Posts Tagged ‘Cell Phones’

Predatory Business – Payment Plans

July 26, 2010

So a while back, I wrote a bit about how business practices coincided with other vulnerability exploitation approaches. I’ve decided to point out a good case study: Cell phone payment plans.

Really, this applies to any industry in which you’re given the choice of payment option before you receive the product, and particularly before you know what product you even want, but cell phones work particularly well as an example because they function on a sophisticated network governed by computers.

Billing is fairly easy to integrate into cell phone infrastructure – so easy that some companies can update your billing information very quickly, during use of the service. It would be trivial for such a company to have a universal payment plan which charged a small rate for each minute/text/photo/gigabyte of bandwidth/etc, or a universal payment plan which charged a monthly rate for unlimited use of services.

Instead, consumers are faced with a large array of wholly unnecessary choices for varying plans – for what purpose? Well, since we know businesses don’t exactly operate out of the goodness of their hearts, I think it’s safe to conclude that the cell phone companies are making money off of this setup somehow.

I would hypothesize the profitability of such plans come from two sources:

The illusion of choice: By offering options, even if they aren’t meaningful options, a cell phone company can make claims to superior service, particularly superior customer service… which is particularly ironic considering that the second source of revenue from such plans is…
High penalty fees: By offering options to people based on their needs before they make use of the product, cell phone companies can extort extra money from people whenever their needs change.

Here we can contemplate the mindset that produces and tolerates such business practices – practices which functionally predate upon consumers to score extra money, rather than endeavoring to make additional profit through providing a superior service (which, if you listen to an economist, is supposedly how capitalism works).

The mindset that produces such business practices is, obviously, the for-profit business mindset. The idea that the shareholders need to receive their cut of profit and that businesses shouldn’t let piddling concepts like ethics or decency get in the way – an idea that dominates much of America’s economy.

I’m probably more interested in the mindset that has us tolerate such practices and continue to do business with companies that use them. You’d think it’d be insulting for a company to treat us like prey rather than people, and yet we as a people don’t seem to care.

I think, instead, that what’s going on in our society is a widespread application of ‘just-world’ justification – where we find ourselves subconsciously permitting and even forgiving the misdeeds of others – in this case, the exploitative pricing strategies of cell phone companies – by blaming the victims of such predation. “So he’s stuck with a three-year contract for a phone that won’t work in his house?” someone might say, “He should’ve done more research into if his phone would work.” – thus blaming the victim for a problem generated not at all by the victim, but by the predatory contract.

This is not to say that there isn’t something we can each of us do to avoid becoming a victim – just that we’re doing the wrong thing as a culture at the moment. If we each try to play their game, letting them attempt to predate upon us and feeling good about ourselves when we get lucky (because it’s not a person’s fault if, for instance, their circumstances change and they need a different service than in the plan they’re contracted for), then we all remain prey.

I would propose that the way to escape being prey is to stop tolerating corporate predation altogether – if your cell phone company offers unnecessarily complex plans and contracts designed to scam people, don’t do business with them at all. People who prey on others should not be rewarded, even by people who aren’t suffering at their hands at the moment.