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.