Personal Finance 

Effective Complaining: Hit Credit Cards, Not Banks

Stop ComplainingOn Sunday, I reviewed Gotcha Capitalism, a powerful and comprehensive guide for consumers, and gave it glowing reviews. Today, I want to talk about a couple stats Bob Sullivan shares with the reader about complaining to companies and success rates (Keep in mind that the book was published in 2007).

The point of the section was to illustrate that the places where you are more likely to succeed are exactly the places that people don’t try. The success rate at a grocery store is 57.1% but only 14% of people ever try, whereas the success rate with a television company is an abysmal 20.2% yet 84% of people complain. If you want to make the most out of your time, go after credit card companies. Ask to have fees removed, refunded, or waived because you’re such an awesome customer.

Here are the numbers:

  1. Credit card companies: 64.6% success rate
  2. Airlines: 60.0% success rate
  3. Grocery stores: 57.1% success rate
  4. Retirement: 52.2% success rate
  5. Internet: 51.5% success rate
  6. Hotels: 37.0% success rate
  7. Banks: 33.3% success rate
  8. Insurance: 28.9% success rate
  9. Cell Phones: 26.8% success rate
  10. Television: 20.2% success rate

Here are the rates at which people actually complained:

  1. Television: 84% complaint rate
  2. Credit card companies: 79% complaint rate
  3. Cell Phones: 71% complaint rate
  4. Hotels: 54.0% complaint rate
  5. Insurance: 38% complaint rate
  6. Internet: 33% complaint rate
  7. Retirement: 23% complaint rate
  8. Banks: 18% complaint rate
  9. Airlines: 15% complaint rate
  10. Grocery stores: 14% complaint rate

If you have all the time in the world, complain to everyone! 🙂

(Photo by aturkus)


Review: Gotcha Capitalism by Bob Sullivan

Gotcha Capitalism by Bob SullivanIf The Consumerist were a religion, Gotcha Capitalism would be its Bible.

I think that every consumer in America needs to read Gotcha Capitalism by Bob Sullivan (he also writes for Red Tape Chronicles). Go to the library, head to the bookstore, jump on, but get yourself a copy. This isn’t a book about investing that appeals only to those with some extra income to invest in the stock market. This isn’t a book about relationships and money. Gotcha Capitalism will teach you how to identify how you’re being cheated by major corporations and what you can do about it. If you spend money, you need to read this book. (I’ve never given a stronger endorsement to a book) Heck, just get it and scan it, you’ll end up savvier than when you started. I bet that once you start reading, you won’t want to stop.

The book has three major sections. Section one describes Gotcha Capitalism, how ten industries are bilking you and every other American out nearly a thousand bucks a year ($946 on average, they calculated, and that on only ten specific industries), and how they get away with it. Section two describes exactly what they’re doing and how to defend yourself against it (and get your money back!). The third and final section is like a tool-kit of consumer tools – a collection of sample letters, emails, scripts, etc. for dealing with companies. In summary, section three is the hammer, section two tells you where to hit them, and section one charges you up with the fury you’ll need to drive that nail home in one shot.

The crux of section one is that the world is separated into myopes and sophisticates. Myopes are the folks who happily overpay for things and don’t comparison shop. Sophisticates are those who are savvier consumers, who read more of the fine print and comparison shop products so that you get a good, if not the best, deal available. I’d say all of you are sophisticates (no I’m not buttering you up, a myope wouldn’t be reading blogs about personal finance, they’d simply trust the first financial planner they met) and we’re the enemy to corporations. The solution to the busting the comparison shopper is to confuse them. While we do have savviness in abundance, we only have so much time. So they force arbitration clauses on us, and hidden fees, and ridiculous early termination charges. They hide where the true cost is (for printers, it’s in the ink, not the printer) so that you can’t accurately comparison shop. They deliberately plan to confuse and befuddle you to the point that you become a myope. Your brain can only process so much! Myopes are awesomely profitable, sophisticates are not… and so the game begins.

Section two goes into every one of the ten industries, and more, they identified (Credit Cards, Banks, Retirement/401(k)s, Mortgages and Rentals, Cell Phones, Home Phones, Pay TV, Internet Access, Travel, Groceries, Gift Cards, Rebates, Student Loans, Everything Else) and talks about all the fees and ‘gotchas’ they employ. A great one they discuss deals with retirement plans and 401(k)s. The ‘K’ in 401(k) stands for kickback. 🙂 Your HR contacts a third-party administrator to handle the fund options for your 401(k). Your company gets a great deal on the administration of the plan from the third party administrator because the third party gets a huge “revenue-sharing payment” (*cough* kickback *cough*) for including certain funds. They state that 90% of mutual funds use revenue sharing. 90%. Look to the person to your right and then the person to your left, chances are you’re all getting screwed. This section is nearly 200 pages long.

The last section is the toolkit section with sample phone scripts and form letters you can use to battle the fees described in section two. The sample scripts are great because they outline exactly what you need to do and they can help keep your emotions in check. If you’re listening and reacting, there’s a pretty good chance you’ll get angry, flip out, and start screaming at the poor CSR on the other end. By having a script to follow, you can go through it like an emotionless killing machine to get the job done. Plus, yelling never helps.

That’s Gotcha Capitalism in a nutshell. I don’t really want to talk it up any more than I had in the first paragraph so I’ll leave with this suggestion. Give the book a chance by getting it at the library. When you realize you can’t put it down and that it could be a handy reference for a long while, you’ll understand why I was so positive about it. 🙂

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