Tuesday, December 28, 2010

The "Only If The Customers Notice" Economy

Two weeks ago I made a deposit into my checking account. When it didn't show up in my account after a few days, I called the bank. They said they had no record of the transaction and told me to bring the deposit slip to a branch office. I got the feeling that if I didn't have the slip, the money would have been gone.

Last week I noticed that my cell phone bill was higher than normal (it's been the same amount each month for a long time). When I called to find out why, the customer rep said that for the past two months I was charged for a new service that I must have signed up for. When I said I had not, she immediately offered to refund my money and remove the new charge from future bills. It was almost as if she had been instructed to "just take it off if anyone calls."

A few days ago I saw that my favorite yogurt was on sale at a great price. A bright yellow card under the yogurt trumpeted the deal. At checkout, I noticed that I was charged the regular price. When I took the receipt to the manager and explained what happened, she gave me one yogurt free and refunded the difference on the others -- again, immediately and without even looking at my receipt.

Innocuous incompetence, or something deeper? Maybe an electronic infrastructure to go with the roads, bridges and railways? These are all large, publicly-traded national companies. I wonder what percentage of corporate profits is due to this sort of thing.


Anonymous KAIMU said...


I wonder what percentage of corporate profits is due to this sort of thing.

48.7% ...

Still, without government contracts I wonder how many Fortune 500 companies would exist? 5 ...

12/28/2010 11:35 PM  
Anonymous pete said...

I'll go with the incompetence. I'm a small businessman and I deal with poorly educated people on a daily basis. The schools teach garbage and young people are spoiled and brain dead. It's stunning how ignorant so many people are today.

12/29/2010 6:31 PM  
Anonymous BCash said...

After switching to DSL I was supposed to get a $100 gift card. Never showed. When I called I was given the number to the fulfillment center. This is the new normal. Along with selling 89 ozs of OJ instead of 96. See what you can get away with. Fuck the customers and employees as much as possible. Only shareholders matter.

12/29/2010 7:24 PM  
Anonymous Anonymous said...

I've been convinced for quite a while that these "mistakes" are calculated efforts by large companies to screw anyone and everyone who doesn't notice what's going on. There's no penalty once they're caught, so why not?

12/29/2010 10:06 PM  
Anonymous pete said...

I disagree, Anon, if this were that big a conspiracy, it would leak out. It's really just stupid people who fear being fired for mistakes, so they just give in. Corporations are starving for loyal customers, so they insist on not arguing with customers. It's really quite pathetic.

12/29/2010 10:21 PM  
Anonymous Liebchen said...

Pete, Anon did not claim that there was any conspiracy, only that there was a calculated effort to maximize profits through these "mistakes."

12/30/2010 2:08 PM  
Anonymous Blakeantor said...

The idea of a conspiracy is a bit of a stretch, mainly because of the probability of a leak that the trial lawyers would feast on. However this type of "incompetence" is common enough that I have to believe it is intentional. I was once told I could not close or cancel a credit card account Even after three attempts to pay the balance to 0, I kept getting a bill for a few dollars on another card. I have received bills from third parties on closed accounts and when I called the "closed" account reps, I was told they could not do anything about the charges, that I had to contact the third party directly to cancel. In one particularly egregious case, I had to call twice a month for almost a year about a late fee that kept getting tacked on to a payment even though I was assured on each call that there was no late fee. The problem with things like this is the corporations can ding your credit rating but you have no way to harm them other than not use credit, which was the only way I solved my vexations.

12/30/2010 2:22 PM  
Anonymous Anonymous said...

Incompetence except for the phone bill. I suspect that sort of thing is very common right now, and always has been when the economy is bad.

12/30/2010 4:56 PM  
Anonymous Ed said...

Thanks for noticing this. I've been seeing more of this too. The only real defense is to withdraw from the "normal" corporate economy as much as possible, which of course will make the economy even worse if enough people do this.

Its one of those things that is making the US feel increasingly late Soviet Union like.

12/31/2010 8:16 AM  
Anonymous Anonymous said...

I vote incompetence for the in-person transactions, where the errors can go in either direction - the missing deposit, the wrong change at the lunch counter, etc.

But someone programs or configures these systems that produce the phone bill, the yogurt. And in general it's not a minimum wage, uneducated worked that does it.... It's strange that those sorts of mistakes are never in the customer's favor.

1/01/2011 5:16 PM  
Anonymous rapier said...

It's impossible to separate the phone company from the customer service person. She might be the nicest most honest person in the world who wouldn't think twice about returning a lost wallet or helping any way she could a friend in need but when she punches the clock she will align her ever word and action to benefit the corporation, the institution to which she belongs.

Ones like her will help foreclose on you improperly and not blink once. Pass the absurd service charge on to you without a thought. Reject that health insurance claim on the most minute technicality as casually as adjusting a cuff or collar. No possible penalty can accrue for doing so. Only not doing so is a risk. If and when a complaint comes along it's Verizon's or Citi's fault, not hers.

The world belongs more and more to the company man. There is absolutely nothing that can stop it.

1/01/2011 10:29 PM  
Anonymous Anonymous said...

Nowadays when I do any bank transaction I IMMEDIATELY ask for a printout of my updated bank balance. EVERY time.

And I don't use credit at all, not any more. I'm in computers, and I know how incredibly easy it is to hack into accounts, so I have NEVER given any corporation the # of my account for "automatic" withdrawals.

The system is being gamed, more and more blatantly all of the time. And innumeracy is a bit part of it; cashiers are always shocked when I do simple addition or percentages (for sales taxes) in my head -- but that's the way one can protect oneself.

When you are innumerate, you are defenseless.

1/02/2011 1:11 PM  
Anonymous Anonymous said...

It happens all the time. My bank resets the charges from time to time thinking we will not notice. Computers don't just decide to reinstate fees.... humans do.

1/03/2011 8:52 PM  
Blogger Thomas Daulton said...

It's certainly not your imagination, TCR. iTulip.com has referred to stuff like that as "Stealth Inflation" for years now.

People have the misconception that inflation is defined when a vendor suddenly puts a big markup on his price tag. That's not the beginning, that's the end-state of the inflation process.

With inflationary pressures on your phone company or bank, they promise you the same service for the same rate, but pile on hidden fees to recoup the difference. It's merely the converse of how your favorite restaurant or your home contractor, they hold their same price (at first), in order not to drive away customers in droves. But behind your back, they substitute cheaper ingredients for the high-quality ones you're expecting.

Both those things are inflation, even though the price tag never changes. The big price markups which people associate with inflation, are basically a public admission that your business model is failing, so companies only do that as the last possible resort. Until then, they try and rob you in far subtler ways.

Electronics manufacturers bank on the fact that 40% of customers fail to send in mail-in rebates; and they can deny an additional 20% of potential rebates, for picayune paperwork reasons. If electronics companies by some miracle had to pay out all the mail-in rebates they promised for all their products, they'd immediately go bankrupt.

It's industry standard practice among banks that their computers automatically re-arrange your expenses, charging your account not chronologically, but re-arranging them until they find the order which makes you most vulnerable to their exorbitant fees. Google "Sneaky Hands Overdraft" for the full explanation.

As far as "conspiracy" goes -- the California Power Crisis showed us that market participants do not need to actually collude or formally agree on anything in order to screw over all consumers at once.

It's not a "conspiracy", the better term is a "race to the bottom". It used to be that customers would abandon a dishonest merchant and flock to the other honest ones. But if none of the merchants are honest, they can all simply adopt the dishonest practices in lock-step and screw over all of the customers all of the time -- excuse me, I meant, "create new revenue streams".

I think the last several bubbles accompanied by fraud scandals have demonstrated pretty conclusively, that if they were somehow divinely prevented from screwing over the small consumers, American businesses all would have gone tits-up many years ago. Instead they're posting record profits. You, TCR, have simply noted some of the many ways they do it.

I have links to back up each of those assertions about scams and ripoffs, but Blogger doesn't seem to be accepting HTML today.

1/04/2011 3:19 AM  
Anonymous clark said...

I think it's deliberate.

The banks-- three different ones-- all changed my payment due dates the same year. Two I caught in time not to be late, one I didn't.

They were happy to change it back(!).

If they do that to ten million customers, even if 90% catch it, and even if 90% of the rest complain and have it reversed, that leaves 100 thousand people paying a $30 late fee: a quick three million bucks.

Why not do it?

1/07/2011 1:46 PM  
Blogger Mr Wendover said...

It's amusing when my health insurance company manages to lose my claim submissions for large amounts (more than $100) and when I do see a check from them, I get giddy until I open the envelope and it's reimbursement for a small claim where the allowable amount is peanuts and the final reimbursement is worth less than the hassle of mailing the form.

5/11/2011 10:15 PM  
Anonymous Anonymous said...

Similar thing happened on a recent Chase credit card statement. There was a mysterious $1.50 fee tacked onto the end of my monthly statement. I called them about it, the agent said it interest even though the statement called it a fee and there was no outstanding balance. He took it off immediately 'because I was a good customer' or for some other such reason. I still don't know what that fee was supposedly for.

5/12/2011 8:07 AM  
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