Why we get ripped off - and what we can do about it

We get ripped off because the world is becoming an increasingly perilous place financially, but also because we allow ourselves to be conned out of our cash. Don’t worry - it’s never too late to change basic human nature

By Anne Caborn

Co-author

Money Fight Club

The answer to the question: ‘Why do we get ripped off?’ can appear simple. The world seems to be filling up with financial cowboys, cynical retailers and suspect service providers who use a growing array of dubious practices to part us from our cash.

• Any journey down the high street is a master class in highly sophisticated and sometimes morally suspect marketing techniques.

• Everything from financial products to consumer durables are increasingly complicated, making choosing between options ever harder.

• Traditional sources of impartial (if limited) advice are almost extinct. The smartly dressed bank official talking to you about refinancing your home loan may well have their salary linked to commission. Not something an old style bank manager had to worry about.

This new world is full of cowboys and every single one of them is after your horse. This is borne out by the facts and figures. Complaints to the Financial Ombudsman Service went up 75% in 3 months. Mobile phone regulator Ofcom announces a review into terms and conditions that allow price increases during a ‘fixed’ contract. The Chancellor takes banks to task over their failure to ring fence investments from high street banking. And that’s just one month’s headlines.

Do we allow rip-offs to happen?

There’s plenty of evidence that it’s a jungle out there but we’re not without blame in all this. To quote a Money Fight Club motto: In a world full of sabre tooth tigers you shouldn’t leave home without your club.

To understand the ‘why’ a little better it’s worth looking at some of the psychology. There are two major points worth making here.

1. Human beings have a desire to trust their fellow man. For example, you’d never manage to make it into a flow of traffic on a busy roundabout if you didn’t trust you fellow motorist to give way appropriately.
2. It’s easier to be lazy. Saving energy is a cave man instinct. It’s much easier to let someone else do the work. So if the person in the smart suit tells you to buy this phone or that loan - who are we to argue?

In September 2011, American magazine Psychology Today ran an article entitled ‘The 5 Reasons We Get Suckered andRipped Off’, written by Professor Ronald E. Riggio.

As well as ‘trust bias’ and ‘cognitive laziness’ he also mentioned the ‘norm of reciprocity’ and the strong human inclination to pay someone back if they do us a favour. Have you ever wondered why you get offered everything from pens to carriage clocks just by applying for financial product?

In her book, The Ponzi Scheme Puzzle - A history and analysis of con artists and victims*, Tamar Frankel at the Boston University of Law points out that warning people about con artists and scams doesn’t seem to make that much difference. What we need to do is recognise: “the subtle signals that mimic truth and honesty”, which con artists use to play to our own vulnerability.

(* A Ponzi scheme is a fraudulent investment that entices in new money by offering impressive returns. In fact the money is not invested, funds are misappropriated and the scheme eventually collapses. They’re named after Charles Ponzi, who came up with the idea back in the 1920s.)

So, what makes a money fighter?

The good news is we all have the ability to become money fighters. We just need to tap into the survivor instincts that kept our ancient ancestors alive and to stop assuming that just because today’s tyrannosaurs wear suits they have our best interests at heart.

Most critically - we need to be wary. It's ok to trust people we know well but should we trust a stranger who just dresses smartly or works in a bank? If something doesn't sound right, investigate. Ask questions. Look for evidence.

It’s also important not to get distracted by the small print, the free gifts, or the pleasant banter about the weather or our families.

Ultimately, we need to be prepared to tough it out. Ask questions and then more questions. If you don’t like the answers - ask some more. If you don’t understand the waffle or techno-speak get the organisations you're pitting yourself against to go over it again, and again, and again. Sometimes you win because you pack a bigger punch. Sometimes you win because you wear your opponent down.

Take your time and stay in control. It’s better to miss a deal than snap one up and regret it. If you’re in the market for a new conservatory, do your research - don’t just opt for the company whose literature just happens to drop on your door mat at that time, or whose advert in the local paper catches your eye. By all means accept recommendations from reliable friends - but do you own homework as well.

Are you Money Fight Club fit - take the mini test below

Answer ‘Never’, ‘Sometimes’ or ‘Always’ to the following statements.

• Q1. You always check till receipts and get mistakes corrected.
• Q2. You take time to read any small print before you sign something.
• Q3. You ask questions and more questions until you understand something completely.
• Q4. If you believe you are in the right you’ll fight until you get what you deserve.

How did you do?

Count up how many times you said ‘Never’, or ‘Sometimes’ or ‘Always’.

More ‘Always’ responses: You already understand a lot of the Fight Club basics and probably carry a few battle scars to prove it. But now’s the time to raise your game.

More ‘Sometimes’ responses: Chances are the recent headlines around financial mis-selling and retail scams have put you on your mettle. But there’s still more you can do.

More ‘Never’ responses: You have a tendency to accept things at first glance and assume they’re right. You need to prioritise.

You can find the complete version of this test, which includes more detailed feedback, in the Money Fight Club book.

So, in practice, what does fighting back boil down to? Here’s a quick 1.,2.,3. (Or Biff, bash, bosh, as we like to say.)

1. At a practical level when you buy a product or service you’re buying a product or service - not looking for a new friend. Conversations about the weather,or your family, just distract and create an emotional bond that can cloud decision making. Be on your guard.
2. You don’t owe the seller of any goods or services anything and certainly you don’t owe them for the Parker pen, stylish carriage clock or prize draw that seems to be part of the deal.
3. Do the home work. Wade through the jargon and small print. Use the internet and suck it dry for peer reviews and ombudsman rulings. Take nobody’s word that it’s the right product for you. And if you’re sold a dud fight for your rights with every last ounce of energy.

Now, here’s your club - go hunt yourself a sabre tooth.

This article was written by Anne Caborn, co-founder of Money Fight Club, which shows you revolutionary tactics and techniques for battles with supermarkets, banks, utilities, mobile phone companies... Don’t get angry - get even. Find out more on their website [http://moneyfightclub.com/]

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Why we get ripped off - and what we can do about it

We get ripped off because the world is becoming an increasingly perilous place financially, but also because we allow ourselves to be conned out of our cash. Don’t worry - it’s never too late to change basic human nature

By Anne Caborn

Co-author

Money Fight Club

The answer to the question: ‘Why do we get ripped off?’ can appear simple. The world seems to be filling up with financial cowboys, cynical retailers and suspect service providers who use a growing array of dubious practices to part us from our cash.

• Any journey down the high street is a master class in highly sophisticated and sometimes morally suspect marketing techniques.

• Everything from financial products to consumer durables are increasingly complicated, making choosing between options ever harder.

• Traditional sources of impartial (if limited) advice are almost extinct. The smartly dressed bank official talking to you about refinancing your home loan may well have their salary linked to commission. Not something an old style bank manager had to worry about.

This new world is full of cowboys and every single one of them is after your horse. This is borne out by the facts and figures. Complaints to the Financial Ombudsman Service went up 75% in 3 months. Mobile phone regulator Ofcom announces a review into terms and conditions that allow price increases during a ‘fixed’ contract. The Chancellor takes banks to task over their failure to ring fence investments from high street banking. And that’s just one month’s headlines.

Do we allow rip-offs to happen?

There’s plenty of evidence that it’s a jungle out there but we’re not without blame in all this. To quote a Money Fight Club motto: In a world full of sabre tooth tigers you shouldn’t leave home without your club.

To understand the ‘why’ a little better it’s worth looking at some of the psychology. There are two major points worth making here.

1. Human beings have a desire to trust their fellow man. For example, you’d never manage to make it into a flow of traffic on a busy roundabout if you didn’t trust you fellow motorist to give way appropriately.
2. It’s easier to be lazy. Saving energy is a cave man instinct. It’s much easier to let someone else do the work. So if the person in the smart suit tells you to buy this phone or that loan - who are we to argue?

In September 2011, American magazine Psychology Today ran an article entitled ‘The 5 Reasons We Get Suckered andRipped Off’, written by Professor Ronald E. Riggio.

As well as ‘trust bias’ and ‘cognitive laziness’ he also mentioned the ‘norm of reciprocity’ and the strong human inclination to pay someone back if they do us a favour. Have you ever wondered why you get offered everything from pens to carriage clocks just by applying for financial product?

In her book, The Ponzi Scheme Puzzle - A history and analysis of con artists and victims*, Tamar Frankel at the Boston University of Law points out that warning people about con artists and scams doesn’t seem to make that much difference. What we need to do is recognise: “the subtle signals that mimic truth and honesty”, which con artists use to play to our own vulnerability.

(* A Ponzi scheme is a fraudulent investment that entices in new money by offering impressive returns. In fact the money is not invested, funds are misappropriated and the scheme eventually collapses. They’re named after Charles Ponzi, who came up with the idea back in the 1920s.)

So, what makes a money fighter?

The good news is we all have the ability to become money fighters. We just need to tap into the survivor instincts that kept our ancient ancestors alive and to stop assuming that just because today’s tyrannosaurs wear suits they have our best interests at heart.

Most critically - we need to be wary. It's ok to trust people we know well but should we trust a stranger who just dresses smartly or works in a bank? If something doesn't sound right, investigate. Ask questions. Look for evidence.

It’s also important not to get distracted by the small print, the free gifts, or the pleasant banter about the weather or our families.

Ultimately, we need to be prepared to tough it out. Ask questions and then more questions. If you don’t like the answers - ask some more. If you don’t understand the waffle or techno-speak get the organisations you're pitting yourself against to go over it again, and again, and again. Sometimes you win because you pack a bigger punch. Sometimes you win because you wear your opponent down.

Take your time and stay in control. It’s better to miss a deal than snap one up and regret it. If you’re in the market for a new conservatory, do your research - don’t just opt for the company whose literature just happens to drop on your door mat at that time, or whose advert in the local paper catches your eye. By all means accept recommendations from reliable friends - but do you own homework as well.

Are you Money Fight Club fit - take the mini test below

Answer ‘Never’, ‘Sometimes’ or ‘Always’ to the following statements.

• Q1. You always check till receipts and get mistakes corrected.
• Q2. You take time to read any small print before you sign something.
• Q3. You ask questions and more questions until you understand something completely.
• Q4. If you believe you are in the right you’ll fight until you get what you deserve.

How did you do?

Count up how many times you said ‘Never’, or ‘Sometimes’ or ‘Always’.

More ‘Always’ responses: You already understand a lot of the Fight Club basics and probably carry a few battle scars to prove it. But now’s the time to raise your game.

More ‘Sometimes’ responses: Chances are the recent headlines around financial mis-selling and retail scams have put you on your mettle. But there’s still more you can do.

More ‘Never’ responses: You have a tendency to accept things at first glance and assume they’re right. You need to prioritise.

You can find the complete version of this test, which includes more detailed feedback, in the Money Fight Club book.

So, in practice, what does fighting back boil down to? Here’s a quick 1.,2.,3. (Or Biff, bash, bosh, as we like to say.)

1. At a practical level when you buy a product or service you’re buying a product or service - not looking for a new friend. Conversations about the weather,or your family, just distract and create an emotional bond that can cloud decision making. Be on your guard.
2. You don’t owe the seller of any goods or services anything and certainly you don’t owe them for the Parker pen, stylish carriage clock or prize draw that seems to be part of the deal.
3. Do the home work. Wade through the jargon and small print. Use the internet and suck it dry for peer reviews and ombudsman rulings. Take nobody’s word that it’s the right product for you. And if you’re sold a dud fight for your rights with every last ounce of energy.

Now, here’s your club - go hunt yourself a sabre tooth.

This article was written by Anne Caborn, co-author of Money Fight Club, a new guide that shows you revolutionary tactics and techniques for battles with supermarkets, banks, utilities, mobile phone companies... Don’t get angry - get even. Published on Kindle and available from Amazon priced £2.48 [http://www.amazon.co.uk/Money-Fight-Club-ebook/dp/B00A76YUSU]

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Rip-off News round-up. Our pick of the last week's media (Thu 7th February)

£390m fine for RBS as traders fixed lending rates and joked it was in exchange for sex and sushi

The 81% state-owned bank RBS has agreed to pay the UK’s bank regulator, the Financial Services Authority, £87.5m, the United States Commodity Futures Trading Commission $325m (£208m) and the US Department of Justice $150m dollars (£95.8m) for Libor fixing. The Government wants RBS to pay the fine out of their bankers’ bonuses rather than pass the cost on to customers and taxpayers, and have the offenders prosecuted and jailed. DAILY MAIL

Police paid millions for leaking car crash info to claims management companies
Police forces sold on the details of road accident victims to insurers. Insurers can then sell these leads on to claims management companies and lawyers. It may have led to thousands of people being pursued by “cash for crash” companies looking to profit out of personal injury claims, vehicle repairs and providing a replacement car. Police forces denied making a profit, insisting the money merely covered the cost of vehicle recovery and other admin, which it rightly passes on to the insurer rather than the taxpayer. But critics say any such financial incentive can be corrupting. The fees will become illegal in April as part of Government attempts to reduce the cost of motor insurance. TELEGRAPH

British families’ cost of living is £2,000 higher than other countries thanks to energy, transport and property costs

The Centre for Economics and Business Research (CEBR) says British people face paying 31% more for transport, 18% more for housing and utilities, such as water and fuel, 14% more on recreation and cultural activities, while restaurants and hotels are 12% more expensive. However, they calculated that if prices of housing, commercial property, energy and transport were brought down to average levels over the next decade, it would save every UK household more than £2,000 pounds a year and boost the economy by 15%. DAILY MAIL

(£2,000 higher? Somebody tell those bloody immigrants. They come over here, taking our jobs, paying our rip-off prices…)

Osborne backs break-up of banks that fail to reform

The UK's big banks will be broken up if they fail to follow new rules to ring-fence risky “casino” investment banking from High Street retail banking. But the chairman of the Parliamentary Commission on Banking Standards, Andrew Tyrie, warned once the spotlight had moved away from the banks, they may try to soften the rules: "At that time, banks could be particularly active in testing the ring-fence and lobbying politicians to alter its design for their benefit.” BBC NEWS
(“Contrary to what you all think, we don’t enjoy taking 'casino' risks. That’s why 50% of Tory party funding comes from us,” said our banking lobbyist insider.)

Household water bills up by 3.5%

The average household water and sewerage bill in England and Wales is to rise by 3.5% over the next year, regulator Ofwat has said. However, the Consumer Council for Water said the price rises had allowed companies to make excessive returns: "Water companies are making higher profits than expected and they need to give some of this back to their customers." BBC NEWS

Banks to pay for 'swap' mis-selling, FSA demands

Barclays, HSBC, Lloyds and the Royal Bank of Scotland will now compensate tens of thousands of small businesses mis-sold complex insurance deals since 2001. In a pilot study, the bank regulator found that 90% of deals sold to "unsophisticated" customers broke at least one rule. To work out whether compensation is due and how much, the banks will sit down one-to-one with the small businesses. There will be no independent arbitrator. BBC NEWS

(“One-to-one is a great opportunity for us to listen to these businesses, learn our lessons... and sell them some more of this loan insurance,” say all the bankers.)

Bank regulator FSA ‘bows to the banks’ with £1.5bn ceiling for compensation on interest-rate swap mis-selling scandal

Mis-sold swaps worth £10m and above will be excluded from the compensation. Shockingly, there was no mention of the £10m figure in the FSA’s press releases or in a detailed larger document. It was accessible only through study of a complicated flow chart. Up to 40,000 small businesses were sold complex loan deals they had no chance of understanding, which virtually bankrupted them. INDEPENDENT

(“After our thorough analysis of the inability of small businesses to understand complex financial shenanigans, we thought our flow-chart idea was pretty neat,” said our FSA insider.)

Barclays under investigation over claims it lent Qatar £6bn to buy Barclays shares and avoid a Government bailout
The alleged £6bn deal helped the bank avoid the part-nationalisation suffered by Lloyds TSB and Royal Bank of Scotland at the height of the 2008 financial crisis. DAILY MAIL
(“Money out of thin air? We were only doing a little bit of Quantitative Easing of our own…” says our Barclays insider, quite reasonably.)

Rail fares outstrip cost of living rises
Walk on fares on some of the country's busiest rail routes have gone up three times faster than inflation since privatisation, according research by a transport union. TELEGRAPH

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Inquiry into Mid Staffordshire NHS Foundation Trust

KJ, Chris and Fee know what the problem is...

SOURCE DAILY MAIL: Hospital 'box-tick' culture that cost hundreds of lives in biggest NHS scandal in living memory

The report blames managers who cut costs and reduced staffing levels in an attempt to hit Labour’s ‘efficiency’ targets and win foundation status. Hundreds of patients may have died unnecessarily. Whitehall sources said, ‘We can’t tolerate a situation where hospitals are meeting all the targets, ticking all the boxes, and the reality is people are drinking water out of vases and sitting in their own excrement.’

BBC NEWS: Stafford Hospital report: At a glance

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Ministers accused of “bending” the new high-speed rail line to avoid George Osborne’s affluent constituency

Cameron is reassured by George Osborne...

SOURCE DAILY MAIL Cameron forced to defend George Osborne over claims he diverted planned high-speed rail line away from posh constituents
The Government faced claims of hypocrisy after it emerged that the northern section of the new HS2 rail network would include a £600 million “detour” around parts of the Chancellor’s seat of Tatton in Cheshire.

OUR RELATED STORIES

Rail fare increases - gouging profits or a stealth tax?

Train fare price increases capped? Oh no they're not...

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Liebrary: Do high pay and bonuses encourage high performance and excellence? A US Federal Reserve study says high reward actually results in worse performance!

Now here is something all the fat cats and their apologists really don't want us to see: scientific evidence that paying them fat salaries, perks and bonuses actually makes them worse at what they do not better. The evidence is provided not by some left wing think-tank, but from research done by top US universities funded by the US government.

Fat cats from executives to politicians claim that paying them loads is done for the good for all of us. Paying them more, they claim, would attract higher calibre people. Presumably because they find themselves and their colleagues inadequate (can't argue with that). To say anything to the contrary, they assert, is just envy. So we should just shut ourselves up and put their pay up.


You would have thought the evidence of the Credit Crisis, in which highly paid bankers crashed the World economy, together with the ongoing litany of banks ripping off their clients (PPI; Interest Rate Swaps; LIBOR rigging...) has proved beyond reasonable doubt that by paying vast amounts of money you simply get people who are blinded by money and will recklessly and without compunction pursue money for the sake of getting money.
Studies by high powered economists at top US universities (MIT; University of Chicago; Carnegie Mellon) funded by the US Federal Reserve (hardly a font of left wing propaganda) found that while increasing rewards increase performance for physical tasks, high rewards actually result in poorer performance for cognitive, intellectual work. Now you may say that describing the work of our MPs and bankers as 'intellectual' is stretching it a bit. But we can say with some certainty that what they do doesn't fall into the "physical" category.

The lesson for us: when MPs, bankers and businessmen claim we must let them take more money to incentivise themselves, don't believe them. They want us to agree to them taking more money simply because they want to take more money. So if you want to shoot down their arguments you should watch, and retweet, this animated presentation from the RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce). 



Apologists for the excessively paid may say that this experiment can't be extrapolated from the American students and the South Indian villagers used as this study's guinea pigs to bankers and politicians. But don't let them forget: another far bigger real life experiment was done over recent decades involving bankers, regulators and politicians. All these highly paid individuals stunningly failed that test. That test ended in the 2008 Credit Crisis and the crash of the World economy.

Pity the domestic cat, Felix Catus. Politicians, bankers and their ilk are only called 'fat cats' because cat rhymes with fat. A more appropriate animal comparator would be the tapeworm, though rhyming with that is much tougher (suggestions to tapeworm@rippedoffbritons.com). Executives, particularly in the banking sector, claim that they are forced to take £millions to attract and reward the best staff for the good of Britain and all us Britons. They point to the soaring banking sector revenues to justify their soaring bonuses. But like the tapeworm, they grow by sucking nourishment out of and impoverishing their host (that would be us citizens and businesses). Soaring banking revenues and profits are driven by rip-offs like: 

• High pension charges in the UK mean a Dutchman saving the same as a Briton will get 50% more pension; 
• Investment bankers 'rescue' businesses by loading them with debt; 
• The Interest Rate Swaps scam by the big UK banks that destroyed British businesses. 

Support for the tapeworms is provided by HMRC with lax tax, the FSA with poor regulation, and politicians who enable all the above with their cheers and obfuscations.

One example of the support the FSA provides is the ruling on compensation for the Interest Rate Swaps scam, that pushed many businesses into ruinous losses and bankruptcy. Banks hope the FSA will put a cap on the compensation they have to pay. And that they will only have to repay the money they misappropriated, rather than have to return the business to the healthy state it would have been in had the misappropriation had not happened. 

To understand the implications of this, consider a vandal cutting your brake cable causing your car to crash resulting in injury to you and others and destruction of property. The banks are hopeful that the FSA will only require them to pay for a new brake cable, as that is what they cut. The banks are hopeful they won't have to pay for the resulting injury and destruction. 

One collateral result is all the other tapeworm in other industries and professions, seeing the bankers get away with their bonuses yet again, are encouraged to suck even harder themselves.

Measured by GDP in the decade before the banking crash of 2008 Britain was keeping up with France and Germany. But measuring GDP is like measuring the weight of a child with a tapeworm. The child gets heavier as the tapeworm inside the child grows, but with no benefit to the child. This only becomes evident when the tapeworm has a crisis, as it did in 2007.

History will look back at our times and view the excessively paid executives as the great frauds of our time: 20th century witch doctors profiting from phoney promises of wealth (that they fail to provide) if we pay them and empty threats of calamity (that happen in any case) if we don't. The best the national leaders, who allow and encourage the tapeworms to get filthy rich at our expense, can hope for is that history will forget them.

(RSA animation suggested to Ripped-off Britons by Richard McCarthy @Barsacq)

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How much do those "cheap rate" 0845 etc. numbers really cost?

 Confused by phone charges or don’t know how much a phone call really costs? Perhaps that's their intention...

By Tony Monk. The information is based on research Tony did as a volunteer for KentLINk after it was discovered that several local GP practices were found to be using 0844 numbers, possibly on a revenue sharing basis.  Tony was also particularly incensed when he noticed that the expensive 0870 series number was rather cynically used by the Government as an emergency number for the public to ask for names of victims of the 7 July 2005 London bombings. 

WHAT THE AVERAGE PERSON THINKS

Many callers think that that 0843/4/5 calls are charged at a local rate or similarly cheaper cost.

THE TRUTH

0845 and 0870 numbers typically cost between 1p and 10.5p/min with or without set up fees and again are normally far more expensive from a mobile phone, typically 12 to 41p per min.

0871/2/3 numbers typically cost more than 0845 and 0870 numbers.

Charges for 0843/4 numbers from a landline vary greatly, typically between 1p and 13p/min plus a call set up fee. For example, Talktalk charge a set up fee of 13.87p per call and then 5p/min. One company was unable to quote a charge as it depends on the recipient’s telephone service provider.  Charges to these numbers will normally be far higher from a mobile phone.

118 numbers can be a very expensive and can cost up to £2.50 for a search plus up to £3.00 per min.

07 numbers are for mobile phones and will vary greatly between providers and depend on whether they are made from another mobile or a landline phone.

DO NOT phone 09 numbers unless you are very rich or a financial masochist as they can cost up to £2.60/min from a landline or mobile!

0500 numbers are free from a landline but are charged for from a mobile phone.  056 numbers are used for VOIP calls via the internet.

0800 and 0808 calls are normally free from a landline but typically cost 21p from a mobile phone.

116 is a range of easy-to-remember phone numbers for use throughout Europe to assist children and adults in need.

01, 02 and 03 numbers are normally charged at standard geographical number rates dependent on your provider, typically between 2p and 10p per minute and will normally be more expensive from a mobile typically 10p to 40p/min.

On the plus side many companies include all 01, 02, 03, 0845 and 0870 numbers in their inclusive bundles BUT NOT the other 08 series numbers.

WHO IS USING THESE NUMBERS?

There is an increasing use of higher rate charge 084 and 087 series numbers by commercial organisations.  Some corporate and government help lines have started using 03 numbers but many are still using the 084 and 087 series of numbers.  Examples include:-

• DVLA 0870 240 0009 or 0300 790 681
• Department of Health Publications 0870 155 5455 or 0300 155 5455
• Many NHS hospitals are now using 0845 numbers and some GP practices have started using 0844 numbers. Remember, if your GP is using one of these numbers he or she might be making a profit from your call.
• HMRC's 0845 number for tax queries costing upto 41p per minute

THE HIGH CHARGES ARE A WAY OF MAKING MONEY FROM YOUR CALL

An example of this is revenue sharing.  In other words the money paid for some 08 series calls is split between the service provider and the recipient and could lead to deliberate delays while the caller pays to listen to music.  Start worrying when you hear “In order to improve our service…….” which is then followed by music!

THE RULES NEED TO BE CHANGED

While most mobile users are aware of the costs of their phone and calls, many mobile and landline users are not aware of just how expensive 084 and 087 series numbers can be.  Many companies help to spread the myth that these calls cost no more than a local call – a fraudulent lie!

Rather than reducing costs, competition has led to total confusion and some very high prices.  In future let’s greatly simplify these numbers with standard maximum charges. Callers should be clearly advised of the cost per minute before the call charges start, and the time taken for the advice to be heard should be free.  No more set up fees or other sneaky charges and no more revenue sharing schemes.  

OFCOM has some proposals for changes, published in December 2010 – see http://consumers.ofcom.org.uk/2010/12/tackling-consumer-confusion-over-call-charges/.  OFCOM seems, however, to have been dragging its feet for a long time while the public remains unprotected from these rip-offs  

LOW INCOME HOUSEHOLDS ARE WORST AFFECTED

The cost of calling these numbers is generally significantly more from mobiles. The impact of the higher cost on mobiles is particularly pronounced for people on lower incomes who are more likely to live in mobile-only households, and use their mobile or call box to call essential services on these numbers such as some benefit offices, councils, utility services and doctor surgeries, etc.

WHAT CAN YOU DO?

Make sure you complain to Ofcom if you have a problem with charging and also chase them on what they are doing about urgently needed reforms.  Contact them on

0300 123 3000 or 020 7981 3000 or at http//www.ofcom.org.uk

If your complaint concerns premium (09) numbers contact 0800 500212 or

Phonepayplus.org.uk

Also have a look at Ofcoms very helpful Number Crunching website on http://consumers.ofcom.org.uk/files/2010/01/numbering.pdf

REMEMBER

If you can afford to, consider buying a package from your phone company and check they include 01, 02, 03, 0845 and 0870 numbers, but calls outside these numbers can be eye-wateringly expensive especially if made from a mobile.  Try to find a cheaper alternative number first.

Use the SAY NO TO 0870 website for alternative numbers for many business and government lines. This site lists alternative geographic numbers that are much cheaper. The information is crowdsourced, so if you know of any that are not on the site please add them to it.

If you want to find a number from a landline phone try 0800 118 3733 – it is directory enquiries for free!!

Confusing isn’t it.  Take care or you could be making someone very rich at your own expense! Who said privatisation and consequent competition would lead to cheaper calls?

Read More

How much do those "cheap rate" 0845 etc. numbers really cost?

 Confused by phone charges or don’t know how much a phone call really costs? Perhaps that's their intention...

By Tony Monk. The information is based on research Tony did as a volunteer for KentLINk after it was discovered that several local GP practices were found to be using 0844 numbers, possibly on a revenue sharing basis.  Tony was also particularly incensed when he noticed that the expensive 0870 series number was rather cynically used by the Government as an emergency number for the public to ask for names of victims of the 7 July 2005 London bombings. 

WHAT THE AVERAGE PERSON THINKS

Many callers think that that 0843/4/5 calls are charged at a local rate or similarly cheaper cost.

THE TRUTH

0845 and 0870 numbers typically cost between 1p and 10.5p/min with or without set up fees and again are normally far more expensive from a mobile phone, typically 12 to 41p per min.

0871/2/3 numbers typically cost more than 0845 and 0870 numbers.

Charges for 0843/4 numbers from a landline vary greatly, typically between 1p and 13p/min plus a call set up fee. For example, Talktalk charge a set up fee of 13.87p per call and then 5p/min. One company was unable to quote a charge as it depends on the recipient’s telephone service provider.  Charges to these numbers will normally be far higher from a mobile phone.

118 numbers can be a very expensive and can cost up to £2.50 for a search plus up to £3.00 per min.

07 numbers are for mobile phones and will vary greatly between providers and depend on whether they are made from another mobile or a landline phone.

DO NOT phone 09 numbers unless you are very rich or a financial masochist as they can cost up to £2.60/min from a landline or mobile!

0500 numbers are free from a landline but are charged for from a mobile phone.  056 numbers are used for VOIP calls via the internet.

0800 and 0808 calls are normally free from a landline but typically cost 21p from a mobile phone.

116 is a range of easy-to-remember phone numbers for use throughout Europe to assist children and adults in need.

01, 02 and 03 numbers are normally charged at standard geographical number rates dependent on your provider, typically between 2p and 10p per minute and will normally be more expensive from a mobile typically 10p to 40p/min.

On the plus side many companies include all 01, 02, 03, 0845 and 0870 numbers in their inclusive bundles BUT NOT the other 08 series numbers.

WHO IS USING THESE NUMBERS?

There is an increasing use of higher rate charge 084 and 087 series numbers by commercial organisations.  Some corporate and government help lines have started using 03 numbers but many are still using the 084 and 087 series of numbers.  Examples include:-

• DVLA 0870 240 0009 or 0300 790 681
• Department of Health Publications 0870 155 5455 or 0300 155 5455
• Many NHS hospitals are now using 0845 numbers and some GP practices have started using 0844 numbers. Remember, if your GP is using one of these numbers he or she might be making a profit from your call.
• HMRC's 0845 number for tax queries costing upto 41p per minute

THE HIGH CHARGES ARE A WAY OF MAKING MONEY FROM YOUR CALL

An example of this is revenue sharing.  In other words the money paid for some 08 series calls is split between the service provider and the recipient and could lead to deliberate delays while the caller pays to listen to music.  Start worrying when you hear “In order to improve our service…….” which is then followed by music!

THE RULES NEED TO BE CHANGED

While most mobile users are aware of the costs of their phone and calls, many mobile and landline users are not aware of just how expensive 084 and 087 series numbers can be.  Many companies help to spread the myth that these calls cost no more than a local call – a fraudulent lie!

Rather than reducing costs, competition has led to total confusion and some very high prices.  In future let’s greatly simplify these numbers with standard maximum charges. Callers should be clearly advised of the cost per minute before the call charges start, and the time taken for the advice to be heard should be free.  No more set up fees or other sneaky charges and no more revenue sharing schemes.  

OFCOM has some proposals for changes, published in December 2010 – see http://consumers.ofcom.org.uk/2010/12/tackling-consumer-confusion-over-call-charges/.  OFCOM seems, however, to have been dragging its feet for a long time while the public remains unprotected from these rip-offs  

LOW INCOME HOUSEHOLDS ARE WORST AFFECTED

The cost of calling these numbers is generally significantly more from mobiles. The impact of the higher cost on mobiles is particularly pronounced for people on lower incomes who are more likely to live in mobile-only households, and use their mobile or call box to call essential services on these numbers such as some benefit offices, councils, utility services and doctor surgeries, etc.

WHAT CAN YOU DO?

Make sure you complain to Ofcom if you have a problem with charging and also chase them on what they are doing about urgently needed reforms.  Contact them on

0300 123 3000 or 020 7981 3000 or at http//www.ofcom.org.net

If your complaint concerns premium (09) numbers contact 0800 500212 or

Phonepayplus.org.uk

Also have a look at Ofcoms very helpful Number Crunching website on http://consumers.ofcom.org.uk/files/2010/01/numbering.pdf

REMEMBER

If you can afford to, consider buying a package from your phone company and check they include 01, 02, 03, 0845 and 0870 numbers, but calls outside these numbers can be eye-wateringly expensive especially if made from a mobile.  Try to find a cheaper alternative number first.

Use the SAY NO TO 0870 website for alternative numbers for many business and government lines. This site lists alternative geographic numbers that are much cheaper. The information is crowdsourced, so if you know of any that are not on the site please add them to it.

If you want to find a number from a landline phone try 0800 118 3733 – it is directory enquiries for free!!

Confusing isn’t it.  Take care or you could be making someone very rich at your own expense! Who said privatisation and consequent competition would lead to cheaper calls?

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Minister says UK pension charges pass the 'baked bean test' despite them being among the highest in Europe

Chris, Fee and KJ listen to what pensions minister Steve Webb has to say...

SOURCE TELEGRAPH  Minister says UK pension charges pass the 'baked bean test' despite them being among the highest in Europe
Pensions minister Steve Webb says there is no need for price controls in the "vibrant" pensions market. Asked about the possibility of a cap on charges, he said: "Why doesn't the Government set a price cap on a tin of baked beans? We don't need to because there's a vibrant market, people have lots of choice." Many workers and employers with little previous experience of pension saving will invest in poor value deals, say critics.

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Rip-off News round-up. Our pick of the last week's media (Thu 31st January)

OFT clears oil firms on petrol prices, despite experts' claims that they quickly rise but fall too slowly
Competition is ‘working well’ at the petrol pump and price rises over the past decade are largely due to increases in tax and the cost of crude oil - and not because of sneaky retailers cashing in - the Office of Fair Trading (OFT) reported this morning. It says it found ‘very limited’ evidence pump prices rise quickly when wholesale prices go up but fall more slowly when it drops. As a result, it will not be launching a full investigation into the market. The watchdog failed to implement a measure called for by motoring organisations that would have seen wholesale petrol prices published, so that customers could easily see whether the price at the pump was fairly rising and falling. DAILY MAIL

Britain’s biggest multi-national companies oppose Cameron's call for tax disclosure 
Most FTSE100 businesses have warned David Cameron to abandon plans which will expose corporate tax dodging. They say it threatens to undermine the economic recovery. The PM said that firms have a moral duty to pay tax - in comments which angered global business leaders meeting in Davos, Switzerland. TELEGRAPH
(“It’s that word tax that makes us furious. And moral. And duty and pay, for that matter,” said our global business leader insider.)

Minister says UK pension charges pass the 'baked bean test' despite them being among the highest in Europe

Pensions minister Steve Webb says there is no need for price controls in the "vibrant" pensions market. Asked about the possibility of a cap on charges,  he said: "Why doesn't the Government set a price cap on a tin of baked beans? We don't need to because there's a vibrant market, people have lots of choice." Many workers and employers with little previous experience of pension saving will invest in poor value deals, say critics. TELEGRAPH

(Do you really think the pensions market is fine, minister? Or is that just the baked beans talking?...)

HMRC helpline keeps 16 million people hanging on the telephone, and paying for it

MPs attack HMRC for keeping helpline callers on hold for more than five minutes. Last year HMRC’s 0845 helpline cost callers £136m through delays in answering calls. HMRC has promised to move to a cheaper number. GUARDIAN

(We reckon HMRC should start using an offshore phone provider. They are always the cheapest, for reasons HMRC understand better than any of us.)

Libor rigging: US regulators may chase RBS on criminal charges

RBS is already expected to be fined £500m by US and UK regulators for its role in the rigging of the $300tn Libor market. Swiss bank UBS was fined £940m and pleaded guilty to felony. Despite the imminent fine, RBS’s bonus payout may still exceed £250m. Unions warn that paying the RBS fine may result in the bank cutting ordinary bank jobs without penalising the “fat cats.” GUARDIAN

1,000 postgraduates a year 'too poor' to take up Oxford place
About 1,000 students a year turn down a postgraduate place won at Oxford on academic merit because of the financial demands of study there, university figures suggest. This amounts to 15% of the 7,500 students offered a place. It only makes financial sense to take on student debt if you are sure you can get a good enough job to repay it. But in the current climate around 40% of university leavers are in non-graduate jobs two years after graduation. GUARDIAN
(Too poor, or too smart?...)

Speaker John Bercow tells David Cameron not to block MP salary rise to £86,000
John Bercow, the Commons Speaker, has warned David Cameron not to “appease” public opinion by blocking large rises in backbench MPs’ “ordinary” salaries. Submissions to the Parliamentary review by MPs suggest that members believe their salaries should rise by a third to more than £86,000. Bercow said that MPs “resent” moves by independently wealthy party leaders like the Prime Minister to prevent increases in their pay. TELEGRAPH
(“Cameron is totally blind to the hypocrisy of it all,” said Bercow, totally blind to the hypocrisy of it all.)

Ministers accused of “bending” the new high-speed rail line to avoid George Osborne’s affluent constituency

The Government faced claims of hypocrisy after it emerged that the northern section of the new HS2 rail network would include a £600 million “detour” around parts of the Chancellor’s seat of Tatton in Cheshire. TELEGRAPH
(...and a £600m “detour” around all principles of fairness and justice.)

Bank of England’s £375bn QE a 'monumental mistake', pensions experts say

A committee of MPs were told Quantitative Easing has reduced the value of pensions. This forced people to put more in their pension pots, thus squeezing their spending, and forced companies to divert cash to pension funds rather than investing. Also, by pumping money into the system, QE also drives up prices, which hits consumer demand. The Bank of England has created £375bn (Quantitative Easing) to help banks lend over the credit-crunch. GUARDIAN

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