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Photo by Marc Lostracco.
Deliberately confusing customers is big business in Canada, and fudging advertised prices with hidden fees is a hallmark of this particular circle of hell. Consumers can activate their cable television within a day, but can't cancel it without paying for the following month. Freestanding "independent" ATMs that are actually owned by big banks charge you an extra $1.50 "convenience" charge on top of what you'd pay at their regular ATM. Condo builders can charge hidden levies that lock buyers into paying for items that should be covered by a developer, like landscaping or a City-mandated piece of public art. And Hertz Rent-A-Car at Yonge and Bloor just started charging an additional $10 "parking recovery fee" to return the rental to its own lot.
Some of the worst offenders of the hidden fees are the telcos. With Bell, Rogers, and Telus dominating the mobile landscape in Canada, Canadian consumers are caught in a stranglehold of disproportionately high fees. Most abhorrent is the indefensible "system access fee," which is not mandated by the government as many customers believe, nor is it included in the large type in ads for monthly price plans—so when Bell touts a $30 monthly contract, it actually begins at $39.70, before tax. That's like saying your morning coffee is only 80¢, plus a 40¢ "beverage access charge." With 19 million wireless subscribers in Canada, the system access fee alone adds up to more than a billion dollars annually.
Just last year, Rogers Video mounted a campaign to proclaim "No Late Fees On Movies." That claim was true—if you didn't count the late fees. If renters kept the flick for more than a week, Rogers would "automatically convert your rental to a retail sale" and charge your account accordingly. This was a "truly customer-friendly offering," said Rogers Video President Chuck van der Lee at the time. If customers returned the video within a month, they would be refunded the additional, um, late fee.
It wasn't to last, however. This month, Rogers clandestinely reinstituted charges for returning videos late, calling them "pay-per-day incentives." If a video fails to be returned by the due date, the customer is slapped with a penalty of up to $4, plus a $20 "replacement fee" if the video is held for more than thirty days. In its typical doublespeak fashion, Rogers explains why the program was dropped: "our customers told us they want selection," they say, meaning that when people rent Top New Release videos and don't return them on time, they can't be there for other customers to rent. Fair enough, but after millions spent on a massive "No Late Fees" campaign, it's interesting how quietly the penalties were re-implemented.
Part of the culture of confusing customers into unwittingly paying extra comes from deregulation. Originally meant to spur competition, deregulation has allowed huge corporations to collusively steamroll Canadians with lucrative service charges, usually billed as "convenience fees." For the convenience of saving electricity, you owe Toronto Hydro a "Lost Revenue Adjustment Charge." For the convenience of ordering a Cineplex movie ticket online and printing it out yourself, you get dinged an additional $1 per ticket. For the convenience of checking your voicemail on a Fido handset while roaming in the United States, expect to pay a preposterous $1.70 per minute, and 40¢ per text message.
Luckily, Canadian customers are beginning to fight back—against the telcos, at least. Mobile providers are facing a massive lawsuit for "unjust enrichment" over system access fees, and with the impending debut of Apple's hugely successful iPhone in Canada on the Rogers GSM network, competitors Bell Mobility and Telus have drastically reduced data plan fees in an attempt to retain customers—particularly their highly profitable business customers, who require extensive data plans and worry less about roaming charges and overages. However, the willingness of general consumers to tolerate exorbitant costs due to lack of other options could be reaching its saturation point, and interestingly, it might be very much attributed to demand for the data-hungry iPhone.
The corporations aren't backing down willingly, though. Yesterday, Canadian Industry Minister Jim Prentice announced that Ottawa will open up the wireless spectrum to more competition and possibly lower rates, declaring that Canadians pay some of the highest wireless fees in the world.
"We believe this is not in the best interest of consumers or [the] telecom industry at all," whines Janet Yale, Executive Vice President of Telus. Yale says this with a straight face, easily ignoring how Telus snapped up competitor Clearnet with little regulatory resistance in 2000 and how Rogers bought-out Microcell Telecommunications (Fido) in 2004, hiking rates and further shrinking options for consumers.
Even Ted Rogers got crusty at the prospect of opening the spectrum, grumbling about how newcomers "rip off the system and get spectrum at half-cost and have taxpayers pay for it." Rogers is rich and old, so he possibly forgets that his company didn't have to pay for access to the spectrum at all when they entered the market.
Still, corporate boardrooms across the city are undoubtedly alive with renewed discussion on how to bewilder customers and disguise fees under "perceived value" benchmarks, but this kind of marketing can only be stopped through tougher regulation and consumer backlash. Sadly, convoluted service contracts and obscure charges only serve to frustrate the consumer into inaction, and these Canadian megacorporations ride our surrender straight to the bank.
Bottom photo by the mkt from the Torontoist Flickr Pool.
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I'm not defending the telcos here, but the following is a common misconception: "[Rogers] possibly forgets that his company didn't have to pay for access to the spectrum at all when they entered the market." When Bell, Rogers and Telus were granted spectrum in 1984 and 1995, it is true that there was no upfront cost, but there were licensing fees. This means it was relatively very cheap, since there was no auction-like process to determine true value, but the companies still had to pay.
If I remember correctly, the telcos originally rolled-down the licensing costs to the consumers in the form of a $50 initial charge when setting up the account, as well as a precursor to the monthly system access fee in the mid-to-late 1990s.
Companies don't pay for anything; we do. If the government charges them some amount for whatever reason, it ends up on our monthly bills.
Anyway, I'm hopeful that the opening of spectrum to competitors will mean a price war between the big guys, but something tells me we're more likely to get something that resembles price fixing right across the board...
It sounds like the government needs to outlaw hidden fees. All fees (and tax, too) should be included, by law, in the advertised price. And you forgot to mention the airline industry, which is by far the worst offender in this regard.
Just FYI: RE: Rogers Video Late Fees: As far as I know, i t only applies to one day rentals, ie BRAND NEW rentals. Since the demand for these titles are much higher than older titles, people hanging on to them for 3 weeks at a time is detrimental to business. Hence, Late fee.
I don't get what the complaint is about late fees. Dude, you rented a movie and they told you when to bring it back. You don't bring it back = late fee. Where's the disconnect?
I agree that there should be late fees and that it's unfair to other customers. The point was that after a muti-million-dollar "No Late Fees" campaign (where there possibly were technically still late fees), they very quietly reinstated the late fees.
I dunno, I know during the initial campaign, I didn't return a movie for, like, 2 weeks, and wasn't charged anything. It's only recently they've told me that there are fees for returning a one day rental back late.
Although, ALL the chains had the "restocking fee" if you kept it for a month. We bought "The Transporter 2" for just such a reason. So, as you can assume, we learned our lesson. Because having guests know that you own The Transporter 2 is enough of a detriment in itself.
The worst is the cancellation fees....could go up to $720 for a 3-year cell phone contract. cellClients.com came around at the right time. They help you forego cell phone contract cancellation/ activation fees by the cell phone contract ownership exchange concept.
Rogers cancellation fee is a maximum of $400, less than anyone else.
www.CellPlanDepot.com is a meeting place for people looking to get out of their cell phone contract "Plan Droppers" and those looking to takeover a contract "Plan Seekers". This service adds value to cell phone subscribers as it satisfies their need to break a contract and avoid the steep early termination fee. Those who takeover a plan will receive numerous incentives such as cash, free cell phones, accessories, and avoid activations fees through the simple transfer process. Those getting out of their plan avoid the early termination fees and all of the future monthly payments for that contract. It is a win-win process as both Plan Seekers and Plan Droppers save money through this innovative service.
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great post! i'm an ex-torontist living in Van and it's the same BS here. ICBC for instance - anyone who led you to belive gov't run insurance equals lower rates LIED, try equals doubled rates. recently i moved 1km down the road to a new apartment, and BC Hydro slapped me with a $10 close account fee, and then a $10 open new account fee because apparently you need a whole new account when you move. i'd like to write more complaints but i'm currently typing under candlelight, with a dying laptop battery, evading the police for driving without insurance.
Regarding the comment:
"When I tell people back home that on some plans it costs you (cents or minutes) to receive calls/texts they laugh.".
The reason for this is not that the phone companies are ripping you off, but that North America has a different system than Europe. European phones are under the 'caller pays' system, which means that the person calling your cell phone is the one expected to pay for your airtime.
In Europe the person who calls your mobile number pays for your airtime. Rates of 30 to 50 cents a minute are not uncommon to call a mobile phone in Europe, even within the same country.
Try calling a European mobile phone from Canada sometime. The rates are as much as ten times higher than calling a UK landline phone.
This is simply a different way of shifting costs and duping the customer. The person who has a mobile phone gets "free" incoming calls, while the person who calls you pays through the nose for the privilege of calling you. (Essentially making your friends and family pay for your decision to switch to a mobile phone.)
In North America, the person who owns the mobile phone is the one expected to pay for airtime, after all he/she is the one who made the decision to get mobile phone service. Seems fair, doesn't it? You wouldn't expect someone else to have to pay for your airtime.
The result is that if someone calls you on your mobile phone in the US or Canada, your cell phone company will deduct minutes from you, but the person who calls you is not gouged for the call as they are in most of the rest of the world.