Sneaky Fees: Hidden Charges Add Up for Tech Users

By Bill Snyder, CIO |  Mobile & Wireless, consumer electronics

Helen Mickiewicz, a sharp-eyed T-Mobile customer in San Carlos, Calif., noticed something odd on her mobile phone bill earlier this year: A charge for $6.05 for something called a "regulatory fee." Curious, Mickiewicz read the fine print and found that T-Mobile levies the fee to compensate itself for collecting government-mandated taxes and fees related to her service.

Be clear: the $6.05 is not a tax. "T-Mobile is charging me $6.05 a month to collect taxes and fees of $4.30 a month. That's like Macy's charging me for collecting sales tax on something I bought," she told me.

That's what I call a sneaky fee. More and more companies, from airlines and cell phone providers to computer makers and cable TV providers, are separating all sorts of little charges from the basic cost of the service, in an effort to look cheaper than the competition. In many cases, the charges are so small you might not notice them. But they add up.

[ Broadband providers sell connection speeds using "up to" marketing tactics. Good luck determining your actual speed -- and don't bother looking to the FCC for help. See CIO.com's recent story, The Truth About Broadband Speeds. ]

How much does this consumer-unfriendly game cost you? Obviously it varies, but a research firm called the Ponemon Institute sent questionnaires to nearly 28,000 consumers and found that on average, sneaky fees cost each household about $920 a year. The survey was conducted in 2006; sneaky fees have almost certainly gone up since then.

Beating Sneaky Fees is Tough

"There are a lot of legal ways that companies offer what seems to be a good deal and (legally) add fees to lure consumers into what turns out to be a more expensive agreement than was advertised," says Michael Spinney, a Ponemon analyst. "It's sort of buyer beware."

Even well-informed consumers often strike out when they try to beat a sneaky fee. Mickiewicz contacted T-Mobile, the Federal Communications Commission and the California Public Utilities Commission--all to no avail. Particularly galling was a response by a well-meaning T-Mobile employee who told her that "everybody (all the phone companies) is doing it."

You should certainly let vendors know that fees like this don't incent you to be loyal to their brands. Another strategy is to avoid the fees in the first place--if possible.

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