Did you hear the “Gotcha Capitalism” book author Bob Sullivan do a Fresh Air program interview on KQED radio?

He has written a book about the blizzard of mickey mouse charges and fees that are common on credit card, cell phone, subprime real estate loans, rental car invoices and hotel checkout bills and payday loan businesses.

The thing that has bothered me about all these charges is I simply can’t see a way to write enough business regulations to stop these exploitative processes.

Well i thought of an approach to use that would lend itself to a clean regulatory approach.

Consider all the charges coming from businesses involved in handling money. The basic business transaction involves a commodity “money” that has an established time and interest rate. Wrapped around the basic “money” is services, like a credit card or a storefront office.

Well, suppose all the charges associated with a financial service were capped at a ratio of the basic commodity.

For communications like cell phones, establish a commodity price and cap the service charges at a multiple of the commodity price.

Suppose cell phone service was billed in two parts: the commodity of bandwidth used, and whatever other charges there are, those services capped at a ratio of the basic commodity.

So a capping approach would put a ceiling on the artfully structured multi-year cell phone contract that costs you $117 a month for 60 phone calls.

You’re right that the regulatory approach is limited.

I heard the conversation as well and was disappointed because it was typical newspaper consumer-reporting stuff with no historical context. His solutions have more to do with individual action than government action. That’s OK as far as it goes, but it doesn’t stop the practice and as he acknowledged there is no good way to answer the questions posed by these practices.

A lot of the abuses described are because of specific regulatory permissions. For example, car rental agencies and telephone companies have been given specific regulatory approval to list “taxes” and “government fees” separately, even though many of these taxes are fees are overhead and not transaction dependent. I rented a car once where auto registration and license plate fees were quoted separately.  There’s a lot of this nonsense in phone bills as well.

Another major class of abuse is bundling. Cell phone plans and cable bundles are good examples of this. I think he did a pretty good job of laying out the problem. I know the FCC is considering a la carte cable, but the truth is that we can’t expect them to do a good job of it.