What's your favorite unethical business practice?

In My Humble Opinion
41

Regarding Handling Charges, I’ve always thought that mail-order shipping and handling charges are roughly equal to the actual cost of the product.

That is, if you order a Music CD for $9.95, the $2.25 shipping and handling charge is the amount the company spent to make and ship the product. That way they at worst break even if they have to return your money due to their ‘100% satisfaction guarantee’.

I don’t think it’s particularly unethical, or even morally ambiguous. They told you up front you’d be paying the extra fees, and it’s just business.

My favorite unethical business practice is buying politicians. They are amazingly cheap, and the returns are tremendous. If you buy the right guy, it’s also a get/stay-out-of-jail-free card. Seems to me you can buy time with the president himself for about $100,000. How much did Kenny-boy pay to be able to manipulate the power supply in California and run his offshore scams?

42

Here’s my fave. I used to be managing editor for a banking industry publication. At one point, we ran several articles written for us by various bank marketers about what a great thing fee income is.

Fee income is the money that banks charge you for maintaining your accounts. Their point was that for many customers there wasn’t much attention paid to fees, so long as they didn’t get beyond a certain point, so you could make a lot of money by charging as much as you could for fees.

They also pointed out that customers wouldn’t object to overdraft fees even if they were very high because the customers tended to regard them as a fine for financial misbehavior, rather than a fee.

That is why banks now routinely charge customers $29 for overdrafts when they cost just $2 or so to process. They make $27 bucks every time anyone bounces a check.

Of course, anyone can avoid overdraft fees by just never bouncing a check. Bank know, however, that X percent of their customers will bounce one or more checks in any given month. They are VERY HAPPY to have that fee income. They could charge five bucks for a bounced check and still make a hefty profit, but NOOOO they’re banks and they’re greedy.

They know that most people who bounce checks are young people and old people and poor people who can afford those fees least. They don’t care.

It’s an unethical practice that depends on people’s guilt about making financial errors, and in a sane world people would make the banks cut it out. But most people I have talked to have said, ‘No, I really like being reamed by the bank when I screw up my account.’

Sigh.

43

I have 2 replies to above posts.

I have been fighting with a customer from sale I made on eBay 6 months ago. My ad specified $6 shipping and handling. He won the auction and got a very good deal, he save about $10 off the retail price of the item. The initial transaction went smooth, he paid immediately and I shipped the next day. A few days later he email all bent out of shape because I charged him $6 for shipping and handling and the box he recieved shows that I paid $4.20 for the shipping. He wants his $1.80 back. I explained to him I had to buy the box, bubble wrap and tape and pay for the gas to take the box to the post office. He didn’t care, he left negative feedback (since removed by eBay) and has been threatening me with a lawsuit. His latest claim is that he can charge me $500 for deceptive business practices. I have repeatedly told him to sue me or go away.

[QUOTE]
But the worst are the pricing schemes for live concerts. As an example I saw the following on another board I frequent:

$28.00 Concert Ticket
$1.50 Building Facility Charge ea.
$7.50 Convenience Charge ea.
$3.90 Order Processing Charge ea.

$40.90 Per Ticket —> Just charge $41 upfront and be done with it. And all this for a band that I’ve never even heard of before.

[QUOTE]

Federal law requires that each charge be shown individually, many consumer rights and public disclosure laws require certain taxes and charges be listed separate from the actual retail price of the item. Did you know that all retailers of gasoline and other motor fuels make available a breakdown of the taxes and fees we pay for each gallon of gas? Most folks don’t know this and gas station owners aren’t going to post it for all to see. If you ask, they are suppose to show you.

44

My personal favorite: being too cheap to pay a janitor, and making your employees do his work instead.

I encountered this practice (along with a huge list of other unethical, slimy, and moneygrubbing ones) when I worked for Best Buy. If you ever walk into a Best Buy store and the bathrooms are trashed, you know why - the inventory guys are the ones who unclog the toilets. Remember that the same hands that load your 50" projection TV probably cleaned the restrooms at the beginning of the shift.
I have a lot of great/unbelievable stories from my time at Best Buy. Maybe I should start a thread…
-Ben

45

This happened to me not long ago. I purchased some seismic data (cost ~$10,000) and ordered copies of the field data tapes. Normally, for 2D data, we figure $50-75/line mile for ancillary costs that include tape copies, reproduction and shipping. This was a seismic line where we anticipated ancillary costs would be about $600-700.

The invoice I received for the tape copies was $5600! This was an insane amount to charge, and I called the (dominant in this end of the business) supplier to dispute it. I’ll toss in an explanatory note that in the business of licensing confidential data, there are generally no returns - it’s considered compromised as soon as it is in your possession.

I was able to, quite quickly, settle the invoice for about $500 with the president of that division. He made the comment, “If I’d seen your name on that job, that invoice would never have gone out the door like that.”

I related this to many of my friends in the industry, co-workers and competitors alike, and they’ve all had a universal interpretation, similar to mine. That is that what this guy was really saying was that they knew they screwed up in charging me the 10-11 times market rate that they routinely get away with charging the lumbering giants like Exxon, who rely on a bureaucracy of acquisition clerks. Having done business with Exxon, I’d have no problem charging them twice market to compensate for the nuisance factor.

But it did seem a little bit wiggly to, without hesitation, drop my invoice by about 90% with just my notification that I wasn’t going for it.

Whatever the market will bear, I suppose.

Another that is not so much a business practice as it is an expose of how affairs are conducted on the scamming side of corporate life. Today I read about the recently former CFO of a local, and currently tortured, public company who, when needing to rectify ~$390K of not-earned bonuses taken from the company, executed a promissory note with the company for ~$560K and then got the company to issue her a payment of $170K to cover the overage. Slick, huh? Not slick enough if I’m reading about it.

46

Auto Insurance

I’m 20 years old and no longer living at home, yet my mother’s insurance company refuses to let her take me off of her insurance policy, eventhough I have no car and will be at home maybe 3 days in the next 6 months.

47

With regard to handling fees (sorry I haven’t been back to check this thread earlier):

I have no problem paying for the costs of an item. My point is that the costs of an item should be included in the price and not tacked on afterwards (especially in the “fine print”). Advertising a product for “only $5!!!” and then mentioning in the fine print that there is an additional $4.95 “handling” charge is, in my opinion, just another form of bait and switch. This is especially the case when the seller brags about how he has the “cheapest prices anywhere” and mentions that his competitors (who likely don’t charge handling fees) are selling the same item for $9.95.

If a seller needs to charge $9.95 to recoup his expenses and make a profit, by all means he should charge $9.95. And, as somebody else has pointed out, sellers on eBay are required to pay eBay a percentage of their sales, which means that “handling” charges are also a means of scamming eBay as well as the buyers.

Barry

48

The problem is that these costs should be included in the PRICE and not sneakily added on to the bill at the end - if you ask me it’s false advertising to say something costs a certain amount and then sneak in hidden costs :rolleyes:

Another related pet-hate of mine is booking fees. Ticketmaster is one of the most evil, parasitic companies on earth. I worked in a box office where we didn’t charge booking fees, presumably because these costs were included in the ticket price and everyone knows what they’re getting.

But booking fees are particularly annoying when you pay a booking charge for booking over the phone with a credit card - even if you are going to pick up your tickets and are using an automated system and don’t pay a charge if you go in and do it over the counter. In my experience phone bookings take far less of a staff member’s time and effort than over the counter bookings.

49

Banks. Against my will, every employer pays my money into a bank account. The bank uses my money to make interest. They then have the ordasity (sp?) to charge me fees for the privillage. I hate them with a passion.
Mel.

50

Sorry, sorry, sorry (cringes) :o

I should have read right to the end before I just repeated what everyone else already said. Please forgive me. My hairs just stood on end when I read the words ‘handling fee’ - urrrraaaggh :mad: (calm down, calm down…)

51

Again, I have no problem with paying for the actual cost of getting an item from the seller to me, including the cost of packing materials. It’s when the seller tries to make money off of escalating “handling” fees that I get pissed.

I hadn’t thought about eBay sellers but now that someone’s mentioned it I have refused to buy from sellers because of their excessive shipping and handling fees. I’m sorry, but it does not cost $6 to ship a CD within the US, even if you ship it priority. And sellers who won’t combine shipping costs on multiple wins are scum.

Just got a letter today about another unethical business practice. It seems Oriental Trading Company is the target of a class-action lawsuit over its practice of charging “replacement fees” to “expedite the replacement of lost or damaged merchandise.” Anyone who’s paid a replacement fee over the last several years is a potential member of the class. I, fortunately, am not a potential member of the class because I refused to pay the fee. I refused to place an order online or by phone with them because they would not waive it and when I ordered by mail I would always cross it out.

52

Here’s one that recently bugged me. I got a series of letters from my mortgage company telling me about this brilliant program whereby you could pay your mortgage every four weeks instead of once a month (or every two weeks, I didn’t pay much attention), thereby adding increasing the rate you pay down your mortgage and reducing the term.

So far, so good. Not a bad idea. But they charge you to do this. There’s a $300.00+ startup charge and a small but not insignificant fee for every transaction. What makes this unethical is that the same mortgage company allows you to pay online and * you can specify an extra amount to pay off the principal every month *. So in other words, they’re charging you quite a bit of money to do something that they allow you to do for free.

I got something like three letters offering me this “wonderful” deal. Bastards.

53

So, you’re basically admitting that you didn’t read your membership agreement with Columbia House? You know, the one where they explicitly tell you that the terms of your membership are that you will be sent automatic shipments of DVD’s on a regular basis unless you specifically take action to decline said shipments?

Call me crazy, but when you sign up for a subscription service like Columbia House, anything they send you is not unsolicited and you have no right to keep it. In fact, if you forget to decline a DVD selection, all that’s required of you is to write “Declined - Return To Sender” on the package and it will go back to Columbia House and they’ll refund your credit card charge. By denying the credit card charge and keeping the DVD, you stole it from Columbia House. Nice going.