10 Ways Consumers Are Getting Ripped Off

by Guest Contributor · 32 comments


Consumer rip offs can seem like the domain of conspiracy-theory-obsessed taxi drivers. But when you begin to notice less and less cash left at the end of the month with no real addition to your lifestyle, who could blame you? These ‘rip offs’ also have a more technical term coined by economists, and are known as ‘market inefficiencies’ where the price of something is far removed from its actual value.

The value to price ratio could be out of whack for a number of reasons, but in this case your suppliers and retailers are not doing anything technically wrong, they are simply using a situation to their advantage where you have no choice but to use their goods or services, or you are simply too time poor to worry about being cash poor.

Therefore, to help you spot these rip offs in your everyday life and hopefully keep more money for yourself, rather than the salesman, compiled here are the top 10 ways you could be getting ripped off right now.

1. Airline Memberships

It’s nice to receive a little rock star treatment, especially when you’re traveling – which can be stressful enough without the waiting in line and the headaches brought on by other passengers. So you may think that the $425 a year membership to the United Airlines’ Red Carpet club is well worth it, even with the additional $50 application fee.

As a member of the Red Carpet Club you’re getting priority customer service and access to a comfortable, quiet and cushy lounge at major American airports. However, if you sign up for a United Mileage Plus Club Visa card, you can earn air miles as well as receive a Red Carpet Club Membership and the annual card fee is just $375.

2. Shoes to Make You Fit

You may have heard about these shoes which have a curved sole and promise to give you a workout with every step. A number of athletic shoe manufacturers make their own version and whether you opt for the Reebok EasyTone or the Sketchers ShapeUp you’ll be paying around $130 for a pair of sneakers.

However, according to Doctor Michael Ross who is the director of Rothman Institute’s Sports Performance Lab, “There is no evidence they will help you tone better or quicker than a regular shoe”. This is because the shoes primarily target the foot and ankle, and if you want to get fit and toned, just keep walking – all the way to work, the gym or just take the stairs. There is no need for special shoes.

3. College Textbooks

Education is an investment in your future, but you don’t need to over capitalize on your investment by being ripped off when it comes to your study materials. According to Nicole Allen a director at Student Public Interest Research Group students are being ripped off when it comes to books because they are “a captive audience since professors decide what books they need to buy”. As a result the average American student will spend around $900 a year on textbooks and with new editions coming out every three years, the prices will go up even further.

To help your starving students make their way more frugally through college look for sites like Chegg, which allows you to rent the books you need, allowing you to make savings in excess of 70% of the sticker price.

4. Travel insurance

Rather than suggesting you put yourself and your family at risk when you travel, simply think about where you are buying your insurance from, and whether they have your interests or their commissions at heart. In America more than $1 billion is spent every year with agents, as travelers aim to protect themselves from canceled flights and stolen luggage and possessions.

However, other products and insurance policies you already have can cover the same things for a fraction of the price. For example, many homeowners’ insurance policies cover lost luggage, and you may even have more extensive insurance coverage on your credit card – if you purchase your holiday using the card. Plus most airlines will reimburse you for the value of lost or damaged possessions up to the value of $3,000.

If you do want a dedicated travel insurance policy, go directly to your insurer rather than through an agent because purchasing insurance through a third party generally means that party is being reimbursed for signing you up, so you’re going to be paying more for your own safety and well being.

5. Premixed Baby Formula

Being a parent is a busy time but when you purchase ready to drink baby formulas you’re making it even harder by stretching the budget for no reason. Taking the time to mix the powder with water to feed your bub can save you over 50% in some cases. For example, buying a 32 ounce (or 192 fluid ounces) can of premixed formula which you can open and serve to your baby will last you just a few days and will cost around $45 according to Diapers.com whereas a container of powder that makes 168 ounces is around $25.

Instead of spending 57% more on premixed formula, invest in a water filter jug if you’re worried about the quality of the feed and you’ll be spending $30 in a once off purchase, rather than more than 50% more each feeding time.

6. Gift Cards from Credit Card Companies

Giving a prepaid credit card gift card is a nice way for you to give the perfect gift, while not encouraging overspending on a real credit card. However, some cards, like the American Express gift card, charge a flat $3.95 charge just for buying a card, regardless of the value loaded onto it. Visa not only charges $3.50 for the cards sold through bank branches but also includes a $2.50 monthly fee 12 months from the purchase date.

Plus, many merchants will not accept the cards if the value remaining is less than the purchase price of the item, so it can be hard to use up those few remaining dollars. Instead, if you want to give your friends and family the gift of an unrestricted shopping spree, just give cash.

7. Packaged Sliced Meats

According to a search on Whole Foods on Yahoo Finance, Pre-sliced and packaged deli meats can cost 27% more than having your meats sliced at the deli counter of the supermarket.

Therefore, take the time to wait a minute or two to be served at the deli counter rather than paying all of that extra money just for convenience, not to mention additional packaging and plastic.

8. Germ Fighting Supplements

No one likes being sick but if the Federal Trade Commission (FTC) were able to successfully charge manufacturers of products which claim to fight germs and colds, and boost the immune system then you are better off observing good hygiene practices and getting enough rest, rather than being ripped off by ‘germ fighters’. Also watch out for the packaging of these supplements because while the FTC were able to have three manufacturers of these products change their packaging to avoid misleading claims, the products are still available.

9 – Title Insurance

Title insurance is an unavoidable cost when you have a mortgage, but be careful of how much you spend. The costs can vary significantly between states, for example insurance on a $500,000 home in Houston can cost $3,000 but in Boston you’ll get away with $2,000 in insurance. Also be careful who your real estate broker recommends, as you will be paying for your insurance, as well as for the referral fees paid to your broker.

Instead, take some time to shop around and to save even more. Contact the insurance company used by the previous owner; they know the property and will have almost all the information you need, so the insurance company can often offer you a very affordable rate.

10. Cable TV

When you have pay TV, there are hundreds of channels and thousands of shows which go unwatched. You know this, which is why you want a basic cable package. Unfortunately your cable company knows this too, but they want you to pay for those channels anyway. As a result they’ll bundle the channels you want with ones you’ll never want to see, just so you will pay for them all.

If you think this is unacceptable, try and go without the cable all together. Whenever you’re looking for something else to watch, visit sites like Hulu where you can watch movies and TV series for free at anytime. If you want entertainment on tap you can also subscribe to Netflix for just $9 a month and have access to over 100,000 TV shows and 12,000 movies on DVD.

This is a guest post from Timothy Ng, who lives, breathes, and sleeps personal finance! Check out his in-depth guide to doing a balance transfer for life where he answers everything you need to know before applying for a lifetime balance transfer.

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current AT&T DSL and U-VERSE promotion codes and promos and see if you can save more money every month from now on.

{ read the comments below or add one }

  • HenryBT says:

    What. Mortgages not listed as a ripoff? Com’on… With all this talk about how the banks are losing money on foreclosed properties nobody points out the exhorbitant profits they make on a sale. Not to mention that in today’s society most folks here in the US don’t buy a house with the intent to keep it for 3 decades. Not to mention the job market today forces many folks to relocate to other regions of the country. This typically means that even for those who purchased a house and paid faithfully on it for 5+ years before they had to relocate really only ended up renting it. Yes, some folks are able to recoup their investment when sold but very few actually do so, especially when you consider moving costs, repairs and maintenance (to bring it up to marketable conditions). Let’s not forget that the banks acquire these very same houses over and over again and resell them for more and more. I guess that’s the real reason a home is called a “Money-Pit,” it’s the banks moneypit.

  • Art says:

    Got rid of the landline phone and saved roughly $28 a month and got rid of the “basic” cable (which we paid for only to have a DVR to record what was once free tv) and saved about $40 a month.

    Over the past year we’ve scrutinized the cell phone bill and have eliminated over $100 a month worth of fees and charges. For example, we used to pay $17.99 for phone usage between 7 and 9 p.m. After reviewing the minutes we used during these hours we realized we probably used less than 100 minutes a month and this was covered by our 1400 minute usage plan.

    Scrutinize, learn to live without and determine to only pay for what you want.

  • Mike ryba says:

    That was good, now how about the other trillion ways we are ripped-off.

  • twilight says:

    I go to Half.com to get my text books. Or i see if my local public library or university has the same book. Either that or I see if a classmate can let me borrow their book to read the chapter for that week. Way way cheaper than buying the book through the university.
    And like was mentioned, with new editions coming out all the time…why actually buy the book at full price and then when the semester is over, only get a third of what I spent if they even take back the book at all..

    • Z1082 says:

      Just Google the ISBN. I’ve been lucky with Biblio.com recently, but half.com has been good to me too. Don’t be afraid of “International Editions”. Every one I’ve bough has been the exact same book, just a paperback version. The Intl. Ed. says “Not Authorized for US use”…but authorized by whom? Notice it doesn’t say it’s illegal, or breaks copyright laws, etc. The publishers are just trying to protect their honey pot of US students.

      Of course the universities collude with the publishers by creating mashups of books, online content, special sections that you just HAVE to have…but never actually use for your class. I just got burned on that for a Finance class in my MBA program. It’s an MBA program…did they think I wouldn’t notice? I fought them over it, but everyone insisted I HAD to buy the special package…and now we’ve barely even used the book, much less the extra included crap. I could have bought JUST the book for cheap, but purchased the package for full price.

  • Michael says:

    Love the tips. I have the $9/month Netflix and a PS3 which allows me to watch my movies and tv shows on my real TV instead of a computer. I catch The Daily Show and Colbert Report every day on my laptop and have a $15 antannae to watch network tv (and with the transition to digital broadcast, the picture quality is quite good)

  • samelvin says:

    FOr landline phone get a lifeline appilcation fro your phonecompany it cuts all the “FEE” of your monthly bill.
    Yes we need to be free from cable( cable service is down by 741 00 cuts.. per Finacial Times..

  • Carl says:

    WORST ripoff: the tobacco drug, which KILLS 5,000,000 addicts and hundreds of thousands of INNOCENT people (who breathed toxic tobacco smoke) around the world, EVERY YEAR.

    BAN THE TOBACCO DRUG, NOW.

  • Allen says:

    Buying laser toner cartridges from some online suppliers can save plenty ($80 vs $140-180 for an HP 5000 printer’s cartridge. Same goes for ink jet printer cartridges; save even more with online purchase of do-it-yourself ink refilling kits which are so quick and easy to use.

  • Blue Spyder says:

    You forgot cigarette money, that adds up for you chain smokers…

  • Sperko says:

    Cable is the worst offender. With emerging alternatives to cable, there really is no reason to stay with cable, unless you absolutely need to watch shows the day they are released. I prefer to wait. I get everything I want online these days and maybe turn on the TV prior to going to sleep. One week I realized I didn’t use the cable at all. If I wasn’t sharing a place with a roommate I would get rid of it.

  • Jon G says:

    Re: No. 9. What is described does not happen. I do not know any Broker or Title Officer that would violate fedreal law over a kickback.

  • bob says:

    Nice list. I was expecting cellular data fees and one way car rentals, two of the ones I loathe the most.

  • Mekhong Kurt says:

    Good list, for sure.

    There is another point regarding travel insurance that won’t apply to everyone, nor even very many, but for those, it’s worth thinking about. I’m single and live in a smallish one-bedroom apartment (about 530 square feet). However, I don’t have homeowners’ insurance at all — I checked into it, and given that I could replace every piece of furniture and every single household item I have for somewhere around $1,500 at most (and probably considerably less, if I shopped around a bit), it simply wasn’t worth it to me. Further, given that my apartment is in a building in which all the walls, floor, and ceiling are concrete several inches thick, there’s just about zero chance of structural fire. I do live in Bangkok, where flooding has historically been something of a problem in this flat, low-lying city on the banks of the country’s major river that routinely overflows its banks in the rainy season, and in the 16 years I’ve lived here, flooding has been gradually worsening. However, it’s never flooded in my particular neighborhood since I’ve lived here, and even very old lifetime residents say it never has, as far as they know. Therefore, I feel there’s little chance I would ever need homeowners’ insurance.

    So, in my case and given that I don’t travel that much, it’s cheaper for me to just buy travel insurance when I do go. Yes, it’s way overpriced, but it’s still cheaper than any other option I’ve checked, or at least is, for me, better value for money than any other option. Incidentally, I don’t have even a single credit card, so they’re irrelevant in my case.

    Obviously, and as I’ve already said, my circumstances are rather unusual so there aren’t many people in similar ones, but the few who are might think about what I’ve written here.

  • Mark says:

    Good list. I would add landline services to that list. Cell phones make home phone service a luxury.

  • Kathy says:

    Premixed baby formula vs. powdered? Why not save money the old-fashioned way: breastfeeding. Worked for my four. No muss, no fuss, always available at the right temperature, and the containers are so attractive.

  • Elaine says:

    I agree about the powdered baby formula. My only caution (from experience) is to double-check your proportions when mixing. If you are using a Playtex-type bottle with the liner, remember that the 8-oz capacity is the rigid outer bottle — the liner that contracts while drinking is quite a bit smaller. So use LESS powder than instructed for bottles like this, otherwise your baby won’t be getting enough fluid and the constipation will be unbelievable.

    • Lem says:

      I’m disappointed that the article didn’t even mention breastfeeding, which would save families hundreds of $. Though, I know there are certain circumstances where mothers must use formula, sadly, formula has become a lifestyle choice even when it has been proven that breast is best.

  • Meryl says:

    Great article. However you did not mention the phone companies. We moved to a new home and wanted the minimum service; we also have cell phones. The woman says $15/month. After several questions she says,”That will be $25/month.” So what happened to the $15 monthly charge? The additional money included taxes and fees, part of the total cost every month. I said forget it. It wasn’t just the money – I did not like the idea of being deceived. We are a cell phone only household now.

  • Steve Jobs says:

    I remember when I was in college, my parents give me money to buy textbooks but what I did was I befriended a lot of my upper years and asked them if I can borrow or buy their textbook for the next school year. That way, I had saved my money for textbooks and deposited it in a bank just in case the professor changed the textbooks.

  • CreditShout says:

    Great post. These are all true. I didn’t even think about the deli meat, but it’s definitely true.

  • marci357 says:

    College textbooks at $900 a year would be a bargain – seems they are that much each term… Thanks for the rent-a-book line.

    If all you need is a basic phone, you have to ask specially for it, but mine is $7.99 month. I pay 10 cents a call extra for outgoing calls – which I don’t make, and nothing for incoming calls. I have the phone for emergencies like 911 when I would want an address locator, for when the cell phones are not working (frequently in my neck of the windy woods), and for the grandkids to use in case of an emergency to me.

    This low phone use is not available if you have internet also, in my area.

    • BettyLaVerne says:

      You can get MagicJack for $20.99 a year and make all the calls you want, if you have high speed cable internet.
      check out this site for credit unions:
      http://www.youngfreehq.com/

    • Melanie says:

      Basic phone service in my area (southwest Michigan) is $45.00 minimum + you pay for all outgoing calls. No basic $7.99 bargains here. Of course our entire cost of living in Michigan is artificially boosted to drive us into the poor-house quicker.

  • Jenna says:

    What a great list. Couldn’t agree more. I’d add buying bottled water and land line phones.

    • BettyLaVerne says:

      Yes, bottled water. What a ridiculous thing to waste money on. Water is one of the few things left that are available for free.And, the germ-fighting products are actually hurting us, since the bacteria killed leave the stronger ones behind, and they are resistant to antibiotics. This should be outlawed. MRSA is here because we have antibacterial products , and people die from MRSA(multiple resistant). Oh, remember when we did not buy disposable anything? Better for the environment, for sure.

  • Robert says:

    Cable TV has to be the biggest ripoff. Threaten to cancel every few months and they’ll slash a ton from your bill.

  • Great money saving tips. One more thing to add to the cable TV analysis. Take a look at what kind of service you would get from just an antenna. We found a site http://antennaweb.org where you can enter your address and your watching requirements and they will recommend the type of antenna that works best as well as list what your service will let you see. We also found an old TIVO box in the garage and for $10/mo plus a $40 antenna, we can use their interface to search for what is available as well as record. Beats the heck out of the $100+ we were paying each month with cable.

  • Nick D. says:

    all of your points here are so true.. we have become lazy, which explains the pre-packaged meat, and pre-mixed baby formula. As for college text books, something has got to be done. it’s outrageous.

    • BettyLaVerne says:

      College text books are ridiculously expensive. I just paid $3oo. oo for four paperback , yes, paperback texts. Thank you for pointing out the rental site, i will try it .

      • J. Mill says:

        Not only are college textbooks priced to gouge, most of the fees and tuition charged by colleges are designed to gouge and to confuse young students unused to untangling complex pricing structures (though of course by the time they’re adults and have to begin untangling health care bills that make no sense, insurance schedules that come in huge printed catalogs hundreds of pages long, software agreements in which they catagorically refuse to take any responsibilty for anything that happens when you use it but which you have to agree to up front before you can use it and find out if it really is the right product for you, phone company bills sprinkled with little fees here and there all over the bill like fleas on a dog and that always change a little every month so you never really have any idea what they are really charging you for, bank fees so blatent and so preposterous its like getting slapped over and over and over just reading the agreement you have to consent to that they can change any ol time they want to anyway..i could go on, you know what i mean) and universities know very welll that young people just having moved out of their family home for the first time are naive and easy pickins and they waste no time in taking full advantage of that right up front with the money. What I wish I could go back and do now, now that I’m 47 and experienced all that and then learned afterwards how much nonsense I just accepted from the school cause I didn’t know any better. But, in fact, students are college are never reminded that they are the customers at that school, and that anything they receive from the school in the form of services rendered should come under extreme evaluation. I had instructors who could barely speak english and others who knew english but had such thick accents I couldn’t understand a thing they said. I had instructors who would just up and change the required textbooks for the course AFTER i’d already puchased the ones i’d been asked to buy before the class began. And all the nonsense around dropping a class is absurd. If you don’t attend and drop the class you should be given your money back no matter when you chose to drop it. And the unbelievable nonsense surrounding grades and how they are calculated and how your gpa can be affected by any number of things that have nothing whatsoever to do with the actual learning process is astounding. Now that I’m older I realize I should have stood up and called a spade a spade. I should have required that instructors have clear distinct voices that can handle the english language in a maner I understood, I should have gone into the administration building and demaned that my gpa be recalclated correctly and note be affected by anything other than test scores. And no test should ever be only allowed to be taken once. If I did poorly on a test I should have been able to request several more retests on the same material, making test scores not only the product of study but also the product of chance based upon the whimsy of a professor is simply ridiulous. You are taught something and you you’re tested on it. If you didn’t learn it and the test shows it, if you wish to retest you should be allowed to. Just because the teacher is required to create a new test so you can retest is of no value compared to the value to everyone in our society when a child learns something new. If the child wants to keep trying then carte blanche retesting at the request of the student would be a pretty good incentive for the child to try again. Grades set in stone are not a value for a childs tuition dollar. When I was in college I should have demanded that I understood what I was being taught before being rushed onward to the next concept. I know know that learning is vital, and also that if you are paying to be taught, you have to right to demand a product be delivered to you that is something you can take home, real knowledge. Colleges have a responsibiliy to educate, not to take advantage of children, leaving them in desparate finanical straights when they graduate and not even knowing yet that in so many ways they’ve already been had. I suppose by the time a person has run the maze of college and been caught in all the traps the school sets for its captive consumer, they think that must be the way the world SHOULD work. And so they go out and write up nosensical bank agrements that gouge, and think that parking ticket fines really should exceed a hundred dollars and so set them that high, and they write software agreements that are exquisite pickpockets, and car insurance rates so high that car insurance companies have so much money they get for nothing that they can afford to run commercials on all television stations and on all radio and on all internet and in all print media all the time. Has anybody ever noticed that these car isurance companies can afford to buy all that ad time? Because they have the money to pay for it. And where does it come from? By charging too much for what they provide. Does it really cost your cell phone company more than a nickel or two a month to provide you with some air time? Do you really think that they pay more than a buck or two to have those cell phones pressed out in bulk they sell for hundreds? It all starts at college doesn’t it. We certainly do learn things there, don’t we.

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