Consumer Gripes and FAQs
The Wall Street Journal ran a great article on Monday about frequently asked consumer questions, and provided the answers in this article (here):
Some examples:
5. How come banks immediately take money out of your account for debit- card transactions, but when it comes to depositing money it can take as long as five days for a check to clear and be posted to your account?
While a debit is frequently an online transaction, “the process of depositing a check is typically not an online transaction,” says Fritz Elmendorf of the Consumer Bankers Association, a trade group based in Arlington, Va. “For the most part, the paper check is physically carried back to the bank of origination.” And that takes time.Also, your bank may be able to, say, take a photo of every check it receives and email it to the bank of origin for clearing. But that bank may not have the ability to receive and open the image.
Beyond that, banks take a long time “because they can,” says Ed Mierzwinski, consumer program director of the U.S. Public Interest Research Group, a watchdog group in Washington. The time frame for clearing checks is covered under a 1987 law called the Expedited Funds Availability Act. Banks typically have two business days to clear local checks and five business days to clear nonlocal checks. (But there are exceptions to the rules; for more information, check out consumersunion.org.)
For the time being, there’s no change in sight. A bill introduced in Congress last year by Rep. Carolyn Maloney (D., N.Y.) to shorten the deposit time has stalled. But there may be some reason for optimism on the technological front, as community banks adopt electronic check image clearing that may accelerate the process. According to a study by the Independent Community Bankers of America, 14% of community banks already clear checks using a digital image of the check, and 58% plan to adopt this method in the next 18 months.
– Lyneka Little
6. Why do you have to pay for incoming and out- going minutes on cellphones? Essentially, a cellphone carrier is collecting twice for one call — from the caller and from the person receiving the call. Shouldn’t only outgoing calls cost money?
Look at it this way, telecom experts say: Carriers aren’t collecting double the revenue on each call. They’re collecting half the cost of the call from each party.
In Europe, the caller pays the entire cost of the call — but calls can cost twice as much as in the U.S. If U.S. carriers charged only one customer for the call, the average per-minute cost would effectively double. That would bring the average rate per minute in the U.S. to 13 cents rather than the six and a half cents customers have today.
The lower cost is why the monthly minutes of use here are so high, says Marina Amoroso, an analyst at Yankee Group. The average in the U.S. is 800, compared with 300 to 400 in European markets.
However, most carriers offer in-network calling free to their customers, often for an extra $3 or $4 a month. Meanwhile, some carriers have packaged their plans to allow for free incoming calls. This marketing tactic, of course, costs carriers money, but they are hoping it will make them look more attractive and competitive in the market. Sprint Nextel Corp., for example, offers Sprint Free Incoming plans that charge only for outgoing minutes on cellphones. This plan starts at $49.99 for 300 outgoing minutes, plus unlimited incoming minutes and unlimited night and weekend minutes.
– Sarmad Ali
7. Why do rental-car companies charge so much money to put gas in the tank, forcing travelers to drive around near airports looking for a normal gas station so they don’t get gouged? Also, why is rental-car insurance so confusing? You already have insurance through your credit- card company or your own auto insurer, so why do they try to sell you double coverage?
“You aren’t paying for fuel,” says Neil Abrams, president of the car-rental consultancy Abrams Consulting Group Inc. in Atlanta. Rental agencies set the price high to deter clients from bringing back vehicles with an empty tank and thus offset the steep cost of refueling.
Rental agencies don’t have efficient systems for shipping and storing fuel and gassing up vehicles en masse, says Mr. Abrams. Some companies don’t even keep gas on site, so an employee has to drive the car to another location to fill it up. And a rental agency’s goal is to get the car out to the next customer as quickly as possible; if the agency has to take time to refuel a car, the lost revenue and labor costs are huge, Mr. Abrams says.
Still, most rental agencies do offer a pre-pay refuel option at the time of rental so the customer can bring back the car empty and pay for a tank of gas at a price close to local market rates. Those few additional cents on each gallon can help to offset labor costs, since the average renter never brings back a tank bone dry, says Michael Kane, president of Vehicle Replacement Consulting Group Inc. in Royal Oak, Mich.
Why do rental agencies push insurance so hard? Largely, it comes down to boosting revenue. Agencies can’t really afford to give you a car for $17 a day, says Mr. Kane. The companies need to offer that kind of low rental price to stay competitive, but they then need to make up the lost revenue. So they turn to extras like insurance — which is highly profitable if most people don’t get in accidents.
Rental insurance is confusing for another reason: Lots of people actually do want it, so rental agencies offer lots of different policies to cover their needs. For instance, says Mr. Abrams, many people do in fact come to the counter without their own car insurance and need coverage. Others buy the protection so they can minimize the hassle of dealing with their insurance company or the car-rental company if they’re involved in an accident, says Richard Broome, a spokesman for Hertz Corp.
Mr. Abrams says many of the companies he works with are focusing on training employees to explain insurance options more clearly. But he recommends knowing exactly how you are covered by your own car insurance or credit card when you arrive at the counter, and buy accordingly. “Buyer beware,” he says.
– Sarah Nassauer
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