Economists call them “market inefficiencies” “” those thrilling or frustrating moments (depending on your point of view) when the price of something veers from its underlying, inherent value. In that world “” the one in which we all live, eat, shop, drive and pay bills “” they’re called rip-offs. We’re not talking fraud here (though there’s plenty of that going around, too). We’re talking about all the ways, within the law, that humans allow themselves to be taken for a ride
The Rip-off: All you want is basic cable, but your cable company wants you to have so much more “” and pay for it, of course. That’s why it bundles in a whole mess of channels, including dozens that even the most feckless of couch potatoes won’t watch, including foreign-language channels, background-music channels and niche stuff like Speed (an ode to all things fast). Time Warner Cable charges a minimum $67.50 a month for a “value package” with 350 channels (HBO and Showtime cost another $14.95 each). Comcast isn’t much better: Its basic package includes 98 channels for $62.40.
How To Avoid It: Cue up network Web sites and watch for free. Hulu.com offers thousand s of videos, TV episodes (new and old) and full-length movies “” all free. And Netflix charges as little as $8.99 a month for access to more than 100,000 DVDs and TV episodes, as well as 12,000 movies. “” Miriam Marcus
The Rip-off: Warranties cover everything from technical problems to spilling beer on the keyboard. They also empty your wallet in a hurry. Two-year coverage on a $350 Toshiba laptop from Best Buy goes for $280 “” a whopping 80% of the purchase price.
How To Avoid It: Check out third-party warranty providers, who often offer better coverage for a lot less. SquareTrade.com sells a three-year warranty (with all the same protection and reimbursement guarantees) on that same Toshiba laptop for $100. “” Melanie Lindner
The Rip-off: Upscale boxes, purchased by emotional families through funeral homes, can go for $20,000 “” a mark-up of up to four times cost. “People end up paying giant premiums that they don’t have to,” says Joseph Conzevoy, owner of ABC Caskets Factory in Los Angeles.
How To Avoid It: Plan ahead and buy direct. Make sure the funeral home doesn’t whack you with a penalty for going outside its supplier network. The savings can be huge: ABC Caskets’ Carved Mahogany model, which Conzevoy sells for $5,000, would fetch three times as much inside a funeral home showroom, he says. (While you’re at it, shop around for flowers, too.) “” Christopher Steiner
Movie Theater Snacks
The Rip-off: It’s a law of business that captive customers pay through the nose. Proof: At an AMC Lowe’s theater in Manhattan, a 5.3-ounce bag of peanut M&Ms sells for $4.25. That hurts more than just your teeth.
How To Avoid It: Buy your snacks at a drug store on your way to the theater and stow them in your purse (it’s not like anyone’s going to check it). Less than one block from that same theater a Rite Aid charges $2.99 for an 8.2-ounce bag of peanut M&Ms–that’s 55% more cand y for 30% less! “” Melanie Lindner
The Rip-Off: Thirty percent of American adults are obese. That’s one big pool of suckers looking for a way to remove inches with ease. Gadgets abound, costing $30 to $120. Some “ab belts” deliver an electric current that ostensibly shocks the wearer’s midsection into shape. (The implied message: kick back, drink beer and get ripped.) Never mind that there’s no proof these short cuts work. “That this stuff is a rip-off is pretty obvious,” says Laura Ries, an author and marketing consultant in Atlanta, Ga. “People want to believe, though.”
How To Avoid It: Stop watching infomercials and eating too much. Better yet, craft a weekly workout regimen (including three sessions of cardio and two of strength training) that you can do on your own. “” Christopher Steiner
The Rip-off: Sadly, we’re all fairly inured to this one by now. Say you have an account with Citibank and you pull out $50 from a Bank of America ATM. BofA will charge you $3 for that transaction, while Citi tags you with an additional $1.50 for using a competitor’s machine. Companies flirting with bankruptcy pay a far smaller cost of capital than you do!
How To Avoid It: Walk another 10 steps inside the bank, write yourself a check and cash it at the desk. “” Melanie Lindner