"Junk Fees"

If you're like me, when a bill arrives in the mail, you pay it. If the amount is what I expected, I'll usually write the check or schedule the online payment without much additional thought. However, I do occasionally read a bill thoroughly, which leads to some interesting observations.

My combined local telephone/Internet/long distance telephone bill is full of bizarre fees, taxes, and strange charges: the VA Public Rights of Way Use Fee; the Federal Universal Service Fund Surcharge Long Distance; the VA Cost Recovery Surcharge; the VA Federal Universal Service Fund Surcharge; the VA Communications Sales Tax; the PEG Grant Fee; the Federal Subscriber Line Charge; and the Non-Primary Line Subscriber Line Charge. I have no clue what most of those are for, or if they are legitimate. The service provider is willing to explain them to you as long as you are willing to wait long enough to talk to the nice person in India who is paid (although not very well) to listen to your question and provide some stock answer.

The documents you sign at closing when you buy or sell a house are worse. You sit at a table for an hour, surrounded by brokers and lawyers, and sign page after page of densely-printed documents that are passed in front of you in a rapid-fire sequence. Most of these are designed to protect the interests of the bank who's lending you the money to buy the house; relatively few are intended to provide any protection for your interests. And the parade of documents is thick with small print and various fees, charges, surcharges, and other odd things you're not encouraged to ask about.

An interesting article in the Washington Post last Saturday discussed a lawsuit that's taking on some of the most egregious of the so-called "junk fees" - the various undefined charges for "admin fees," "document preparation," "regulatory compliance," etc, that add hundreds of dollars to the closing costs that are already very high. The focus of the lawsuit is a ruling by the Department of Housing and Urban Development that any fee imposed in connection with a real estate transaction must be for services actually rendered...and it seems that many of the fees being imposed are for services covered in brokerage fees that are already being assessed. The real estate industry, of course, is fighting this suit, which would deprive it of a small, but significant source of income.

The problem is also seen in other areas, too. Consider the last time you bought or repaired a car: how many "dealer preparation charges," "destination charges," "environmental fees," and other undefined assessments did you pay? How many of those are legitimate, and how many are actually already covered in the cost of the car or the repair? The dealer can explain these to you at great length, if unconvincingly, if you ask; it really doesn't matter to him, because if you've gotten to this stage, you're probably going to buy or repair the car, anyhow.

Junk fees. As the economy continues to tank and businesses of all sorts look for ways to keep up their revenue intake, I expect we'll see more and more of them. Not all will be as egregious as the charge assessed by a law office a few years ago for "HVAC" (heating, ventilation, and air conditioning - essentially, charging the customers separately for heat and a/c), but they're out there...and we need to be aware of them. You may not be able to escape, but you can question them, and if enough of us do that, perhaps the glaring light of public opinion may result in some of them going away.

As fantasies go, that's a pretty safe one.

Have a good day. More thoughts tomorrow.

Bilbo