Actually, the info is there should we ever care to do something about it. The change in credit card "swipe" fees is the occasion of a Kevin Drum post about lawsuit which results in merchants -- who were charged outrageous fees by Visa and Mastercard (and who passed those costs on to you and me, for sure) -- being refunded for those fees toot sweet. I don't expect Ace Hardware and Valero and LL Bean to pass their refund along to me, but still...
Before the lawsuit and the demand for payback, Drum alerted us about the buried penalty you and I have been paying. It's just another reminder of how we get ripped daily and in all kinds of ways.
There's a Boston Fed study showing that the net result of swipe fees is to transfer money from the poor to the rich. There's an ECB report suggesting (unsurprisingly) that in a monopoly environment interchange fees will always be set too high. And there's this New York Times piece about swipe fees in the debit card market, which makes it pretty clear that Visa's fees are simply egregious abuses of its monopoly power. And if they're abusive in the debit card market, they're probably abusive in the credit card market too. Finally, there's the fact that current fees are so high that card issuing banks can afford to rebate a big chunk of them in rewards programs, something that flatly makes no sense in a sane world. ...Kevin Drum, Mother Jones
It reminded me of David Cay Johnston's investigation into other riptides we, the ever-poorer middle class, are dragged into in our daily lives.
David Cay Johnson: ...One of the companies I write about – Cabela’s – I show that in the first three years that they were a publicly traded company they reported profits of about $220 million. But they made deals for $294 million of subsidies. They’re really not in the business of selling goods. They’re in the business of soaking the public. And this is going on at an enormous rate all around the country. It’s in the news reports, but not in the way people understand it. Would you know, Terry, what it means if you pick up your local paper and it says they’re going to build this wonderful new store and it’s going to involved “tax increment financing”?
NPR: I have no idea what that means.
DCJ: Right. What it means is that the owners of the store get to keep the sales taxes. They’re not increasing the pie, they’re simply concentrating the pie in their hands. They’re not competing in the market. They’re getting the government to make them rich. And they’re doing it to the detriment of the people who don’t get those deals. There’s one company in America – Gander Mountain, another outdoor outfitter – that employs a lobbying firm to fight these subsidies. They won’t take these subsidies. They’ve actually given money back in, I think, two communities. Recently, in Indiana, where they have a store – in Greenwood, Indiana – one of their competitors wanted to build a store right across the highway. And they wanted $18 million in subsidies. The Gander Mountain lobbyist, David Ewald, goes down and says to the city fathers, “Excuse me! We’ve already invested our money to build our store here. Why would you give $18 million t this competitor to build a store right across the street from us?” And the local burghers all said, “Well, because if we don’t, they the next town down the street will do it and we’ll lose out!” This is not competition. This is not the market. This is government thwarting Adam Smith’s invisible hand – handcuffing the invisible hand. ...The Scribe
Or how about this example of "Gotcha Capitalism"?
Intro: Does it seem to you like the bills for your cell phone, your credit card, your internet access, your rental car, your bank, and your hotel are loaded with “fees,” many of which are incomprehensible like the “regulatory cost recovery charge” on the cell phone bill? According to Bob Sullivan, Americans are paying an average of $1,000/year in sneaky fees. He’s written a new book about these hidden fees and how to protect yourself from fees you shouldn’t be paying. The book is called “Gotcha Capitalism.” Sullivan also writes “The Red Tape Chronicles” for MSNBC.com.
NPR: What do you mean by “Gotcha Capitalism”?
Bob Sullivan: Everyday, when people open bills or they turn on a TV set or they get on an airplane or they check into a hotel, they pay a bill and they pay a price. But then there’s also a second price – the “aftercharges,” these tack on charges. It’s almost impossible to know what they are. They come around a dark corner, it’s a surprise: gotcha! The next thing you know is what once was a $70 hotel is now a $100 hotel, what once was a $39 cell phone bill is now a $72 cell phone bill. It’s nearly impossible to determine the real price of things. Companies are making a killing by confusing consumers this way.
NPR: That is so true! What I don’t understand is, are those fees legitimate costs? And, if they’re legitimate, why aren’t they included in the thing we sign up for, the price that we sign up for? And if they’re not legitimate, what are they doing there!
Bob Sullivan: They run the full spectrum, I’d say, from being an outright scam, frankly, to being a real price that probably should be an add-on to the price tag itself. But something really magical happened in the whole nature of pricing a few decades ago which really came to fruition thanks to the internet. Somebody’s realized that they could essentially trick us with low teaser prices and then sneak in these after charges after the fact. They could separate out – they could do this in the name of separating out real costs of doing business. The phone company, for example, has tack-0n fees for real estate taxes, for the price of collection federal taxes. Not only do they charge you federal taxes, they charge you extra for collecting them! So instead of charging you one price, which is the standard… Imagine if you went to a deli and you paid $3 for a sandwich and 15¢ for the fact that they had to charge you 30¢ for sales taxes! So they’re breaking out these costs of doing business and isolating them essentially so that they can charge you more in the end.
NPR: Let’s look at my cell phone bill. I was charged a “federal universal service charge” of $1.22, a “state gross receipts surcharge” of $2.21, and a “regulatory recovery charge” of $.96. I have no idea what any of that means! Do you?
Bob Sullivan: I do, actually! The last one there, the $.96 charge – that’s the price their charging you to collect the other taxes that you mentioned. ...The Scribe