Okay, we’ll admit it: trying to squeeze the biggest ripoffs in America into a single article was a pretty tall order. In fact, it looks like we only scratched the surface. Billshrink readers chimed in with some terrific ripoffs after we published our original biggest ripoffs, so we decided to take another crack at it. Today, we’ll run down 20 more of the biggest ripoffs in America – many of them taken directly from reader comments and suggestions. Who knows? With a topic like this, there may even be a part three!
Several commenters pointed out the irony of paying a dollar (or in some cases more) for bottled water, when it comes essentially free from a tap. Granted, some manufacturers – such as Dasani – claim to bottle only the purest water, and even then, only after it has passed through a rigorous, “reverse-osmosis” filtration process. However, LockerGnome.com reports that such claims are essentially lies, as “brands from popular soft drink manufacturers Coca-Cola, owner of the Dasani brand, and Pepsi, bottler of Aquafina, both bottle municipal tap water.” LockerGnome goes on to cite another report stating that the water in most bottles that are sold, “bought for about $1.25, can be gotten from the tap at home for $0.0001.” Since the entire allure of bottled water is the vastly “purer” and cleaner lifestyle it enables customers to lead, this ripoff adds insult to injury.
Ink cartridges have long been slammed as a ripoff. As Khaze remarked in our comments on the original article, “It’s not uncommon to get an entirely new printer for the same price or less than your refill cartridges.” A ComputerWorld.com blog post sheds some light on why this is so. After Robert Mitchell was puzzled to find only HP branded ink cartridges for sale at the local Staples, he discovered that “allegedly, Staples received a sweet deal from HP in return for quietly dumping its in-house line of generic ink products and selling only HP’s pricier brand.” In other words, the market for ink cartridge replacements is essentially a racket. As of 2007, ComputerWorld noted that ” currently, Staples does $120 million with HP and gets 30 margin points, or $45 million in profit” from its arrangement.
UK-based This Is Money ran a story in June 2009 about the “great razor ripoff”, focusing specifically on Gillette’s 4,750% markup on razor heads. According to “industry sources”, This Is Money says, “products sold by Gillette and other companies cost as little as 5p to make”, but consumers are nevertheless “charged up to £2.43 a piece – a mark-up of more than 4,750%.” Evidently, an investigation was launched by the UK’s Office of Fair Trading into “alleged collusion between the manufacturers and retailers” after it was determined that the UK’s three biggest supermarkets (Tesco, Asda and Sainsbury’s) were selling Gillette’s Fusion Power razor cartridges at an identical price. Indeed, several Billshrink readers pointed out that razor blades are quite a ripoff here in the states, as well.
Bail Bond Rates
One ripoff we were somewhat surprised to see named in the comment section of the original article were bail bond rates. Bill Napier pointed out that (at least in California) bail bond rates “are ursurous, fixed by law and thus non-competitive.” While we don’t suspect many of our readers will find themselves in need of bail bond service in the near future, it’s interesting to note an instance of the government charging rates that would be spell fines or jail time for a private business that engaged in the exact same behavior. Good eye, Bill!
Another commenter named Zach (who claims to be in the restaurant business) adds fountain drinks to our growing list of the biggest ripoffs. Sure enough, some cursory research reveals that fountain soda is often a raw deal from a consumer’s standpoint. HowStuffWorks.com, for instance, notes that soft drink fountains “can be a huge source of profits for restaurants, particularly those that don’t use disposable cups.” The reason? A standard glass of Coca-Cola, for example, “often costs just a fraction of the $1 to $2 they charge.” Of course, the ripoff becomes magnified even further by the fact that most restaurants “top off” soft drinks with a generous helping of ice that takes up at least half the glass. In short, it’s likely a safe assumption that you were ripped off anytime you ever bought fountain soda at a restaurant.
Another perennial ripoff foisted onto consumers by retailers every single day are extended warranty contracts for electronics. In fact, our readers were introduced to why these warranties are such a poor deal back in December, when Billshrink ran an article on holiday budgeting tips. Here’s the relevant passage for our purposes:
Here’s the rub: Nine times out of ten, the price of these warranties is roughly equivalent to the price of a repair in the event one is needed. Keeping this in mind, it makes little sense to buy now what may in fact never need to be purchased at all.
Now, we realize that the high-pressured salesperson who sold you the laptop or TV – or the clerk who checked you out – probably made these warranties out to be absolute, baseline necessities for owning the product in question. Perhaps you even fell for it and bought a warranty at some point in the past. No shame in that, but now you know the truth: 99% of the time, electronics warranties are an abject waste of money, no matter how you slice it.
French Fries at Fast Food Chains
Another interesting ripoff submission from our readers were french fries at fast food restaurants. Chipping in with some insider dirt that would be virtually impossible to pry out of any official source, a commenter named Ryan claims that “my mom has worked for a potato distributor for 15 years. They charge restaurants like Burger King, Jack in the Box, and KFC about 15 cents a pound for regular french fries” – even though we as consumers are charged $2 and up for a box containing less then a half pound of fries. And maybe it’s just us, but haven’t those fry boxes gotten smaller and smaller over the years? As one of the most widely available crops throughout the world, it’s hard to argue that potato prices have skyrocketed over the years.
Funerals often get a pass in discussions of America’s biggest ripoffs because of the gravity of the situations which necessitate them. That is to say, the passing of a loved one is seldom the appropriate time to bellyache about how much it costs to bury them. Nonetheless, it’s difficult to ignore the staggering cost – and how relatively little in the way of labor or expense seems to be involved. An MSN article on funeral planning clocks the price of the average funeral at $6,500. But as Billshrink reader James reminds us, it is questionable whether the costs of a funeral are anywhere near that high. Having a hearse drive the body to the cemetery, purchasing a coffin, printing out paper programs for the guests, digging up a grave and perhaps buying a tombstone aren’t cheap, but they rarely add up to the astronomical funeral bills many of us pay.
While not a ripoff per se, taking your car to a garage for an oil change can quickly become costlier than you ever intended or needed it to be. There are a few ways this happens (many of which you will no doubt be painfully familiar with.) The first way is the most unscrupulous – garages that deliberately either use inferior oil or do not fill your tank with the required amount, while still charging as though they had. However, the more frequent ripoffs at auto garages are the questionably valid upsells they so eagerly push onto customers. Many a driver has been pressured into buying “high performance” motor oil when their owners manual neither called for or even mentioned it. Similarly, many have been hosed into flushing their transmissions, buying new windshield wipers, and swapping out their antifreeze before it was necessary.
Cigarettes (depending on state)
Depending on where you live, cigarettes could be a substantial ripoff. In Connecticut, for instance, Channel 8 New Haven reported that the state cigarette tax had increased from $2 to $3 a pack as of September 2009. With cigarettes retailing for close to $8 per pack, that means the true price (without taxes) ought to be closer to $4 or $5. Indeed, cigarette taxes have been hiked in several states in order to raise more tax revenue during the financial crisis. The Tax Foundation offers a helpful chart of cigarette taxes by state for 2009, but be advised, again, that many of these taxes have actually increased in the short time since that chart was produced. As Billshrink commenter Manhattan opines, “$7 just to be unhealthy? No thanks.”
Tipping in Restaurants
Another thought-provoking suggestion from a reader was tipping at restaurants. Commenter Mevima persuasively argues that tipping, far from being a social nicety, is little more than a clever way for restaurants to hide the full cost of eating there. “Restaurants pay their employees less so they can charge less up front for the food”, Mevima says, and then relies “on customers looking only at the price of the food” rather than thinking in terms of how much the meal will cost in full, with the tip included. In essence, the tipping system has created a scenario where a restaurant’s customers are unwittingly paying a portion of employee wages for the restaurant, rather than up front in the form of higher meal prices. While there’s certainly nothing wrong with tipping for exceptional service, the fact that tips are basically expected no matter what level of service you get offers strong support to Mevima’s theory.
One of the greatest things about technology is that it tends to fall in price over time, as methods improve and new technologies emerge. However, nothing has been exempted from that trend quite like printer cables. For as long as we can remember, printers have always been sold without the cable needed to connect it to your computer or laptop. Aside from that, they have always be sold for at or around $30. They were $30 in 1997, they were $30 in 2007, and having just purchased one, yours truly can personally vouch that they are $30 in 2010. Indeed, a commenter identifying themselves as a former Staples employee on ComputerWorld.com claims that “Staples sells their USB printer cables for $25.00 when it is only costing them about $3.00 a cable.” Between the ink and the cables, printers seem to occupy more than their fair share of the ripoff world!
Travel Size Shampoo
As several of our readers pointed out in the original article, travel size shampoo is rarely a good deal. In fact, IndependentTraveler.com went so far as to declare that “travel-sized products can sometimes be full-size rip offs.” As an example, IndependentTraveler cites how a 1.7 ounce bottle of Pert Plus was found on sale for $2, while “the regular 13.5 ounce bottle…cost just $3.69″ – in the very same drug store! In other words, buying the travel sized bottle is nothing more than a senseless way to pay “over four times as much for the exact same product.” A smarter option is to buy one of these travel sized kits once and then simply fill them up with shampoo from home every time thereafter. If you are a frequent traveler, the savings can quickly add up!
Walletpop.com confirms what several of Billshrink’s own readers pointed out to us in the original article’s comments section – that restaurant coffee is often a huge rip-off. As Walletpop explains, a 16 ounce cup of coffee at your local Dunkin Donuts costs $1.75, which is at least what you can expect to pay “for a much smaller cup at most restaurants.” For perspective, keep in mind that “a plain 16 oz. cup will cost you about $0.55″ at home. True, there is something to be said for the convenience of not having to add coffee brewing to your list of morning or post-work chores. But make no mistake: restaurant and store coffee could add an extra $483 per year vs. brewing it yourself.
In the same vein as oil changes, brake jobs often become rip-offs when unscrupulous mechanics or auto garages are involved. As Billshrink reader Kate astutely pointed out in the comments of our original ripoffs article:
“From what I understand, brake job specialty places will nearly always tell you you need new pads and rotors, and that they charge a huge mark up over their real labor costs.”
Again, it is not at all difficult to understand how this continues to happen. Many (perhaps most) of the people who bring their cars in for service to auto garages are not car experts themselves, as car experts often prefer to do their own labor. Consequently, the people paying for a mechanic’s services are often precisely those people with the least ability to evaluate the advice being given. Who is the average customer to dispute an authoritative-sounding mechanic insisting that you “really ought to get new pads and rotors?” Lacking the ability to confidently challenge such assertions, many of us simply give in and learn the hard way that we were scammed after the fact.
Publicly Financed Stadiums & Arenas
Time and time again, professional sports teams have lobbied state and local governments with fancy graphs and charts “proving” that new stadiums or arenas will turbocharge the local economy. The argument is made that if the affected governments pitch in towards the stadium costs, that money will be made back and then some due to the increased business hotels, restaurants and the stadium itself will generate. However, numerous academic and professional studies have found that this is rarely what occurs when public money is used to finance stadiums and arenas. In fact, in their book Baseball Between the Numbers, BaseballProspectus.com demonstrates that every baseball stadium it analyzed failed to deliver the net gain to state and local economies that were promised. The chapter “are new stadiums a good deal?” ends by emphatically stating that “new stadiums are still about one thing: boosting team profits by separating taxpayers from their money.”
Many of us have heard the analogy that you have a better chance of dying in an airplane crash than winning a lottery ticket jackpot. Nevertheless, consumers willingly spend tens or in in the worst cases, hundreds of dollars a week on the long odds of winning a randomly awarded fortune. The slim chance of winning isn’t the only reason lottery tickets are a rip-off, though. As Billshrink reader superchicken explains in detail:
“Consider a “powerball” win of $300 million or so. First thing they do is take a nice chunk off the top of the money .. I don’t know what the figure is it but wouldn’t be surprised if a $300 million Powerball type lottery generated somewhere around $600 million in actual sales. Then, they offer the winner a choice between the $300 million spread out or a lump sum of about $92 million … and I can never remember anybody ever not taking the lump sum payment. And then they have the gall to tax that amount. At the end of the day the winner gets a nice $50 mil or so I suppose but everybody else gets around $550 million largely made up of recycled social assistance money.”
In short, even in the unlikely event that you win big, the tax man is waiting like an unfed house pet to tax away every cent that it can from your prize. Taking everything into account, it hardly seems worth it to play the lottery as anything more than a once-in-a-while hobby.
Billshrink reader Martini brought alcohol to our attention as another rip-off worthy of discussion here. While alcohol costs pennies to produce, it is taxed heavily in countries located outside the Carribean. As an informative anecdote, Martini offered up the following in the comments section of our original article:
For example – Cuban distilleries AND the shops that sell it BOTH make a profit from selling a 750 mL bottle of Havana Club rum for $1.85. But in Canada, we’re paying approx $38 for the same bottle. Do the math – it’ll blow your mind.”
In this case, the rip-off is not primarily due to greed on the part of private alcohol manufacturers, but greed on the part of government for levying such high taxes on a popular, widely consumed product. Unfortunately, alcohol taxes do not appear to be going away anytime soon. Quite the contrary – a New York Daily News article on February 25, 2010 reported that a new alcohol tax was being discussed on the assumption that it would “make New Yorkers drink less and get healthier.”
While we hesitate to refer to the most special day in many people’s lives as a rip-off, more than a few Billshrink readers opined that weddings ought to be included in a definitive list. CostOfWedding.com states that the “majority of couples spend between $15,299 and $25,498 while their wedding budget is typically 50% less than the amount spent.” Note that this figure does not include the honeymoon or engagement ring which can easily add several thousands of dollars to the total price. It does us no good to think about “weddings” as a whole however, because the total cost is made up of innumerable separate purchases. Much of the cost can be found in individual parts of the wedding, such as accessories. Billshrink readers Earle and Brett concur, as Earle explains:
“I agree with Brett – if you haven’t experienced paying for a daughter’s wedding you are in for a surprise. A veil, for example, could cost you hundreds of dollars. However, it is usually not much more than a large piece of netting with embroidery sewn on the edges plus numerous pasted plastic “gems”. When you look at that compared to the workings that go into making the wedding dress and then compare prices, you will call a halt to the wedding.”
Wireless Cancellation Fees
More wireless phone users than not have had the unpleasant experience of paying steep fees or penalties for canceling their phone service before the date specified in the contract. To an extent, this is a defensible thing for wireless providers to do – especially if a phone discount was given on the understanding that you would pay for a certain amount of service time. However, the rip-off comes in when the reason for canceling is the fault of the provider, like spotty service. Nor are these fines at all trivial. Nextel, for instance, states in their terms of service that there will be an early cancellation fee of $200 per line unless your cancellation falls within a 30 day guarantee period. In these cases, charging hundreds of dollars simply for shutting off a phone line seems quite excessive.