Avoid sneaky fees and demand fair treatment

Laura T. Coffey • Profile • E-mail

For nearly two and a half years, msnbc.com writer Bob Sullivan has been exposing scams and sneakiness through his blog, The Red Tape Chronicles.

Based on his investigative reporting, Bob has written a book, “Gotcha Capitalism: How Hidden Fees Rip You Off Every Day – and What You Can Do About It.”

Bob’s book highlights the machinations of a system that is rigged to make most consumers throw up their hands and simply give up. After all, who has the time to wade through an avalanche of fine print and decipher all the incomprehensible fees on their cell-phone bills, credit-card bills, cable bills, hotel bills, retirement plans, gym memberships, bank statements, mortgages and student loans?

To give you an idea of just how quickly these $5 and $10 charges can add up, consider this sobering statistic: Such fees are costing the average American $946 a year.

“A thousand dollars is a lot of money,” Bob said. “It’s enough to stock a sizable retirement fund. Many of us are losing more in these fees every year than we’re saving for our futures.”

Bob’s book provides step-by-step instructions to help ordinary consumers fight back against the fly-by-night companies and the Goliaths that are nickel-and-diming us to death. So just when the book gets your pulse racing and your blood pressure skyrocketing, it shows you precisely where and how to channel your frustrations.

“Don’t feel helpless,” Bob advised. “There is help to be had, and you can find it. You can get refunds and you can get justice if you go to the right places.”

Here is a sampling of some of the smart tips found in “Gotcha Capitalism”:

1. Eyeball your retirement “expense ratios.” How would you feel if you learned that fees ultimately were eating away nearly 30 percent of your retirement savings? Well, it turns out that fees are having just that effect on many diligent investors out there – so much so that they may have to continue working years longer than they expected. To combat this, Bob recommends taking a moment to look at your 401(k) statement (or similar retirement fund statement) and locate the “expense ratio” for each mutual fund you have in your account. If any of those expense ratios are more than 1 percent, then seriously consider getting your money out of those funds and moving it into an index fund. (Note: If you can’t find the expense ratio in the fund paperwork you have at home, visit a site such as Yahoo! Finance (http://finance.yahoo.com/) and type each mutual fund’s ticker symbol into the search field. You should spot the expense ratio easily after doing such a search.) Index funds, which replicate the performance of a stock market index, typically have expense ratios of 0.5 percent or less because they don’t cost as much to manage. “They’re almost always much cheaper,” Bob said. “You have a computer picking the fund, not a brilliant MBA running the fund.”

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2. Live your life without regrets. Have you gotten yourself locked into an auto loan, a gym membership or a satellite television contract that you didn’t fully comprehend? If so, be aware that more and more states are adopting “regret laws” or “free-look laws.” These laws make it possible for consumers to back out of such deals after a cooling-off period of, say, three to 10 days. “It’s a really good policy to allow people to get out of something they didn’t understand,” Bob said. With auto loans, for example, you can invoke such laws to get yourself out of high-priced tack-on fees for rustproofing or unnecessary extended warranties. To find out which regret laws are on the books where you live, contact your state’s attorney general’s office or consumer affairs department. You can start the process of finding contact information for your state by clicking here (http://www.msnbc.msn.com/id/15228784/).

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