A Newsvine Interview With Bob Sullivan, A MSNBC Blogger, Author of Gotcha Capitalism: How Hidden Fees Rip You Off Every Day And What You Can Do About It

This is the first of a two-part interview with Bob Sullivan, a writer/blogger for MSNBC

I need to start with a confession, a conflict of interest: The man I'm interviewing is the nicest boss I have ever had. He was my editor for a summer we worked together at Lake Havasu, Arizona. After work we'd go to a bar and shoot play and he'd sing. If I recall right he was a better singer and I was a better pool player.

After I left the newspaper and went on to work in Hemet, Ca, then Fayetteville, Ark., then Hagerstown, Md he moved his way up working for MSNBC, currently writing the popular twice-weekly Red Tape Chronicles

We were recently re-connected when MSNBC bought Newsvine and he noticed that I seem a bit prolific.

I could write a lengthy introduction about Bob and his new book, Gotcha Capitalism: How Hidden Fees Rip You Off Every Day And What You Can Do About It, but seeing as he was nice enough to write lengthy responses to my questions I'll just let his words do the talking.

For the second part of the interview I'll ask him more specific questions about the contents of his new book as well as follow-up questions on some of his answers below.

Scott: First, give me a little background. How did you get into journalism?

Bob: My college degree is in history, but that wasn't getting me anywhere. I also had a minor in English, the only writing-related degree my school offered. I loved to write, but I hated creative writing. When I tried to write science fiction, for example, I was terrible at thinking up names like Gorloc and Blexor. See, I still am. So I got a job at the local free town newspaper, and the first time I read a police report, I was hooked. I could write but I didn't have to make anything up! In fact, that was largely discouraged. I knew in about a week that I'd always be a journalist.

Scott: At some point – I think around the time I left the newspaper you were working at in Lake Havasu, Arizona – you made the switch from traditional to online journalism. Why did you made that switch?

Bob: I left Lake Havasu in 1994 after I'd been to a seminar at Arizona State where I saw my first computer-assisted journalism project – a study of parking tickets and neighborhoods in Phoenix. I left that seminar determined to learn how to use databases to get government agencies to tell the truth. It was obvious even back then that newspapers were in trouble – every paper I'd worked at had suffered layoffs while I was there, for which I take not blame.

It was clear that if I was going to be able to afford staying a journalist, I'd need some specialized skill. I found the University of Missouri's program to be a perfect fit, back in 1994. I still pursued database journalism, but on arrival there, I found the Digital Missourian and Prof. Brian Brooks and all the other trappings of online journalism and I was hooked.

While the establishment wasn't taking us very seriously at the time, it wasn't really all that risky a choice. All my fellow students were getting amazing job offers from places like America Online and Microsoft. We all thought newspapers would be dead in five years.

As with any hype cycle, we over-exaggerated the time it would take for our transformational technology to displace its predecessor. Old media giggled a bit at our admittedly sophomoric ways, and dot coms collapsed for a while, but we were really only off by a small factor of time. In the end, one thing seemed irresistible to me, and still does: It's all about the fact that it's free. All this free content makes online journalism the most compelling media in history, even if it might be the death of good journalism. We'll see.

Scott: What kind of journalism is your favorite to read? To write?

Bob: I don't mean to oversimplify, but anything that tells me something I don't know. I mean, really don't know. I don't mean clever analysis of Barak Obama's choice of tie in the debates. I mean something genuinely new about his health care policy; about a completely new way for a hacker to attack a computer; about a new shift in lifestyles that's sending young families back into urban living, reversing a decades-long trend towards suburbia.

I don't care if it's full of anecdotes or narrative or not. I actually feel like many anecdotal leads are forced, they have an obvious flavor of someone saying, "OK, this story on wild dogs stealing car batteries is good but can we find someone who's gone through this? Quick, send an e-mail around the newsroom to find someone with a friend of a friend who's actually HAD their car battery stolen by a pack of wild dogs and it really impacted their ability to get to work one day." Just tell me something I don't know.

Scott; Now, how did you get into your blog? Was it a topic you chose or was it assigned to you? How do you decide what you will blog about?

Bob: Actually, it's a product of Hurricane Katrina. I was sent down there like everybody else to cover the aftermath and find whatever stories I could find. The Red Tape was the second storm surge which hit those folks. The first story I found: computer glitches kept thousands of people from getting their expedited assistance checks. It was the usual folly – people with the same names or similar addresses had their requests denied. Others were simply lost because of poor data entry. Then all those folks had trouble getting other FEMA aid, too. It was a nightmare.

Next, I wrote about the effect Katrina would have on their credit score. With each story, I was slammed with e-mail from readers outside the Katrina zone citing other, similar frustrations. We set up a blog quickly, mainly because I wanted all these frustrated people to have a place they could tell their story publicly. The sheer volume of people complaining about FEMA assistance checks (more than 2,000) is by itself an impressive body of work that warrants attention. I just have to write the "top" of the story. That formula has worked ever since.

When I write about bank overdraft fees or credit card Gotchas or a new product called MedFICO that will determine patients' ability to pay hospital bills, and thousands of people submit their opinions, it's a great way to draw attention to a problem. At least, people are heard. But often, readers suggest solutions to each other, which is what makes my blog great. It's not me, it's the quality of the comments I receive, thanks a bit to my editing but mostly to MSNBC.com's large audience.

Scott: If I read this book will I be able to get rid of those annoying bank ATM fees?

Bob: Some of them yes. But I won't tell you how, you'll have to read the book. OK I'll tell you, that sounds too much like a hidden fee. The average ATM user spends about $100 a year to get their money. It's all wasted. Just join a credit union that refunds all ATM fees. Really, credit unions are fine!

Scott: How much traffic and feedback does the blog get? What's it like to appear on television shows to deal with issues raised on the blog?

Bob: I often get a half-million readers for single blog entries. I've had 60,000 comments left on the blog, and a couple of times, have had more than 1,000 comments on a single entry. I know it's not all about volume, but I think folks might be surprised at how clever most of those 60,000 comments are.

Scott: What is the history of "hidden fees"? Ah, now you've pushed my button.
There are several seminal moments in the history of hidden fees. You probably won't be surprised to hear that banks have led the way as the inventor of creative revenue enhancement. Two important moments come to mind. First, the day that South Dakota became the banking capital of the free world. And second, the day a Chicago bank discovered that pissing off customers – rather than satisfying customers – is good business.

Huh?

South Dakota. On Dec. 18, 1978, while most people were scurrying for last-minute Christmas gifts, the U.S. Supreme Court gave the credit card industry the best present of all – absolution from state usury laws. Why can credit card companies charge 33 percent interest? Because of a little-known but incredibly important Supreme Court ruling that was extremely favorable to credit card companies. Of course, the Supremes couldn't simply declare state laws invalid, so they did the next best thing. They allowed banks to choose which state laws they needed to abide by.

When it comes to usury laws, it doesn't matter where you live – banks only have to follow the law where *they* live. So in one fell swoop, banks convinced South Dakota to pass the nation's most lenient lending laws, then moved all their credit card headquarters there. Later, Delaware got in on the game and also passed permissive laws, stealing some of South Dakota's market share. But in the end, it means your state laws, and your state officials, are both powerless to protect you from credit card predation.

That story has one post script. In 1996, the Supremes extended this logic to include penalty fees like late fees or over-limit fees. Now, no statehouse can declare these bank practices unfair. Consumer hunting season was wide open.

At about that same time, First National Bank of Chicago was learning a valuable lesson that will forever more be taught to budding young CEOs at Harvard Business School. In 1995, it started to charge consumers for the right to talk with tellers. Most folks thought this crazy. It became the butt of late-night TV talk show hosts. Jay Leno's punch line at the time: "For $3 you can talk to a human teller, and for $4, they'll talk dirty to you.' Analysts predicted the bank would lose market share to competitors.

And yet, a year later, a funny thing happened: The banks per-customer profitability had soared. Consumers did leave, but only the annoying ones with small balances who bothered tellers too much – the unprofitable consumers. The rest willingly went to ATMs. An important business lesson was learned concerning what's now known as the myth of consumer loyalty. By now you know the mantra that the customer is always right is long dead; replaced by this: The customer is always ripe.

I might add one more element to the history of hidden fees – computers. In many ways, technology is the key ingredient to the hidden fee economy. Sophisticated databases are now used to track us and understand precisely how many pennies can be squeezed from our wallets before we'll balk. There's even been experiments run by companies like Amazon in which each consumer is charged a different price based on their buying habits! The more a consumer wants a item, based on a database profile, the more they are charged.

And not to be overlooked, the advent of sophisticated printing techniques have allowed marketers to make fine print so small that it is unreadable. Meanwhile, asterisks have become so common they are practically the 27th letter of the alphabet. Against these techniques, consumers don't stand a chance.

Hidden fees have flourished largely because laws governing false advertising aren't enforced. I challenge anyone signing up for cable television service today to tell me what their bill will be one year from now. It's just too easy for companies to lie; there is virtually no downside. The history of hidden fees is really the history of enforcement of consumer protection laws; which has faded since 1980. Federal agencies like the Federal Trade Commission, Food and Drug Administration, and Consumer Protection Safety Administration, all have fewer than half the employees then did in thee 1970s. All this, while international trade has flourished and the country has grown about 40 percent in population. I describe much more about the collapse of consumer protection agencies in the book.

Scott: What do you mean by the term "gotcha capitalism"?Scott:What made you decide to write a book? What was your goal with the book? Did you accomplish it? Well, all of this breaks my heart. Each time I get an e-mail from a consumer who's been had by a company, who's now tangled up in Red Tape and about to give up on the concept of fairness, I ache. And of course, each month when I open my own bills and scan through my statements, my own blood pressure rises. I know millions of other Americans feel the same way.

But I also know it doesn't have to be this way. There are hundreds of laws that protect consumers. Evoking these at the right time often brings swift justice. There are also excellent negotiating tactics that often get people refunds and fairness. Through 10 years of chasing down these strategies for MSNBC.com users, I've learned a lot about what works and what doesn't. And I want everyone in American to know what their rights are. I wrote this book to give people fighting chance in an economy that increasingly is built to cheat them.

But I want more than that. Since the late 1970s and Ralph Nader's heyday, America's federal consumer protection agencies have slowly been castrated. Where are the product safety rules? The food inspections? How about Truth in Advertising laws? Anyone who watches late-night television or listens to mortgage advertisements has to wonder when lying on TV was quietly made legal. Under the misleading disguise of de-regulation, both Congress and the White House, both Republicans and Democrats, have turned large sections of our government over to major corporations, inviting them to have our way with us.

Today, the state of consumer protection in America is abysmal. Most people think they have nowhere to turn when they feel cheated. It's time that changed. It's time for consumers to demand more from their elected officials. And it's time Washington stopped abdicating its responsibility to make sure America's marketplaces are fair for all. How many more mortgage scandals will we endure before things finally change? I wrote this book hoping to be a small part of a large movement that helps bring about real change in the way America does business.

Before I leave the subject, let me offer up one more motivation. I am a product of the Internet boom. By some grand coincidence, my career tracked the explosion of the Web with perfect timing. In 1993, I was editor of the 9,000-circulation Lake Havasu City Herald in the Arizona hinterlands, not really getting very far in the competitive world of newspapers. I went to the University of Missouri for graduate school, mostly to check out the layoff-laden industry. While there, I discovered e-mail.

I worked on what might be the first Web-based newspaper (certainly one of the first, the school's precocious "Digital Missourian.") Within a year, me and about 10 of my fellow students were scooped up my Microsoft to start an online newsroom at the software giant. I was the third employee on the project.

Hardly a year later, Bill Gates and Tom Brokaw shook hands to create MSNBC, and I was suddenly working for one of the world's largest newsgathering operations, NBC News. But I was a grunt, hired because I could build Web pages. I was nearly the youngest person on staff. I had fooled the company into hiring me as the compulsory Internet whiz kid, which I was not. But I know more HTML than the former Wall Street Journal and Newsweek reporters who surrounded me, so they let me stay.

At the time, in 1996, when eBay was just launching, Amazon sold only books, and Yahoo was not yet a public company, business leaders began to fret. What if the Web really empowered consumers to perform instant, worldwide price comparisons? Entrepreneurs were already building search engines that would let shoppers instantly see prices at dozens of bookstores, for example. Think that through, and no store would ever be able to overcharge again. Consumers could always get the best price. This flat-pricing meant everything would become a commodity. This was a capitalist's worst nightmare.

At the time, I was a bright-eyed, naïve, Web-head who still shuddered with glee every time I found another long-long friend's e-mail address. The Web will completely shrink the world, I thought. No one ever need be lonely anymore. No shopper need to accept unfair treatment anymore. No student need go without a book he or she needs. Information was finally free. The Internet would solve all our problems, I believed.

I've grown and greyed since then. We all now know the Web's dark side is pretty dark. Child predators, porn additions, computer viruses, and identity thieves, lurk in all its dark corners.

Also in those dark corners: Gotcha Capitalists. Knowing that flat pricing meant the scales were tipping in favor of consumers, business owners developed a counter-attack: lie about price. By distorting the true cost of things through surcharges, fees, shipping charges, and misleading advertising, capitalists quickly wrested control of the Web from consumers. Flat pricing was no longer a threat if the prices were fake. Meanwhile, the capitalists also learned how to use sophisticated databases to ever more finely target their prey. Advantage: Companies.

I just couldn't stand for that. My beautiful Internet, seemingly now controlled entirely by the dark side. So I had to do something. There isn't much I can do about child predators, virus writers, or husbands who surf for porn, but I can do something about corporate shenanigans. And so can readers.

I began the Red Tape Chronicles, and wrote this book, in an attempt to tip the scales bank towards consumers. Make no mistake; this is an information war, and right now, you are losing. But not for long. By giving you the information you need to make rational consumer decisions, you can once again reward honest companies and shun cheaters.

But I'm only one person; the collective power of angry consumers is a much more formidable force. At the Red Tape Chronicles, I invite readers every week to share their tips at out-foxing foxy companies. At MSNBC.com, we're constantly inventing new ways for readers to participate in the news. And readers are constantly sharing ways to stay one step ahead in the cat-and-mouse game that is business. I want to give them the right forum and focus to be as effective as possible.

So, in a sense, I wrote the book in an effort to save the Internet from the dark side. And to encourage a rescue effort for our beloved free market system while we're at it.

It's far too early to tell if I've had any impact. I know based on early sales and media reaction that it's hit a nerve. I hit the NY Times Best Seller list within two weeks, something I wouldn't have dared to imagine. Will this cause lasting change? Only time will tell.

Scott: Do you plan to write another book? You wrote one before this too, right?

Bob: My first book, Your Evil Twin: Behind the Identity Theft Epidemic, enjoyed, ahem, critical acclaim (that means no one bought it). But I still think it's a good book. It's really an expose on the credit industry and how it basically created identity theft and now tolerates it as a simple cost of doing business.

I've got several book ideas kicking around; none are finalized. But I think there is endless need to educate consumers on their rights, so that's one project I'll likely undertake soon. I'm also looking into ways consumers can more quickly identify salespeople and other company agents who are deceptive. And the challenging, multi-faceted topic of privacy fascinates me as well.

Thanks to Bob for doing this interview. Part two will come in a few weeks, after I finish the book, ask Bob more questions and he provides answers

Back To Top