Have you had it with high fees? No matter what the fee is or the company that is charging it, fighting fees comes down to understanding when fees are justified and legal, when they are not and how to fight them.
“It is a lot of responsibility on the shoulders of consumers, but it’s your money and it’s well worth fighting for,” says John Breyault, a vice president for the National Consumers League in Washington, D.C.
We asked experts in banking, communications and financial services, which are sources of questionable fees that consumers should be wary of, and got their best tips on how to fight back.
Bank fees are rising. “Fees such as inquiry fees, decline fees and customer service fees hardly seem justified. But they are real and legal when disclosed in the terms and conditions,” says Suzanne Martindale, staff attorney for Consumers Union, a nonprofit consumer protection organization.
But will you be aware of all of the bank fees? A Pew Safe Checking in the Electronic Age Project report titled “Still Risky: An Update on the Safety and Transparency of Checking Accounts” says the median length of checking account disclosure documents, which include fees, is 69 pages.
Consumers also should be wary of the order their bank processes transactions to maximize overdraft fees. The Federal Deposit Insurance Corp. says transactions should be processed in a neutral order.
Use alerts for bank account balances, payments due, account limits and unusual activity.
Call and request a reversal of any suspicious fees. Ask to have it waived at the bank’s discretion.
If overdraft fees are charged due to the reordering of transactions, mention the FDIC’s rule to a bank manager.
The Department of Labor’s Employee Benefits Security Administration released a ruling to provide for transparency in employer-sponsored 401(k) plans.
Starting in late 2012, employers must provide an annual report for 401(k) items such as:
Investments available and investment fees.
“Because of the differences in fees, plan members and plan assets, it’s still tricky assessing whether the fees associated with your particular plan are reasonable,” says C. Brooks Mosley, president of Security Ballew Wealth Management in Jackson, Miss. “So we compare the expenses to assets in the plan to find an expense ratio.”
For a small plan with fewer assets, about 1 percent of your total plan’s assets in fees is reasonable. In a larger plan, expect to pay less than 1 percent in fees. Mosley advises that plans with matching contributions generally avoid high fees.
Compare fees and plans, and check how those fees will affect your bottom line.
Check your employer’s quarterly and annual reports on the sponsored 401(k).
If your bill is “bundled” by combining services such as cable TV, cellphone and Internet, be sure you are getting the TV channels, extra packages, cellphone minutes and services, and the Internet speed for which you are paying.
For example, on landline phone bills, check for “cramming,” or suspicious fees from outside companies for additional services such as long-distance charges, voice mail and others that you may not have requested. The Federal Communications Commission says the biggest problem is that only about 5 percent of customers notice the fees because they are not checking their monthly bills.
Request a block of third-party charges to avoid cramming, and ask for immediate removal of suspicious charges.
Learn more about phone charges by reading the guide “Understanding your telephone bill” at FCC.gov.
Take the “I want to test my broadband connection” test at Broadband.gov to make sure you’re getting the Web speed for which you are paying.
“Estimating service use is tricky for consumers, especially as more companies move to billing in shareable buckets, such as new wireless data-sharing plans for many devices and family members on one plan,” Breyault says.
With wireless family needs that may include several smartphones, tablets, laptops, wireless connect cards and netbooks, data plans are being shared, and family members need to keep track of their usage. Charges for going over the limit can cause “bill shock.” Bill shock is a sudden, unexpected fee increase, which happens when device users unknowingly exceed plan limits for voice, text, data or roaming charges on a shared data plan.
Wireless carriers have been compelled by the FCC to provide limit alerts, so use them.
To avoid roaming and data charges on any wireless device, stay on your carrier’s network or turn off the data connection.
Watch out for upgrade fees and early termination fees when a service contract provides you equipment such as satellite dishes, cable boxes, digital video recording devices and high-end smartphones. Upfront costs are low, but monthly service fees, upgrade fees and early termination fees protect the service company — not you.
“When upgrading a smartphone and renewing a contract, be prepared for an upgrade fee” and a prorated new service, Breyault says.
He says consumers only have leverage against service companies when they are outside of a contract because they can bypass high early termination fees. Carriers justify the early termination fee by arguing that expensive equipment costs must be recouped if customers cancel. Out-of-contract smartphones are drastically more expensive because you pay upfront for it instead of through higher guaranteed monthly service fees. But you have the freedom to switch carriers.
Research all upgrade or early termination fees in your service contract.
Consider buying a smartphone outright with a prepaid service if your coverage area is acceptable. Check the phone company’s nationwide coverage map.
Call, write and complain if employees failed to notify you of added bill charges upon upgrading or canceling a contract.
Keep a paper trail, including email and online chat
“Since phone calls often fall into a black hole of ‘he said, she said,’ consider a written complaint to start a paper trail,” Breyault says.
If you called to complain, follow up with an email or certified letter sent with a return receipt because it’s your proof that the company received your complaint. Always keep copies of the bill or statement containing the disputed high fees along with any other documentation in order.
Another new way to keep a written complaint trail is to engage in the company’s online chat function. If you are stonewalled by a customer service agent trained to follow a script and don’t get your problem solved, ask for a supervisor. Always print a transcript for your files.
Make sure any complaints contain the following information for the best result.
An exact description of the dispute.
What was said and not said, and what was done.
What you expect as a reasonable resolution to your problem.
In 2011, Verizon Wireless charged a $2 payment fee that was quickly repealed. Also that year, many major banks dropped debit card usage fees that ranged from $3 to $5 per month.
What do these announcements have in common? The negative consumer outcry on social media convinced the companies to drop the high fees.
“Using social media is a new, successful way to complain (and) to get millions of unhappy consumers heard,” Breyault says. “Companies act faster when complaints and negative comments are all over their Facebook wall or Twitter feed.”
Search Facebook for a company page and look for any complaint posts and the company’s response.
On Twitter, search hashtags to identify and organize a complaint. Use a topic, company name and the word “fees” or “complaints.” Examples would be: #VerizonFees or #BankOfAmericaComplaints.
Post or tweet your complaint about the company. If you get a response, save a hard copy of any correspondence.