Ending This Fee for All

October 15, 2014 | New York Times |

Last week, AT&T agreed to pay $80 million to customers who had been overbilled for charges they had not authorized. This was an all-too-rare case of a perpetrator brought to book: In recent decades, Americans have increasingly been hit with fees they know nothing about, which have contributed to a crisis of consumer debt. We must hope we are entering a new era of regulatory activism that will shine a light on hidden fees.

Besides mystery cellphone charges, consumers regularly complain about surprise bank charges for using tellers, for overdraft protection or for not maintaining minimum balances. Not to mention fees for “maintenance” of individual retirement accounts or 401(k)’s, airport taxes, charges on credit-card cash advances or balance transfers, costs for the activation or early termination of cable and Internet services, and fees on 529 college savings accounts and mortgage origination. A 2010 Consumer Reports survey foundthat unexpected or hidden fees were consumers’ biggest bugbear.

In the AT&T case, the company typically charged customers $9.99 per month for unrequested, third-party subscriptions for ringtones and text messages providing horoscopes, flirting tips, celebrity gossip and “fun facts.” AT&T pocketed at least 35 percent of these fees; the company earned $108 million in 2012 and $161 million in 2013 from the scheme.

The structure of billing made it “very difficult for customers to know that third-party charges were being placed on their bills,” according to the Federal Trade Commission. Even when customers complained, refunds were often denied.