Monday, June 11, 2007

Predatory Business Practices

Did you know that almost one-half of the profits made by banks and wireless cell-phone carriers come from fees and penalties? Surprised? I didn't think so. But a recent study by two Harvard Business School professors confirms our worst nightmare. It's not big brother that's out to get us, it's big business. And they are getting us, in case you haven't already noticed. Fleecing us good, robbing us blind. and San Francisco Chron columnist David Lazarus writes about the abuse here. Thank you David.

It wasn't long ago that the customer was king. Now, we're told (when we can get a real human to talk to us) to shut-up and consume. Buy now, and buy big. There's always plastic. You know the story, it goes something like this: "...and for everything else there's Mastercard." Or, "Visa...everywhere you want to be." The message is clear: don't hesitate, you can have it now. But make one late payment, on any card you may own, and you'll pay a steep price. Forever. These predatory business want to own your soul, and that of your spouse, children and living relatives. Just look at the recent sub-prime housing mortgage scandal if you need more proof than your monthly credit-card statement.

First, the banks float the idea that anybody can own a home. Anybody. Doesn't matter if your credit score is below 650 and you're barely scraping by. No, "buy now" was the message. You can always sell for a profit later. Now, the American dream has been lost for a huge number of well-meaning, working-class folks who trusted their banks. Hey, how many of *you* read every word in your home mortgage agreement and did all the math?

And cell-phone companies are habitual offenders. Like insects sucking the blood of their customers with fees, charges and penalties; they actually design their programs to confuse their customers and increase their profit potentials in the process according to the Harvard report. That's what I'm talking about: Predatory business practices that seek to dupe trusting customers with disingenuous products and services that are actually designed to rip us off. This kind of corporate behavior is now the rule, rather than the exception. And we tolerate it. We hold for hours; patiently negotiate online forms; and submit multiple inquiries, requests and volumes of documentation to no avail. Give me a break. This model, as the academics correctly note, is not going to win friends and create loyal customers in the long run. But we're talking a feeding fenzy here. I can find no evidence of any long-term planning at all, just a wild, greedy rush to profit in any way possible.

This is a long rant, but there are so many examples that beg attention. Large Pharma refusing to develop new antibiotics because they're concentrating on drugs that people need to take every day. It's a profit thing, after all. What an excellent argument for nationalized, single-payer health coverage. Airlines devaluing their frequent flier programs, overbooking to excess and then tolerating delay rates approaching 70 percent. And don't even get me started on the insurance industry. When you have to sue your provider to recover from a hurricane, you're not in good hands.

I think we need a good, old-fashioned consumer revolt sometime soon. Buy local, support only ethical businesses, and vote with your wallet or pocketbook. It's time to heat up the tar and start collecting feathers. No wonder Halliburton moved its corporate headquarters out of the country to Dubai. Angry consumers (like this one) are spoiling for a fight. We could use a sympathetic big brother to watch our backs. So let's make sure to elect one next time around.

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