Here a Fee, There a Fee, Everywhere a Fee, Fee

But (headline aside), sometimes a big enough outcry can get the fee to go away.

I'll admit it: I hate fees. I hate getting nickel-and-dimed for every last little thing. I hate 'em because they're sneaky, and I hate 'em because they're almost always deeply regressive.

So when I read about the outcry about Verizon Wireless's proposed $2 fee (30 December New York Times story by Ron Lieber and Brian X. Chen, here) , I was quite pleased -- even though the vitriol seemed a little excessive.

After all, as the article pointed out, the fee would only apply "to people who make a one-time credit or debit card payment of their monthly bill on the phone or online. Subscribers who write checks or have the company charge their credit or debit cards or deduct from their bank accounts each month will not have to pay the new fee."

Part of the outrage came from Verizon's stunningly-stupid naming of the charge as a... (drum roll, please) ... "convenience fee"! Part of the outrage came from the general lack of real news in the Christmas-to-New Year's week. Part of the outrage came from the sense of victory from getting Bank of America to roll back its $5 monthly fee to customers who used debit cards. But a huge part of the outrage undoubtedly comes from the you're-holding-me-hostage-with-a-two-year-contract feeling that cellphone customers feel.

This is especially true if you think about who is most likely to make a "one-time credit or debit card payment of their monthly bill on the phone or online."

Is it going to be someone who's got $50,000 in the checking account? Or is it more likely to be someone living paycheck to paycheck, and worried that if she writes the check today, that most recent paycheck won't have cleared and the Verizon check will bounce?

“They are punishing people who need to wait until the last second,” said David O’Neill, who recently lost his job at a Borders bookstore that closed. He is a former Verizon Wireless customer but took to Twitter anyway on Thursday to argue that the company’s move helps the 1 percent get richer, since it rewards Verizon shareholders.

Lieber and Chen quoted a market analyst who said that "it made sense that Verizon was charging for over-the-phone payments, because carriers typically must pay a third-party service to handle those transactions. But Internet payments do not require a third party, he said." But, hello, what is Verizon Wireless anyway? A phone and Internet provider, right? So if anyone can handle over-the-phone or over-the-Internet transactions, it ought to be Verizon.

I keep coming back to the feeling of being a hostage to a Verizon contract as the real motivator for the vitriol. Yes, I know: if you really hate the hostage feeling that much, you can always pay real money for your cellphone, instead of getting it "free" or at substantially reduced price in exchange for the contract. (Full disclosure: I'm one of those tied-by-the-contract Verizon Wireless customers.)

Remember what I said about hating fees for their essentially regressive character? This is another example of that. People who can afford to pay the full cost of a smartphone can avoid the fee; at the lower end of the economic scale, you probably don't have a choice. Perhaps you're a recent college graduate, trying to pay off student loans, minimally furnish your first real apartment, and eat regularly, all while proving to your boss that you're really committed to this job that -- itself amazing enough -- you managed to land in a horrible job market, and so you need to be reachable at all times. You need that new phone. And you definitely can't afford to pay $300 up front for it.

All that said, Verizon did a terrible job of introducing the fee. It didn't make it immediately clear who would, and who wouldn't, be affected. It didn't explain why a fee was necessary in the first place. Even members of Verizon's own "consumer advisory panel" weren't informed of the fee ahead of time.

I'm delighted that it took Verizon only a day to recant their fee. But the Internet and Twitter outrage may have only been part of the reason for that decision. Today's New York Times reports, in an article by Ron Lieber, that "the Federal Communications Commission put out word earlier Friday that it thought the company’s actions merited closer scrutiny."

I hate fees; I love sharp-eyed regulators.

How "Fair" is "Fair Trade"?

What product is produced with the most forced or child labor in the world? If you said, "Gold"; you're right.

Number two? Cotton.

Because I believe that ethical business isn't just the responsibility of producers, but also of consumers, I look for the "fair trade" label on products I buy. Even if it makes that purchase a little more expensive, I'm happy to do that -- and to know that I'm blessed to be able to make that slightly more expensive purchase.

Fairtrade International, one of the groups that certifies products as "fair trade", points out that cotton prices worldwide have been in steady decline for several decades, falling this year to $0.92 per kilo, the lowest level in 30 years. Of how many other products can you say that? Significant government subsidies for cotton production in countries like the U.S. put extra downward pressure on the price (according to Fairtrade, US cotton producers receive $4.2 billion in government subsidies annually, which is equivalent to the value of their entire crop. Well over half of US cotton production is "dumped" on the world market, often priced below the costs of production, even though cotton production in Benin is less than half the cost in the US. Does anyone else have ethical problems with this?!?).

Cam Simpson at Bloomberg News reported Thursday on the exploitation of children in the production of organic and fair-trade cotton in Burkina Faso. The most depressing statement of all?

In Burkina Faso, where child labor is endemic to the production of its chief crop export, paying lucrative premiums for organic and fair-trade cotton has -- perversely -- created fresh incentives for exploitation. The program has attracted subsistence farmers who say they don’t have the resources to grow fair-trade cotton without forcing other people’s children into their fields -- violating a key principle of the movement.

Bloomberg's Simpson followed one young girl, 13-year-old Clarisse Kambire, who has been working in cotton fields for two years, digging rows by hand, and then harvesting the same way. Devastating photos and videos are available here.

Fairtrade International is reportedly starting a review of Burkina Faso policies, following the publication of the Bloomberg News article.

Until then, what's a responsible consumer to do? Unfortunately, there's no easy answer -- there's no way I can trace all the cotton in my favorite turtleneck back to its source to know whether children in West Africa planted and picked that cotton, or whether children in Sri Lanka or India spun the yarn, or operated the sewing machines in Indonesia that made the shirt.

That doesn't cut me loose from the responsibility of trying to find out, of pressuring the store from which I buy to provide that information, and to abide by the agreements that they sign.

A spokesperson for Victoria's Secret, the Columbus, OH-based lingerie company which purchased some cotton from Burkina Faso, told Bloomberg News, "Our standards specifically prohibit child labor. We are vigorously engaging with stakeholders to fully investigate this matter."

Those words are nice -- and important -- but the follow-up will be critical.

I will be keeping that in mind this week, as I rush around trying to find those perfect last-minute holiday gifts.

What's the Cost of Doing Business? What Should It Be?

A couple of stories in today's New York Times got me thinking about the "cost of doing business".

That's a phrase that gets tossed around a lot. Inventory "shrinkage" (a.k.a. theft, by shoplifters or employees) is often shrugged off as a "cost of doing business", whether the company is a mom-and-pop gift shop or a major retailer like Macy's.

A week ago, a federal judge blocked a proposed $285 million settlement between the SEC and Citigroup, terming the amount "pocket change" and noting that such a settlement was often viewed on Wall Street as a "cost of doing business" (click here for Edward Wyatt's 28 November New York Times article).

Now Bank of America's Merrill Lynch unit has come to an agreement to pay $315 million to settle claims that they misled investors about mortgage-backed securities (click here for the Times article, from the Associated Press). This is only the most recent claim settlement for BoA; the AP reported that "in the first half of the year alone, the bank put up $12.7 billion to settle similar claims from different groups of investors." Only potential roadblock here? The settlement must be approved by the same federal judge, Jed S. Rakoff, who struck down the Citigroup deal last week.

Also in today's paper, Sabrina Tavernise and Clifford Krauss reported that Alpha Natural Resources, now owners of Massey Energy, agreed to pay $209 million in civil and criminal penalties and restitution for charges stemming from the Upper Big Branch mine disaster last year that resulted in the death of 29 men. While some of the money (approximately $46.5 million) is earmarked for the families of the men who died, Alpha executives are protected from prosecution by the deal. Massey Energy executives, however, are not.

The problem is, "Under the federal mine act, safety violations, with the exception of falsifying records, are categorized as misdemeanors. That limitation could make it hard to build a case against senior [Massey] managers..."

I've written before about the inadequacy of mine safety protection; this is just further proof that some people view losing lives as merely "a cost of doing business".

Meanwhile, over at Olympus (previous blog posts on that debacle here, here, and here), it becomes clearer that "Olympus had persuaded several banks, including Société Générale of France, to submit incomplete financial statements to auditors, apparently in an effort to conceal financial maneuvers that the report says involved at least $1.7 billion and were meant to hide failed investments during the 1990s." (Full story by Hiroko Tabuchi and Keith Bradsher, here) While an independent report called Olympus management "rotten to the core", it found no evidence of organized crime involvment -- which could have led the stock to be delisted by the Tokyo Stock Exchange. So again ... just a "cost of doing business"?

Yes, accidents happen in every industry, and prudent corporate managers should build allowances for disasters and settlements into their budgets. But that's doesn't mean that people's lives should be destroyed -- financially or actually -- and that the only reaction is, "That's the cost of doing business."

I'm listening for the outpouring of outrage. Why aren't I hearing it?