Economists call them "market inefficiencies" — those thrilling or frustrating moments (depending on your point of view) when the price of something veers from its underlying, inherent value. In that world — the one in which we all live, eat, shop, drive and pay bills — they're called rip-offs. We're not talking fraud here (though there's plenty of that going around, too). We're talking about all the ways, within the law, that humans allow themselves to be taken for a ride.
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The Rip-off: All you want is basic cable, but your cable company wants you to have so much more — and pay for it, of course. That's why it bundles in a whole mess of channels, including dozens that even the most feckless of couch potatoes won't watch, including foreign-language channels, background-music channels and niche stuff like Speed (an ode to all things fast). Time Warner Cable charges a minimum $67.50 a month for a "value package" with 350 channels (HBO and Showtime cost another $14.95 each). Comcast isn't much better: Its basic package includes 98 channels for $62.40.
How To Avoid It: Cue up network Web sites and watch for free. Hulu.com offers thousands of videos, TV episodes (new and old) and full-length movies — all free. And Netflix charges as little as $8.99 a month for access to more than 100,000 DVDs and TV episodes, as well as 12,000 movies. — Miriam Marcus
The Rip-off: Warranties cover everything from technical problems to spilling beer on the keyboard. They also empty your wallet in a hurry. Two-year coverage on a $350 Toshiba laptop from Best Buy goes for $280 — a whopping 80% of the purchase price.
How To Avoid It: Check out third-party warranty providers, who often offer better coverage for a lot less. SquareTrade.com sells a three-year warranty (with all the same protection and reimbursement guarantees) on that same Toshiba laptop for $100. — Melanie Lindner
The Rip-off: Upscale boxes, purchased by emotional families through funeral homes, can go for $20,000 — a mark-up of up to four times cost. "People end up paying giant premiums that they don't have to," says Joseph Conzevoy, owner of ABC Caskets Factory in Los Angeles.
How To Avoid It: Plan ahead and buy direct. Make sure the funeral home doesn't whack you with a penalty for going outside its supplier network. The savings can be huge: ABC Caskets' Carved Mahogany model, which Conzevoy sells for $5,000, would fetch three times as much inside a funeral home showroom, he says. (While you're at it, shop around for flowers, too.) — Christopher Steiner
Movie Theater Snacks
The Rip-off: It's a law of business that captive customers pay through the nose. Proof: At an AMC Lowe's theater in Manhattan, a 5.3-ounce bag of peanut M&Ms sells for $4.25. That hurts more than just your teeth.
How To Avoid It: Buy your snacks at a drug store on your way to the theater and stow them in your purse (it's not like anyone's going to check it). Less than one block from that same theater a Rite Aid charges $2.99 for an 8.2-ounce bag of peanut M&Ms--that's 55% more candy for 30% less! — Melanie Lindner
The Rip-Off: Thirty percent of American adults are obese. That's one big pool of suckers looking for a way to remove inches with ease. Gadgets abound, costing $30 to $120. Some "ab belts" deliver an electric current that ostensibly shocks the wearer's midsection into shape. (The implied message: kick back, drink beer and get ripped.) Never mind that there's no proof these short cuts work. "That this stuff is a rip-off is pretty obvious," says Laura Ries, an author and marketing consultant in Atlanta, Ga. "People want to believe, though."
How To Avoid It: Stop watching infomercials and eating too much. Better yet, craft a weekly workout regimen (including three sessions of cardio and two of strength training) that you can do on your own. — Christopher Steiner
The Rip-off: Sadly, we're all fairly inured to this one by now. Say you have an account with Citibank and you pull out $50 from a Bank of America ATM. BofA will charge you $3 for that transaction, while Citi tags you with an additional $1.50 for using a competitor's machine. Companies flirting with bankruptcy pay a far smaller cost of capital than you do!
How To Avoid It: Walk another 10 steps inside the bank, write yourself a check and cash it at the desk. — Melanie Lindner