This stunt was pulled by a certain west coast Big 4 Bank with their 3$ debit card fee. The media uproar caused them to 'rescind' the fee, then just tack on a $15 fee per month for all checking accounts with less than a $10,000 balance -- obviously a significant higher fee affecting 100% of their customers rather than x%<100. By then no was willing to go through the news cycle again to cover it because it was old news by then.
I'd be somewhat surprised if Verizon isn't doing the same thing.
Or they will increase everyone's rates by $2, then a week later offer a $2 reduction for paying via the methods they want you to. And the sheeple will be grateful.
That reminds me of how some insurance companies operate. They say they have accident forgiveness that won't raise your rates but you lose the "Good Driver Discount". So, in essence, you pay more even though your "rate" technically stays the same.
THey want you to use online payment, and pay the $2 fee! The fee isn't to discourage use or direct users; its there because most everybody uses online payments, won't quit even if there's a fee, and they see a way to make a buck on a captive audience.
Its the free market, I guess. They can charge whatever they want, and we can shop around for a better deal. Except all those people with a contract.
2011 was exciting in that, for what seems like the first time, mass consumer reaction played a significant role in affecting the decision-making of several corporations: Bank of America, Netflix, GoDaddy, and now Verizon.
I'm curious; if Verizon was just a bit more patient, they might have tried, say, a .25$ fee first, and then just gradually increased it over time. I suspect nobody would have noticed in that case. Insert boiling frog analogy.
In one case, a Wells Fargo bank flat out refused to cash a Wells Fargo check. They said I could open an account there and then they'd be happy to honor the check. Of course.
To be fair, it's clear why ATT would want to avoid handling cash in the store. Most people probably don't do that, it's probably small amounts, and they probably spent more offering that service than they collected.
The strange thing about verizon was that they wanted to charge a fee when there was no apparent prompting, for one of the more convenient (for verizon as well as customer) methods.
They are thinking, "if you insist on using Visa, you're going to pay Visa's cut."
Verizon can take have 2-3% more money by convincing people to pay by check/ACH rather than eating the unnecessary cost of credit card processors. Probably would have been far less backlash if they stopped accepting credit cards altogether.
ETrade has something like this. Want to close your account? Well,they (used to?) skim $80 off the top as a 'closing fee' or something. Like it costs more money NOT to hold your account.
I got around that one: added the checking feature, and wrote myself a check for the entire balance. Voila!
With the ability to limit class action lawsuits, cell phone companies are going to keep trying to push the limits of what the market will allow. The FCC and bad PR are the primary weapons left to fight abuses like these.
"The U.S. Supreme Court has handed corporations a major victory. By a 5-4 vote, the court ruled Wednesday that companies can enforce contracts that bar consumers and employees from banding together to bring class action suits.
Ever read that long cell phone contract you signed when you enrolled for service? Well, look again. It likely has a provision requiring all disputes to be resolved by arbitration and barring consumers from banding together in a class action. Your credit card agreement, your cable agreement and maybe even your employment agreement have similar clauses"
Ticketmaster works for the venue, not the event. If a band wants to play in Boston's TD Garden, they must sell their tickets through TicketMaster. For the most part, ticket revenue goes to the event. Fees go to the venue. It's in the best interest of TM and the venue to charge more.
StubHub rakes from both sides of the secondary ticket market just because they can.
(plug: I'm trying to change this, slowly but surely, with my own project: http://www.boxrowseat.com)
I'd say it's because Ticketmaster sells a luxury good. People who don't like their fees can just stop paying them, and people who really want to see shows will pay them. Banks and phones, on the other hand, are more or less essentials which everyone has to deal with.
My guess is because it isn't a day to day impact for most people. With Verizon, BOFA,and Netflix, it was a monthly charge for most people. People who use TicketMaster arn't billed monthly so a one time charge isn't that big of a deal. Also what ever that fee is is nothing compared to the $5 tax on nachos.
Yes--although according to the article, "Ticketmaster can continue to profit off transactions — they just have to say they're doing so on their website."
Plus, as far as I understand it the settlement is a coupon award, meaning you get $1.50 back the next time you buy from Ticketmaster. So if you decided they were in fact deceptive and you don't want to give them your business again (difficult if you ever want to see another concert, I agree), you get nothing.
I'm not an expert on class action lawsuits but this whole thing seemed like it didn't benefit the consumer much, but was worth multi-millions for the firm bringing the suit.
Possibly because they implemented them before social media provided such a quick backlash.
We can all get upset about Verizon right now and spread the word very quickly in response to the recently announced change. It's much harder to foment a spike of reaction about ongoing bullshit fees at Ticketmaster.
Now they'll get what they want: fearful, alert users who can't quit VZ (due to lack of competitor coverage) will move their payments towards ACH/autopay. Everyone else is blissfully unaware.
Glad Verizon cancelled their fee, but $2 is nothing compared to what the airlines charge for booking over the phone...I can understand why a company would want to discourage people tying up their service reps, but making you pay for the privilege of buying something...?
They charge you more if you use a method which costs them more. Makes perfect sense.
What's insane is companies who charge you more for buying online and less for buying in person. There, they charge you more money for something that costs them less. This is completely stupid and makes me hate doing business with them.
But paying extra for tying up a paid human for a substantial amount of time? Absolutely reasonable.
I don't think this is necessarily related to tech (see: banks), its just a trend this year we've seen, and I think I know why.
In my unprofessional observations, I think that faced with declining consumer revenue (or just the mere perception of potential future declining consumer revenue) many CEOs considered schemes to make their stock prices/quarterlies look better regardless. Below are some I can think of from this year that had zero point except to pad accounting numbers for a small period of time.
If successful:
* Netflix's qwikster would have made the stock look better by shedding off the less %profit part.
* HP's considering of ditching their consumer computer division would have made their stock look better for the same reason (corporate customers = more %profit)
* Bank of America's/Wells Fargo debit fees, same reasoning, higher %profit for nothing
* Verizon, same reasoning
All of these would have buffed short term numbers but were panned because either the consumers and the press "caught on", or more accurately, caught on too early.
Part of the blame lies on companies/CEOs thinking very short term. Steve Jobs or John Chambers (long term CEOs) would probably dismiss all of the above out of hand. Part of the blame lies on speculators/investors who turn into doomsayers overnight if every quarter does not look incredible compared to the previous.
I agree completely and would add that the common theme with all these "strategies" is that it is directly related to improving the short term stock price rather than the fundamentals of the businesses.
*The last part of your comment about "Part of the blame lies on companies/CEOs. Part of the blame lies on speculators/investors who turn into doomsayers overnight if every quarter does not look incredible compared to the previous."
is especially true with growth companies where the price to earnings ratio is far above market average. When this happens, they need to continue delivering exponential growth and when they fail to do so, that is when the stock drops considerably.
That being said, equity analysts see growth companies bust every year, year in and year out. Management is rarely presented with the opportunity to be the CEO of a high growth company more than once. (high growth companies are extremely rare, once they stabilize, management usually sticks around for the big paychecks.)
Because these events are rare in CEO's careers, they make blunders thinking they can trick analysts. This rarely occurs, and mainly with fraud rather than business tricks.
I considered banks, but I think the backlash comes down harder on tech companies because we instantly jump to criticizing on social media, and they are more susceptible to it's effects.
Yes I think you are right, it comes down harder on tech companies because of their audience, but that audience (social-media saavy) is growing much wider and more mainstream, and we as consumers are lucky to live in this age where we can actually create a tangible media backlash so early!
Another commentor mentioned Ticketmaster. They were fortunate enough to establish absurd fees before the social media era really took hold.
If social media existed as well as it does today 10 years ago, I do not think we would be paying so much for things like Ticketmaster or cell phone texting precisely because of the backlash we are capable of creating these days.
I'd be somewhat surprised if Verizon isn't doing the same thing.