such a tiny piece of data that they cost carriers onlyabout one-third of a cent to deliver, according to computer scientistSrinivasan Keshav, who testified before U.S. senators on the issue lastsummer.
But on a pay-per-text plan, the 160-character messagestypically cost 20 cents outgoing and 10 cents incoming. That's a markupof as much as 6,500%. OMG!
"It's pretty much pure profit," Keshav says. "Carriers would argue they put that money toward investing in new technology."
Evenif customers sign up for an unlimited texting plan for, say, $10 amonth, carriers are still cashing in considering that their overhead isbasically $0. That's a lot to pay for a few LOLs.
Movie theater popcorn - 900% markup
Amedium bag of popcorn costs just 60 cents to make but retails for $6, awhopping 900% markup. That's enough to make "Avatar" fans turn blue.
RichardMcKenzie, an economics professor at University of California-Irvine,says theater owners mark up the snack so much because they don't make aprofit elsewhere.
McKenzie, author of the 2008 book "WhyPopcorn Costs So Much at the Movies: And Other Pricing Puzzles," saysthat out of your $10 movie ticket, only a tiny percentage goes to thetheater's profits.
"Popcorn is what pays for a lot of stuff inthe movie theater," McKenzie says. "A lot of theater owners tell me, 'Iconsider myself working in concessions, not movies.'"
'Free' credit reports that'll cost you
There's nothing free about forking over $179 a year for information at Freecreditreport.com.
Insteadyou can go to AnnualCreditReport.com, which is run by the Federal TradeCommission, and get a truly free report once a year from each of thecredit agencies: Equifax, Experian and TransUnion.
Freecreditreport.com'scatchy ditties can get stuck in your head for days -- but subscribingto the service will haunt your credit card bill for a year. When yousign up, you're asked for your credit card number. Then the siteautomatically enrolls you in its "Triple Advantage credit monitoring,"which pledges to continuously track your credit status for $14.99 permonth.
A rep for Experian, which owns Freecreditreport.com, says:"We do realize there are a very small percentage of consumers whogenuinely do not understand they have signed up for a credit monitoringservice. We work to resolve issues with these consumers on a case bycase basis."
Technically, you have nine days to cancel thecredit monitoring service before being charged, but many consumers havefelt duped. The Better Business Bureau has received more than 11,000complaints, and the site recently made its policy more prominent on itsWeb pages.
Name-brand painkillers - 60% markup
Is Advil's sleek design worth 60% more than the same medicine in a plain package?
A50-count bottle of 200 mg Advil tablets costs $8.49, versus just $5.29for the exact same bottle of generic ibuprofen at a Duane Reade drugstore in New York.
Brand names may give us more peace of mind,but the cheaper stuff works just as well, and in exactly the same way.It's required to, by law.
The Food and Drug Administrationmandates that generic drugs must be as safe and effective as brandnames. Generics have to use the same active ingredients, however theymay contain different inactive ingredients like coloring or flavoragents. For its part, the company says it "standfirmly behind thevalue Advil brings to consumers."
But at a time when many of us are already feeling the pinch financially, a fancy package just doesn't seem worth the headache.
Wine at restaurants - 500% markup
Orderingwine in a restaurant can cost six times as much as drinking the samebottle at home. At the Olive Garden in Manhattan's Times Square, abottle of Sutter Home's White Zinfandel goes for $24 -- but it retailsonline for as little as $4 per bottle.
Restaurants mark up cheaperbottles by an average of three times the retail price, while the pricesof higher end wines are typically doubled, says Ronn Wiegand, a mastersommelier who runs the industry newsletter RestaurantWine.
Forinstance, a 1985 "La Grande Dame" Veuve Cliquot that goes for about$495 online is marked up 222% to $1,600 at the swank New York Cityrestaurant Per Se. Olive Garden didn't return calls for comment, butfor its part Per Se says: "The total cost of the wine and service iscalculated up front...the beverage team sets the highest standards tobe sure that the quality of the wine and experience exceeds our guests'expectations."
Think that's rough? Prices for wine sold by theglass are tripled or even quadrupled, Wiegand says, since restaurantshave to account for the chance that they won't sell the whole bottlebefore it spoils.
At prices like that, guess we'll be skipping dessert.
College textbooks - $900 a year!
Eachsemester, college students shell out hundreds of dollars on textbooksthey'll use for only a few months. According to a House Committee onEducation and the Workforce, the average estimated cost of books andsupplies is approximately $900 per year.
And a separate studyconducted by the Government Accountability Office found that textbookprices nearly tripled from 1986 to 2004 -- a jump that's twice the rateof annual inflation over the last two decades.
Public-interestgroups say this is a rip-off. They blame greedy publishers andbookstores for driving up prices by issuing unnecessary new editionsthat render older texts worthless without adding much new information,as well as by "bundling" books with other materials like CD-ROMs.
Studentshave no choice but to buy the textbooks for their courses. But don'tworry, kids -- at the end of the semester, you can probably sell that$250 calculus tome back to the bookstore for a buck or two.
Super gasoline - 15% markup
If you're filling up your tank with super gasoline, chances are your wallet will soon be running on empty.
The special stuff costs up to 20-40 cents more per gallon than regulargasoline, even though it doesn't do anything to improve the performanceof most cars. With regular gas averaging about $2.72 a gallon, thattranslates to a 15% premium.
"It's like feeding your dog moreexpensive food and expecting it to jump higher," says Gabriel Shenhar,senior auto test engineer at Consumer Reports.
WhenShenhar tests cars, he doesn't put much stock in the manufacturer's"recommendations for optimal performance" -- instead, he uses the fuelgrade that's explicitly required. You can find the requirement printedon the inside flap of your car's gas tank.
The bottom line: Readyour owner's manual. While some high-performance or luxury cars mayneed super gas, your average Celica doesn't.
Hotel mini-bars - 1,300% markup
Thechocolate bars and sodas in a hotel mini-bar can look alluring to tiredand hungry travelers. But you'll rack up a huge bill if you open upthat fridge. Gummy Bears for $14, anyone?
Oyster Hotel Reviews(oyster.com) sends senior editor Will Begeny to hotels across thecountry, undercover, to get the skinny on hotel stays -- and he's foundsome egregious examples of price-gouging. Across the board, items areusually marked up by 3-4 times the retail price.
Among hisfindings in Manhattan: a $10 pint of water at the Mansfield Hotel; $150"wood-smoke" candles at the Gramercy Park Hotel; and a $12 toothpastekit at W New York's The Tuscany.
"The minibar has turned into asort of status symbol, especially for higher end hotels," Begeny says."They'll include rarer products, like those candles, so people don'trealize how overpriced they really are."
And yes, there reallyis a 1,300% markup on Gummy Bears at the luxury Manhattan hotel OmniBerkshire Place. None of these hotels returned requests for comment,but a rep for the American Hotel & Lodging Association said guestspay a premium for the mini-bar's convenience.
"People havestarted to realize this is a scam, that they can walk to a store ablock away and spend half as much," Begeny says. "Of course, if hotelshave to toss some of the older inventory because no one's buying it,they could mark it up even more."
Hotel in-room movies - 200% markup
Inaddition to the overpriced mini-bar, in-room movies are another quickway you can jack up the cost of your stay without even leaving thehotel.
That's because there's a high premium on the convenience:You could find yourself paying anywhere from $10-$15 based on how newand popular the movie is, says a rep for LodgeNet, a company thatprovides hotel programming.
By comparison, Blockbuster rentsDVDs for about $5. LodgeNet notes that some of its offerings are stillin theaters and not yet available for home viewing.
So insteadof shelling out money to sit in bed and watch "The Hangover" for thetenth time, bring your own DVDs. Many hotels include DVD players in therooms and some will even let you borrow a unit.
I don't see how car dealership maintenance didn't make the list.
