Consumer Rights: You Win Some, You Lose Some

In this post: Three Victories / But the Challenges Continue / Now as Much as Ever, Buyer Beware

Every now and then, consumers win one or two—as has happened in the past month or so.

Three Victories

One of those victories is in my home province of Quebec, where newly passed legislation requires retailers to act more transparently—like not slapping on fees so that a special price becomes a regular one, making sure that gift certificates can be redeemed at their full value and with no expiration, and that prevent companies that have long-term agreements with customers from changing the terms and conditions of those agreements mid-term—or from automatically renewing customers (Life to get a little fairer for weary consumers, Montreal Gazette, December 14, 2009, http://www.montrealgazette.com/opinion/Life+little+fairer+weary+consumers/2337680/story.html).

Visa handed consumers a second victory: in response to a string of complaints to its customer service line, Visa cut off hundreds of merchants for scamming customers (Visa Cuts Off 100 Merchants For Scams, Eileen AJ Connelly, AP Personal Finance Writer, December 17, 2009, http://www.wgal.com/money/21990740/detail.html). According to the reporter Eileen Connelly:

Among the most common hustles: billing the credit cards of customers who thought they were getting free trial products like dietary supplements or teeth whiteners $79.95 per month or more, and then making them jump through hurdles to get the charges to stop.

But perhaps the biggest victory was offered by the US Federal Aviation Administration, which began requiring that airlines provide food and drink for passengers who wait on tarmac for 2 hours and start paying huge fines on airlines that make passengers wait for 3 hours or more on a tarmac (U.S. Limits Tarmac Waits for Passengers to 3 Hours, By Matthew L. Wald, NewYork Times, December 21, 2009, http://www.nytimes.com/2009/12/22/business/22passengers.html?_r=1&hp).

And these fines are indeed huge: $27,500 per passenger (do the math—keeping 50 passengers on the tarmac is over a $1 million choice). Airlines have done this because they’re afraid of losing their place in the line to take-off, without realizing that passengers might have some different opinions about the subject.

They’ve promised to do better but pleaded for self-regulation, claiming they would do better. But when a plane sat overnight on a runway in my old home town of Rochester, Minnesota because an airline employee erroneously said they couldn’t enter the terminal—the latest in a string of incidents like it—the FAA finally realized that, perhaps, self-regulation wasn’t working. Another incentive was needed.

The fines were a last resort—coming years after consumers first began pleading for some sort of redress in instances like this.

But the Challenges Continue

And it appears that the Canadian government isn’t likely to respond to one of the largest consumer concerns with airlines here: misleading advertising (Ottawa fails to force airline ad reforms, Sarah Schmidt, Montreal Gazette, December 20, 2009, http://www.montrealgazette.com/business/Ottawa+fails+force+airline+reforms/2364757/story.html).

For those not familiar with the situation, airlines here typically advertise attractive one-way prices—and usually require a round trip purchase. By the time the return trip and airline fees are added, the ticket price can be effectively quadrupled.

Airlines have resisted efforts to require they publish complete prices in their advertisements, claiming that consumers want to know the impact of taxes.

That, of course, is hogwash—most consumers need to know the bottom line price to figure out whether they can afford it.

Some provinces require complete pricing in advertisements but no national policy exists. The current government has promised to institute something—based on a previously made commitment. But they seem to be delaying.

Now, As Much as Ever, Buyer Beware

Consumers also need to be cautious about insurance. SmartMoney.com reports 10 Things Your Auto Insurer Won't Tell You (Jonathan Dahl, http://www.smartmoney.com/spending/autos/10-Things-Your-Auto-Insurer-Wont-Tell-You/?hpadref=1). Among them, insurers often make deals that are advantageous to them, such as selling policies that are in their best interest rather than mutual best interests, and requiring people to use auto repair services that they own—and might not provide the best service.

Myths abound, too, about credit scores. In 8 popular myths about your credit score (Baltimore Sun, December 13, 2009, http://www.baltimoresun.com/business/money/bal-bz.ml.ambrose13dec13,0,6896489.story), reporter Eileen Ambrose sets the record straight on how misunderstandings about credit scores can result in unnecessarily credit fees.

But most significantly, some larger changes might not necessarily mean great things for consumers.

Although the US will be instituting consumer-friendly credit card benefits in the near future, Keith Bradsher reports that Australian banks—which have had similar restrictions for a while—have found all kinds of ways around them, like slapping on credit card fees to consumers for otherwise ordinary transactions like purchasing plane tickets (U.S. Looks to Australia on Credit Card Fees, New York Times, November 24, 2009, http://www.nytimes.com/2009/11/25/your-money/credit-and-debit-cards/25card.html?ref=business&pagewanted=all).

And the products we buy with them are increasingly of lower quality. One of the Major Ideas of 2009 is that, in design, manufacturing, and service, Good Enough Is the New Great (New York Times 9th Annual Year in Ideas Supplement, December 13, 2009, http://www.nytimes.com/projects/magazine/ideas/2009/?ex=1276059600&en=3315a37210ca3555&ei=5087&WT.mc_id=GN-D-I-NYT-MOD-MOD-M127-ROS-1209-HDR&WT.mc_ev=click#technology-9-HDR&WT.mc_ev=click#social_science-3).