Laura Rowley Money & Happiness

When Hannah Montana vanished, it was the last straw.

I'd spent two days in the Kafkaesque world of Comcast customer service. Six months earlier I'd signed up for its "Triple Play" -- high-speed Internet, digital cable, and phone service for $99 ($112 with taxes and fees). The company called in December offering to extend my teaser rate for six months. (Competitor Verizon is bearing down hard, lavishing free HDTVs and digital camcorders on new subscribers.)

The Cable Runaround

Then I got my January bill -- $153.29. I called Comcast and repeatedly got a busy signal, then a message saying that "due to heavy call volume" they wouldn't even put me on hold. I called on three more occasions, waiting 10, 20, and 30 minutes respectively before throwing in the towel. Finally, I called the number for service problems, and got transferred to billing.

"James" told me a six-month extension wasn't available -- but a two-year deal was! Terrific, I said, sign me up. Just as the order was going through, we were disconnected. When I called back, another customer service rep said she saw my discussion with James on the computer -- but thought two years weren't available at the rate he quoted. She put me on hold in James' queue. I bailed after 15 minutes. Then, Friday, when the kids clicked on the Disney Channel to watch their favorite show, "Hannah Montana," a blue screen blazed "no authorization."

Another call, another service rep -- this one telling me I'd received the Disney Channel in error for the last six months, and the mistake was corrected when the new order went through. To ransom "Hannah Montana," I would have to fork over $125 a month for the bundled phone-internet-cable service, including 100 channels packaged with Disney.

I agreed, silently cursing the army of Comcast marketers who force you to take 10 racy music video networks and "Little House on the Prairie" reruns when all you want is the 15-year-old who moonlights as a pop star. Then I called Bob Sullivan, an expert on 21st-century headaches, to commiserate.

Fighting Back

The Red Tape Chronicles columnist for MSNBC, Sullivan is author of the new book "Gotcha Capitalism: How Hidden Fees Rip You Off Every Day and What You Can Do About It." A survey commissioned for his book found that 85 percent of consumers had complaints about cable fees.

The average consumer pays $1,000 a year in hidden fees, Sullivan says, $5 or $10 at a time. His book is a must-read to avoid getting fleeced by banks, credit card companies, cell phone service providers, hotels, rental car companies, auto dealerships, mortgage brokers, and the like.

Sullivan tells readers what to watch out for -- including a $1,000 line item dubbed the "dumb-ass fee" by the mortgage industry, named after homebuyers who don't notice it on closing day. Sullivan also explains how to fight back, and helps you pick the battles you're most likely to win.

"You and I are lucky because we have access to a telephone and can sit on hold for half an hour," he says of my Comcast experience. "What about people who work outside in construction all day? Or shy people, or old people who can't hear well on the phone? The company strategy is to squeeze as much as they can out of the consumer, to layer on as many fees as possible, and then only refund the noisy people."

Are You Sophisticated or Myopic?

Sullivan cites a paper published in 2005 in The Quarterly Journal of Economics by two economists, David Laibson of Harvard and Xavier Gabaix of the Massachusetts Institute of Technology. They divide consumers into two groups -- "sophisticates" and "myopes."

Sophisticates are savvy consumers: They comparison shop; ask the total cost before booking travel; scan their monthly bills for unauthorized charges; and exploit credit cards to get cash back and travel perks without ever paying a penny in interest or fees. Myopes blunder through their consumer decisions, paying premium prices and bleeding the financial death of a thousand cuts.

"Overwhelmingly, most people are myopes -- people who are too busy trying to get the kids into their car seats to fill up the rental car tank on the way to airport," Sullivan says, adding that he'd just come across a franchise in New England that charged a $1.50 "top off" fee for returning the tank full. (It charged for returning the tank empty, too.)

Gripe Away

The tendency is to blame myopes for their lack of organization and preparation. But Sullivan offers an analogy: "Let's say you're at the store buying a sandwich. A $5 bill falls out of your pocket, and the deli owner grabs it and shoves it into the cash register. He's a thief. But when people get $5 or $10 bills grabbed from them by companies, people say, 'It's their own fault, they didn't pay attention.'"

Meanwhile, the sophisticates are often out-maneuvered by their better-armed opponents. "The fundamental problem is the death of the price tag," Sullivan says, describing the "shrouding" of real costs. The classic example is the cheap computer printer, which requires ink cartridge refills at $30 a pop. "Even if the cartridges are cheap, they don't say how many milliliters are inside, or how many pages you can print per cartridge -- and in the end, you can't rationally buy a printer," he explains.

What's the solution to Gotcha Capitalism? Be proactive and prepared to complain, politely. The average griper gets a refund about half the time, Sullivan says, and credit card companies are most likely to cave -- about half of consumers are successful. Just one in five consumers got fees waived from cell phone providers and hotels; banks and grocery stores were least likely to cough up cash. (For more tips from my conversation with Sullivan, see my blog.)

A Fee-Hider's Cabal

Aside from hurting consumers, buried fees thwart businesses trying to play it straight. "There are lots of companies who would love to be honest and upfront about things, but you can't be the only honest person in a poker game where everyone is cheating," Sullivan says.

For instance, Sullivan covers the multibillion-dollar 401(k) fee rip-off, which he calls "the biggest swindle in history." I wrote a column on this a few weeks ago, and interviewed Dan Peterson, a Harvard MBA who launched G-Fiduciary, which sponsors low-cost 401(k) plans with total fee transparency.

It hasn't been going as well as Peterson expected. "We thought, where there's chaos and abuse, there's a business opportunity," he says. "Our total plan cost is under 120 basis points per year. The marketing problem is we are explicit about it. We're fully disclosing all fees, and competing with people who don't. The guys on Wall Street are 10 steps ahead of the regulators and the companies that sponsor plans; they've got a million ways to hide fees."