And now, a fee to pay your bill

The move will let the utility cut nine customer-service positions and save $363,000 a year. Officials told The Ledger, a Lakeland, Fla., newspaper, that it costs $2.74 to process a payment in person, 74 cents by mail and 22 cents online.

"If a low-income family is paying their utility bill on time, why should we penalize them extra if they're paying on time?" asked Roberto G. Quercia, the director of the Center for Community Capital at the University of North Carolina at Chapel Hill. "It just happened that they don't have the services you and I have, so they are forced to talk to a live person."

How to avoid fees for paying your bills

• Try to pay online. If you're worried about identify theft, know that today online financial transactions are considered more secure than those by mail. If you don't have a computer, use one at a library, community center or senior center. There's a good chance you can even find someone there to help you. If you need to pay your bill at the last minute, ask your utility company or bank to help you set up automatic bill pay, which lets you choose the day the money is drawn from your account. Or find a computer to jump on at the last minute. (For more tips, see "Streamline your finances in 8 steps.")

• If you encounter trouble using an automated phone system, hang up, redial a customer-service agent and explain the problem. Remember, companies want to retain customers and are interested in improving their automated systems. If you still can't use it, explain that you tried and that because the automated service is essentially unavailable to you, you require another free alternative

• Avoid excess third-party fees. If you must pay in person, ask the utility company for the location of an authorized payment center. Often companies have arranged for a limit on the fee its authorized payment centers can charge customers -- for instance, $1 for a cable payment or $2 for a cell phone payment. Steer clear of others.

Though you may depend on your cell phone and say you couldn't live without cable, these are not true public utilities. Cell phone companies are subject to regulation in only 19 states, and it is generally only the basic service rates of cable companies that are overseen by government. In both cases, fees are left to the market alone.

So what can you do? You've got two options, neither especially satisfying:

• Complain. That seems to be the general wisdom. "I'm a proponent of calling the corporate CEO/president's office and leaving him or her a message if switching isn't an option," Rosenfield said. "They should not be making profit on fees. They should be making profit on the sale of phone services. That's what they do for a living."

• Switch to a company that doesn't play the fee game. U.S. Cellular President and CEO Jack Rooney, when asked whether his company charges for bill payments, said: "Absolutely not. We think it is absurd that someone should pay extra just for paying their bill."

Why it matters

Fees have a bad habit of breeding. Just look at the airlines today. Or the banks.

Fees began as a method to nudge customers into less costly behavior, said Matt Fellowes, the project director at The Pew Charitable Trusts. (It costs a company $5 to $7, on average, for an agent to process a bill payment over the phone versus $1 to $2 for an automated system, according to Jupiter Research.)

But along the way, "these institutions discovered that there's actually opportunity to build revenue off those consumers that won't be nudged," Fellowes said. "So the fees became not just punitive for these individuals, they became kind of profit drivers for these institutions." (Banks raked in nearly $40 billion in fees in the States last year; credit card fees accounted for $18.1 billion.)

Look at Verizon Wireless. In 2007, it contracted with CheckFreePay to process in-person bill payments outside Verizon stores. Customers pay for the service through a $3 fee. But at times the company receiving the bill also takes a cut of that processing fee, something Verizon Wireless says it is now doing. Verizon spokesman Tom Pica said he didn't know how much of the $3 fee Verizon was pocketing, only that it was "a small portion."

"Turning your back on the person who's in a bind because they forgot to mail their check in or they're nervous about using the phone system -- it's not very socially conscious. And it's also setting the stage for then when you need access to that service, it will be gone," said Rick Jurgens of the National Consumer Law Center. "We all have a common interest in demanding and hoping that there will be a minimum standard set for customer service. . . . Instead, we have this death-race spiral to the bottom."

Published Aug. 5, 2008

< previous |  1 | 2 |