Friday, February 26, 2010

The 12 Biggest Ripoffs in America

Courtesy: Billshrink , those would be:

  • movie popcorn: 900 - 1,300 percent markup
  • text messages: 6,500 percent markup
  • college textbooks: twice the rate of inflation over last 20 years. About $900 per year average.
  • branded painkillers: 60 percent markup over identical generics
  • "free" credit reports: " it’s questionable that there is a need for any business to offer such a service, as the government mandates that all consumers can check their credit score once a year for free anyway. Beyond that, most of these services unwittingly bilk people into signing up for paid monthly subscriptions that actually charge them for what was supposedly being offered free." 
  • restaurant wine service: heftiest markup is on the second least expensive bottle. Nobody orders the cheapest on the list--it's human psychology--they opt for the next up.
  • hotel mini-bars: 1,300 percent markup. People are loathe to seek out a convenience store in strange town after checking in. Human psychology again.
  • all-you-can-eat buffets: "While the typical buffet charges somewhere between $12-$15, [restaurant owners] know that that the average customer is not likely to eat very much more than they would’ve purchased for $7 or $8 at McDonalds . . . . Furthermore, it’s questionable whether the quality of the food being served is much better than that of a fast food restaurant . . . . buffet’s customers pay for the ability to eat twice as much as they actually eat, on average."
  • premium gasoline: If your owner's manual doesn't say your car requires premium gas, it's a waste of money to buy it. Total myth: that premium gas is "better" for the car, cleans engines, prevents malfunction, etc.
  • actively-managed investments: Fund managers fail to beat the market 75 percent of the time year in and year out, and they charge you 1.5-3 percent of your investment to do so.
  • in-room movies: most expensive way possible to watch a movie. "as much as $10-$15 for a single movie . . . . A Redbox machine, by contrast, will rent you a DVD for as little as $1 a night. A NetFlix account isn’t much more expensive, and streaming movies on your laptop is another inexpensive alternative."
  • health club memberships: " . . . it’s not the price that’s unjustified but the terms of the contract itself." Contract fine print for many health clubs prevent cancellation of the contract for just about any reason short of death.

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