Consumers fight rising use of hidden fees

WASHINGTON — Hidden fees and surcharges that drive up the cost of everything from phone service to concert tickets are spreading like wildfire, creating a nuisance for U.S. consumers and making truth in billing little more than a hollow promise.

Some hotels impose automatic towel, bellman and grounds-keeping fees. Airlines charge up to $25 to check an extra bag. Want to terminate your cell phone service? Don’t be surprised by a $200 cancellation fee.

Many of the charges are undisclosed, buried in contract fine print or listed as an unclear line item on a bill.

While the costly fees get our blood boiling, the smaller ones have turned the marketplace into a minefield of nickel-and-dime charges. These smaller fees typically range from less than $1 to roughly $10, depending on the goods or services involved.

For years, consumers ignored them because they were relatively small and weren’t worth the hassle to fight. But multiply those small amounts by millions of customers and they become a multibillion-dollar corporate windfall.

A 2006 study by the Ponemon Institute, an independent business-research firm, found that the average adult pays about $942 each year in hidden fees and surcharges.

The study’s results are featured in a new book, “Gotcha Capitalism,” by consumer advocate Bob Sullivan, who called the fees the “fastest-growing white-collar crime in America,” even bigger than identity theft.

After years of being squeezed, customers are fighting back. Just calling to complain satisfies many people. Others use Internet sites such as Complaints.com, PlanetFeedback.com, Callforaction.org and ConsumerXchange.com to help settle disputes. If those channels fail, they turn to the courts.

Class-action lawsuits, which have numerous plaintiffs, are the preferred choice for fee-based suits because individual cases over small amounts of money aren’t worth the legal fees and aren’t profitable enough for lawyers to pursue.

A federal law that limited securities class actions by shareholders also has caused more lawyers to gravitate toward consumer cases.

“There has a been a significant uptick in consumer class actions as a result,” said Andrew Sandler, a co-chair of the American Bar Association’s consumer and personal rights subcommittee. “… There’s lots and lots of litigation against financial service (providers), with respect to utility bills, telephone bills, cell phone bills, credit cards, store charges and store value cards.”

The disputes reflect a changing marketplace, in which frustrated consumers are pushing to make advertised prices meaningful again.

“Part of what you’re seeing is a growing resentment of these abuses that are constant in our daily lives,” said Ira Rheingold, the executive director of the National Association of Consumer Advocates.

Commercial banks were on pace to reap $38 billion in fees from deposit accounts in 2007, according to the Federal Deposit Insurance Corp. The entire financial-service sector pockets more than $216 billion annually in related fees, Consumer Reports has estimated.

Corporate America largely dismisses concerns that the extra charges are price gouging. It defends them as a valid way to cover the cost of providing services and of meeting regulatory requirements, among other things.

But problems arise when customers don’t know what triggers the fees.

Regulators also have taken notice of add-on fees, particularly in the hotel industry, which collected nearly $2 billion in such fees last year, up from $550 million in 2002, according to PricewaterhouseCoopers.

Gerald Yetman recalled that when he vacationed at the Casa Marina Resort in Key West, Fla., several years ago, a hotel staffer spritzed cool water on other guests and him as they lounged poolside. Yetman assumed that the standard room rate covered the misting.

But during checkout he noticed fees, which the desk clerk said were to cover this and other amenities. The fees totaled less than $100, Yetman said, but “the dollar amount didn’t really matter to me. It was the principle involved.”

The fees were noted in the hotel contract that Yetman had signed at check-in but were buried in the fine print, he said.

“Who, when they’re on vacation, takes the time to read all the little fine print down there?” said Yetman, of Royal Palm Beach, Fla.