Buyer beware or be fleeced

Discussion in 'The Intelligence Cell' started by Skynet, Jan 2, 2010.

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  1. From The Times
    January 2, 2010
    Buyer beware or be fleeced
    Patrick Hosking: On the money
    RECOMMEND? (12)
    My friend Hugh volunteers as treasurer for his village hall. A few months ago he received a letter from British Gas. The gist was that the village hall’s annual gas supply contract was about to expire.

    A casual reading of the letter suggested that it would be rolled over on the same terms. British Gas talked of renewing the contract automatically.

    “You don’t have to do a thing ... We’ll continue to offer you great value,” British Gas said.

    Nowhere in the letter was there any mention of a price rise, although it did speak ambiguously of new prices. At the very end, Hugh was told the price per kilowatt hour. But there was no mention anywhere of the existing price, for comparison.

    When bamboozling spins out of control
    To buy or not to buy, that is the question
    Hugh, dutiful and thorough, dug out the old invoice and discovered that British Gas was attempting to foist a 42 per cent price increase on the village hall — which was bad news for the Brownies, not to mention the bridge society and the Old Time Dancing Club.

    He rang British Gas. Almost before he could voice his complaint, he was offered a much lower new tariff, this time only 0.4 per cent higher than the existing one.

    The impression he was left with — one the call centre worker did nothing to dispel — was that British Gas has a policy of seeing what price it can get away with. Then, at the first sign of customer resistance, it backtracks and offers a much more reasonable deal.

    A few weeks later Hugh got another letter from British Gas, this time about the village hall’s electricity supply. Same story. In this case, after digging out the old invoice, he discovered that British Gas was trying to sneak a 63 per cent price rise past him. He rang again to protest and British Gas again capitulated immediately, proposing a tariff increase of only 1.6 per cent.

    It is hard to disagree with Hugh that this amounts to sharp practice. Of course, British Gas must have the freedom to adjust its prices in reaction to the wholesale cost of gas.

    But this was plainly not the issue here. If it were, it surely would have remained resolute when challenged. It was the company’s instant willingness to backtrack that gave the game away. Customers too trusting, too busy or too idle to challenge the company were, it seems, regarded as fair game — sheep to be fleeced.

    The vast majority of British Gas’s 600,000 small-business customers are on this pricing regime. The company declines to say how many of them accept their new terms without question, oblivious of the fact that they might secure much better terms for the price of a phone call.

    A few weeks ago my colleague Rebecca O’Connor reported how one company that failed to challenge British Gas ended up with a 435 per cent tariff increase.

    British Gas, and Centrica, its parent company, says that it is “absolutely dumbfounded” by Hugh’s experience and that the reduction he was offered when he challenged the price increase was “unheard of”. Hmm, I wonder.

    Treating loyal, unquestioning customers badly is becoming endemic across large tracts of the British service industry. In banking and insurance it is virtually de rigueur, as it is among mobile phone operators and broadband providers.

    The customer who doesn’t relentlessly switch suppliers or at least threaten to defect is too often regarded not as a valued client to be cherished and treated well, but as a fool to be gouged.

    Sadly, this policy of differential pricing is becoming institutionalised in many companies. Renewal letters are deliberately drafted to gull the customer or, at best, to gloss over the intended price increase. At the same time, call centre workers are trained to capitulate at the first sign of resistance. This is scripted into the business model.

    That is fine for customers with the time, energy and persistence to shop around year after year. In effect, they reap a cross-subsidy from the credulous and the lazy.

    But it is an almighty pain for the many who would prefer to stick with the same mortgage, insurance policy, phone and broadband connection for decades and would be more than happy to pay a fair price with a decent profit margin built in.

    One little-remarked business trend of the past 20 years has been the way companies that would once reward customer loyalty now punish it. The client who is too trusting is clobbered. Savvy, promiscuous new customers, on the other hand, are lavished with keener prices and perks.

    Householders increasingly spend their free time these days not at rest, but trying to sidestep low-intensity but relentless corporate chicanery. They puzzle over slippery-worded contracts and renewal letters. They plead with indifferent call centre staff in faraway countries. They pore over best-buy tables. They hunch over keyboards, diligently plugging their details into price comparison websites.

    The story of 21st-century consumption is not so much about shopping as about shopping around. Any consumer unable or unwilling to spend hours doing just that risks being mercilessly plucked.

    Customer loyalty and trust are seen as customer characteristics to be exploited and punished. The philosophy feeds into the way companies structure their services, the way they market them and the way they price them.

    “Buyer beware” is not merely the slogan of the back-of-the-lorry huckster — it has become the fig leaf of many of the world’s biggest corporations as they construct ever more complex tariff structures and fine print to befuddle and disadvantage their most trusting customers.

    My impression is that the bigger the company, the greater the likelihood of such treatment. The greater the distance between staff and customer and between staff and boardroom, the greater the likelihood of unscrupulousness creeping into the culture.

    Short-term bonus structures that take no account of the erosion of customer goodwill also add to the pressure.

    Regulators, despite the best of intentions, are stoking the conspiracy. Ofgem, which regulates British Gas and other energy suppliers, is not at all concerned with the crafty wording of renewal letters. Instead, it measures its success in terms of the millions of households and companies that switch supplier.

    The more that switch, the better it thinks it is doing its job. Yet switching should surely be a last resort because of the significant frictional costs and general aggravation.

    There is a business case for differential pricing. Companies that charge their price-insensitive customers more make more profit and are better positioned to win new customers because they can offer them cheaper deals. Unscrupulousness can pay. The undiscriminating company that charges identical prices to all may eventually wither and die.

    Markets are imperfect and capitalism can be terribly dispiriting sometimes. On that cheerful note, happy new year — and treat all those renewal offers with deep suspicion.

    More I thought ARRSE members may be interested and the deception is now so common. The comments on this article are also enlightening!
  2. A good post 'Skynet' and thanks. There will many grateful to you for this information.

    The Latin phrase: caveat emptor - was not used by you in the thread title. Understandable I suppose in the 'Bliar Educated Britain', that has just become even more appallingly awful.


    Balls, the 'bug-eyed best (only?) friend' of Brown, has just decreed that straight As in every subject will count for nothing when judging a school, unless there be a quota of Somalis, Bulgarians, Persians, Afghans, Romanians, Persians, Yemenis, Mauretanians, Estonians, Iraqis, Syrians and the progeny of a myriad of assorted sponging 'asylum seekers'.

    This country is terminally 'cattle-trucked'!!!!
  3. Hmmm
    People agree to things without checking a few facts first might have to may more than what they would have if they done their homework.
    Large firm tries to make large profits.
    I can't really see a story there.

    And this little gem
    My arse, the "many" wouldn't utter a word unless it's "up yours" if they were paying less than a fair price, the jammy gits who got tracker mortgages at the right time for example.
  4. One thing about "competition" in the energy supply that has always puzzled me is that my current local supplier is not allowed to play the competition game with me. If I get a quote from the Isle of Lundy Electricity Company which is lower than my present rate then my local Southern Electricity Company is not allowed to match or beat that quote. Call that competition?
  5. Good post, Skynet. It's quite sickening that so many companies consider chicanery to be acceptable practice these days. I was a contented British Gas customer for years, then something changed and now I would urge anyone to avoid them like the plague.
  6. I think this shows the story behind the headline. The main justification for maximum de-regulation of markets is that 'market forces' will somehow sprinkle their magic pixie dust and make the world a better place. The organisation will have to respond to the combined will of the customer or perish, so the theory goes.

    Except, it's now in best interests of the company to leave its customers with no reason to feel any loyalty whatsoever to the company and to leave it at a moment's notice. In the longer term, who knows?
  7. I think he hit the bull dead centre. I seem to be spending a great deal more time now just trying to avoid being ripped off. My feeling is that the ones who are really being fleeced big time are the elderly who neither have the patience or know how to spend time hunting for the best bargains.

    The next big scandal will be all the oldies who have lost the plot with their internet banking and who have little in the way of paper transactions and when they pass away relatives wont have either. Guess who gets the money? The government and banks! We can't run a well balanced society without trust and that seems to be a diminishing commodity.
  8. My g/f bought me a River Island shirt for Christmas, unfortunately too small. I did keep quiet about the label and was suitably grateful :x . Taking it back on Boxing Day, some spotty oik told her she couldn't have a refund nor an exchange, just that she may purchase another 8O

    "No refunds or exchanges until December 29th, to keep the queues down" they said. What f*cking queue? A word with the manager and he's looking irritated about being challenged, even a lazy look of contempt played around its mush which I'd have gladly slapped. Shaking his head quietly at his minions on the Tills, he demonstrated that in his little Ivory Tower in his shop rig, complete with earpiece and radio, just how much customers were valued. She never did get a shirt, seems they only make them to fit adolescents or something :roll:

    Debenhams then pished on New Year's goodwill with its shambles of a restaurant, crap everywhere and feck all on its hotplate unless you wanted to wait for half an hour. The costs for all this was not cheap as you'd imagine.
    Yes, the manager was a w*nker there as well, like he'd popped out from Uni and behaving like Roger Moore but without a brain and his charm. Told to refund the payment as we couldn't wait after half an hour please, he made the g/f wait for another ten minutes before he deigned to comp us. All with the air of a jumped up cnut. Idle, badly led, and charmless staff managed by arrseholes are apparently now the norm in these shopping shite houses, and customers mean nothing, it seems.

    Trem' ?? polite as can be, as usual, picking his way through the rubbish and spilt food laying all over the way out of the restaurant.

  9. Can anyone tell me just how this jumped from Current Affairs to the Intelligence Cell?
  10. The MODs have been saying the CA is more for military matters.
  11. Then surely it should be named Military current affairs?
  12. And have the tagline "Military and Geo-Political News and Analysis" removed.
  13. In the light of the above, which mods have been saying CA is more for military matters?

    Quick, to the Outrage Bus...
  14. Sorry, thanks to WFM it's doubling up as the Griefwhore-mobile.
  15. Sixty's has

    Although I'm sure theres another recent thread where an argument kicks off over why non military matters are in CA.