How Consumers Get Ripped Off - Part 2

December 29, 2009

Interview with Bob Sullivan, author of the book Stop Getting Ripped Off: Why Consumers Get Screwed, and How You Can Always Get a Fair Deal

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Mike Carruthers:
One of the reasons consumers get into trouble with money is that many of them don’t really understand it.

Bob Sullivan:
I think a lot of folks are familiar with the fact that we have a hidden illiteracy problem in America, far more adults than you would realize can’t read. But an even larger number of people can’t add or subtract.

Bob Sullivan, author of the book Stop Getting Ripped Off…

The vast majority of people graduate from high school and college without any kind of mastery of mathematics. You take people like that and you put them in a car dealership or you put them in a bank where they’re applying for a mortgage and they don’t stand a chance.

Another problem for consumers today is no one is really looking out for you.

Back in 1979 the Federal Trade Commission had about 2000 employees. Last year the Federal Trade Commission had barely more than 1000. The Federal Trade Commission’s job exploded - it now regulates the Internet, the do not call list, telemarketing  - their workforce has been cut in half. Now what would happen in New York City if suddenly half the cops were pulled off the street? You’d have rampant crime and that’s a lot of the reason for the problems we have today.

American consumers love low prices so a lot of companies lower their price and add on a lot of fees.

So here’s an example, a couple of years ago the Intercontinental hotel chain, hotels are notorious for having one price on the web and then all sorts of tack on fees when you show up. Well, Intercontinental decided they would have up front pricing, they would tell you the out the door price. Well what happened was they lost all their customers to all their competitors who were lowball pricing and tacking on prices later.

For Part 1 click here.