Companies That Rip You Off
From overpriced products to extortionate fees and crazy marketing, here are some companies that rip you off the most!Money
At some stage, we’ve all been ripped off after purchasing something. While some companies are just trying to make a profit, other companies morph their ambition into flat-out greed you might not be aware of. Here’s a shocking list of companies that rip you off the most.
10. De Beers
The controversial De Beers company is behind the extortionate prices of diamonds. You may not know, but before the 1930s no one gave diamond engagement rings. In fact, gem-quality diamonds aren’t even that rare. It was only until DeBeers came up with their famous marketing program that the trend started.
They convinced people the more money that’s spent on a diamond engagement ring, the more you love your spouse. Even today people, on average, are spending $3,000 on an engagement ring that should be a fraction of that cost.
The De Beers company has monopolized the diamond industry through governmental deals, holding back the supply of diamonds like a cartel to fix the price of diamonds. In fact, they were even fined for price fixing by an Ohio court in 2004 over such accusations.
Without their manipulation, the market would be flooded with cheaper diamonds that would be relatively affordable. Not only that, De Beers has been accused of instigating Blood Diamonds, or conflict diamonds. These are diamonds mined from slavery or any form of aggressive means.
But If you’re looking for a diamond that’s conflict-free, there’s not much hope unless you opt for a lab-grown one. You may have heard of the company Brilliant Earth which claimed to track their diamonds from the Canadian diamond mine to you. Brilliant Earth makes the claim that no harm comes to anyone on the way.
However, the internet news outlet, The Next Web, released an investigative article on Brilliant Earth. They claimed that a lot of the information Brilliant Earth provided was falsified. These claims were supported by a YouTube video from diamond insider Jacob Worth, which has since been taken down.
Brilliant Earth did file a lawsuit against the allegations and the case was settled in 2017. Overall, the diamond business is a shady one.
9. Bottled Water Companies
The United States goes through a massive 50 billion water bottles per year costing around $100 billion. Taking into account that the vast majority of US households have access to clean tap water, why are they splashing the cash on the bottles?
Jackon’s Spa, Boston, was the first recorded place to sell bottled water in the US in 1767. It was marketed as having “therapeutic properties”. It seems that belief has wormed its way into people’s perceptions since, even though tap and bottled water is virtually identical unless you live somewhere problematic like Flint, Michigan.
A 2017 poll from Gallup helps explain why we’re flocking to tap water. It found out that 63% of Americans were “worried a great deal about pollution of drinking water” from the taps.
This belief that bottled water is healthy, and tap water is somehow dangerous, has unfortunately meant that we’re getting ripped off whenever we purchase a bottle of water. In fact, bottled water is 2000 times the cost of tap water! And most of the time, it's tap water anyway.
Dasani, for instance, is just tap water from local municipal water supplies that’s just filtered and bottled. You’d be better off bottling your own water at home, it will be around 2000 times cheaper!
8. Pharmaceutical Companies
Making medicines is expensive. You invest lots of money into research and development without a guarantee you’ll find anything of value. That’s why pharmaceutical companies should be able to charge lots of money for drugs that are relatively inexpensive to make. But some take it too far with price hiking.
Take the case of Daraprim, an antiparasitic drug, as an example. In 2015, Martin Shkreli, the CEO of Turing Pharmaceuticals, purchased the license to the medicine Daraprim, which is also known as Pyrimethamine.
Shkreli’s company drastically raised the price of each pill by over 5000% from $13.50 to $750, making it unaffordable to most patients. Shkreli stated that the profits from the price hike will go to their Research and Development, and if someone can’t pay, he said he’d practically give it to them.
These claims have since been disputed, but he isn’t the only one doing this as many pharmaceutical companies do the same thing. It just proves that without some tougher regulations, pharmaceutical companies will continue to extort insurers, and ultimately consumers, with drugs they’re being held ransom by.
While we have to accept the prices of branded drugs that are patented, there comes a time when the patent runs out, and competition swamps the market with generic drugs. To keep the money rolling in, big pharma has found ways to continually rip you off. They’ll slightly alter the product before the patent expires, but not enough to require new clinical trials for FDA approval, but just enough to preserve its exclusive patent-protected status.
This way people keep requesting the drug they’re used to, even though alternatives exist. This happened with the Alzheimer’s drug Namenda IR, which was replaced by Namenda XR which costs more than double that of its generic alternative post-patent.
7. Car Hire Companies
There are a number of ways car hire companies rip us off. The consumer website "Which" found that customers are regularly billed for repairs, that they insist they didn’t cause, from car-hires companies they used abroad. To protect yourself from these false claims, you should take pictures or videos of the car's condition prior to hiring it.
As well as that, the fees for the repair are often massively inflated. For example, they found one customer was charged an exuberant £1,154 ($1510) for a window chip that should have cost around £78 ($103) to fix.
Car hire firms may even slyly add in extra charges also. One way this is done is by claiming the car you pre-booked is unavailable when you go to pick it up. But you can get an upgraded car for a price. Consumer sites suggest to stand firm that you should be given the upgraded car for the same price.
Not only that, but also buried in the terms and conditions may be some further hidden charges. One in particular is in relation to fuel, known as a “full-to-empty” policy.
You’ll be paying a hugely inflated price to have fuel in the car when you collect, but you’ll also need to return the car with the agreed amount of fuel. If you don’t, you can expect a heavy charge added to your bill. So next time you hire a vehicle, make sure to read the fine print and carefully record the vehicle's condition!
6. Travel Websites
When you buy flights or book hotels online, you’re almost certainly not paying the same price as everyone else. That means it's highly likely you’re being ripped off.
Companies use browser cookies and a variety of other information they’ve gleaned from your computer to learn about your spending habits and willingness to shop around for lower prices. Using this information, they’ll offer you different, personalized prices for the same flight.
In rare cases, you may be offered a lower-than-usual price, but often it’s the other way around, and you end up paying more. To check for the lowest deal you can use another device to check, and clear your browser cookies to find out the original price.
This tactic is used by most online retailers, but research published by North-eastern University confirmed that travel sites show price inconsistencies in a higher percentage of cases. One travel company, Orbitz was even found to be pointing Mac users towards higher-priced hotel rooms than PC users.
5. Printer Companies
Printer ink can cost $13 to $75 per ounce. That’s at least three times more expensive than Dom Perignon champagne at around $5 per ounce! With those prices, you’d expect to get a lot of use from that inky liquid. But that’s not the case.
Consumer Report tested hundreds of all-in-one inkjet printers and discovered that, in intermittent use, most of them used less than half the actual ink in the cartridge for printing. The rest is wasted on printer maintenance such as running maintenance cycles to clean printer heads when the printer is starting up after sitting idle for a while.
One idea to save money is to use third-party ink cartridges. They tend to be less than half the price of genuine cartridges.
However, HP doesn’t like the idea. In 2016, HP printers were found to display a message on the printer after a certain amount of time if third-party cartridges were used, stating the printer is damaged and can’t be used. HP felt that third-party ink was infringing on their intellectual property.
This forced consumers to fork out for another printer or get HP created ink. HP later reversed its action after the backlash but only after disappointing thousands of customers.
HP claims the higher prices on their cartridges help them invest a lot of money into research in development. But still, how can ink really cost more than one of the world’s most expensive champagne brands?
4. Funeral Companies
The funeral industry exploits grief for profit. The average funeral costs around $8,000 but you could easily have one for a fraction of that cost if these exploitative dynamics didn’t exist. First up, there’s the expensive, useless process of embalming which is rarely compulsory by law but costs hundreds of dollars.
Have you ever thought about why you need to be preserved before being buried underground? You don’t! Funeral companies might sell it to you as a way to give ‘’dignity to the deceased’ or required to keep the body safe and sanitary, but it's really just a pointless waste of time.
Refrigeration is cheaper and just as effective as embalming. The WHO reports dead bodies pose almost no health risks to the living but ironically formaldehyde, which is used during the embalming process, isn’t safe; it’s a carcinogen.
On top of that, your love for the deceased may be tested by the funeral homes up-selling tactics. Their ‘’casket room’’ will be filled with overpriced caskets, while the cheaper ones are hidden to encourage you to spend.
They can cost upwards of $10,000 which is pointless when you think about it, since its just going to be buried under ground. You’re better off buying one online from places like Walmart for 1/10th the cost.
And that mom & pop funeral shop you think you’re supporting is most likely owned by a mega-business called SCI that bought the local company but kept the old name so no one noticed.
What’s disturbing is that because they own thousands of funeral homes all around the world, they practically have a monopoly over the industry in most areas giving them significant pricing power to rip you off.
3. Chip Companies
The tasty potato chip was introduced in 1882 in William Kitchiner’s recipe book. Since then it’s become one of the most popular snacks in the US. So much so that $7.1 billion was spent on the treat in 2009. But we may be purchasing more air, than chips.
Analysis by CDA Appliances revealed some chip packages range from 18% air with Wotsits, to 72% of air from Popchips’ barbecue flavor! These companies justify the air as being used as a cushion to protect the chips in transport but it's more likely just to increase profits by decreasing the amount of product sold.
We’re terrible at accurately perceiving size, so even the most discerning shoppers among us will automatically assume that larger packaging means more product if they don’t look too closely at the label.
2. Sneaker Companies
You’ve saved up your money to buy some Nike sneakers for $100. But, how do you feel to know that it costs Nike roughly $28.50 to make them? Well, that’s what the research from Matthew Kish of the Portland Business Journal estimated.
It’s been reported that the Air Jordans, one of the most desirable sneaker brands, costs Nike around $16 to make in China, and then the shoes are sold from anything between $250 to $550!
While the price must be inflated to account for retailed costs, it's understandable why people think these shoes are a rip-off when compared to their raw production costs. But they aren’t the only rip-off shoe brand.
Adidas Yeezys are also made in China and cost $76 to produce, yet they are sold for $350. Of course, marketing, research, and development costs all need to be taken into account, but ask yourself if you really think they’re worth it before buying.
Beats headphones were bought by Apple in 2014, which may come as no surprise. Apple products are so expensive android users continually claim they’re a rip-off because they retail for more than double the value of their production cost.
Is the money going into their research and development? No, in fact only 3.5% of their income in 2015 went into R&D. Facebook, on the other hand, spent 21%. Must be a great Christmas party they have at Apple.
But Beats Electronics, with its headphone brand, Beats By Dre, may be the biggest Apple rip-off of all. These amazingly marketed headphones can set you back $350. But according to the New York Times, headphone designers estimate the fancy headset costs as low as $14 to actually make.
We’ll never know exactly how much they cost to make, but going by reviews from audio fanatics, it likely isn’t more than other headphones. Their popular Studio3 model was rated with a 7.1 sound score by a comprehensive list of headphone reviews by Rtings.
Alternative headphones with a higher sound score, like the ones made by JBL cost a third of the price. Even so, beats take up over 46% of the U.S. wireless headphone market in terms of dollar sales.
The reason Beats are so popular is down to celebrity endorsements, and not sound quality. They’ve regularly been trashed by competitors in quality rankings. So unless you’re happy to pay the huge markup for those celebrity endorsements, their products aren’t worth your money.
You have been warned. I hope you think twice before giving your money to these companies that rip you off. Thanks for reading.