Are consumers "potential suckers to be exploited"?

The no-frills, low-margin online business model is pushing businesses into finding new ways of making money. But should all consumers be considered as “potential suckers to be exploited”?

A middle ground should be the place in a combination of service, quality and price.
The web allows reduced overheads and we can pass this along to our buyers and staff.

As the internet makes price comparisons even easier – and drives down prices – businesses that refuse to change will be in trouble. Any consumer sector that charges more than it needs to for basic services faces the threat of a cheaper entrant stealing a major market share.

Now a new scam is showing up with a simple 'bait & switch' tactic which means every customer is seen as someone who can and should be pushed into paying for additional things above the basic offer.


Being treated like a stranger in town so being taken around the houses in a taxi and the fare ramping up does not make us feel that good service is taking place! Would you tip the driver? NO! Will you refer others? NO! Will you get back in the same cab? NO! So why should we allow this in sales and that is online or off line.

It might be fine when we are talking about add-on luxuries that people choose to buy, but the problem comes when the goal is to exploit customers’ vulnerability to make a fast buck.”

Using the example of overpriced extended warranties on electrical goods I don’t suppose anyone wants to abandon the benefits of competitive markets, but something is lost in society when those who work in the service sector are encouraged to see customers not as people to please and help, but as punters to be exploited.

Easy Jet has helped transform the consumer market place for air travel. Its approach has brought flying within reach of millions more people and it has forced other airlines to be more competitive. As the internet makes price comparisons ever easier, any consumer sector that is charging more than it needs to for its basic services faces the threat of a cheaper entrant stealing a major market share. This is the good news. The bad is this: no frills, low margin models encourage businesses to explore other ways of making money from their customers. This is where all the hidden extras come in.

I hear every day similar experiences of trapped customers being fleeced when they need some assistance or make a mistake like going slightly overdrawn for a few days or the hard sell pressure put on people buying electrical goods with overpriced extended warranties.

In the end this is simply shifting profit from one activity – the basic service – to another – the add-ons and hidden charges.

Be a canny consumer avoid most of these ways that make you pay above the minimum.
If it is an add-say NO!!

Could Postman Pat make a great banking alternative?

Mandy (Business Secretary Lord Mandelson) today announced a major expansion of the financial services offered by the Post Office.

A great way to make the high street bank worki is to create a competitor into the heart of communities and saving the famous Post Office network of 11,500 branches.

With over 11,500 branches nationwide, the Post Office is the largest retail and financial services chain in the UK. Its network is larger than all of the banks in the UK combined!

“Since the global banking crisis we have set about reinventing the financial services industry piece-by-piece, building a system that is fairer, trusted and more responsible.

“Today is the next step in that process. The Post Office is a well-loved community institution and this move will bring more banking services back to the heart of those communities.”

Lord Mandelson Business Secretary

”The Post Office can provide a range of good value, simple financial products for everyone. These are the clear messages that people have given us and we are acting on them – a major step towards making the Post Office a sustainable neighbourhood banking service.”

The measures announced by the Government mark a step change in banking at the Post Office and demonstrate the Government’s ongoing commitment to the Post Office network.

Pat McFadden Business Minister

It looks though the big banks will in real effect be franchising banking services through the post office network

• Weekly budgeting account - An account which would help people on low incomes manage their household budgets, save money by taking advantage of the discounts for using direct debit to pay their utility bills and which would be available through the Post Office. The Government is already working with the Post Office and utility companies to make this account a reality as quickly as possible.
• Children’s Savings Account - the Post Office will launch a Post Office Children’s Savings Account in the next twelve months, encouraging children to save through visits to their local Post Office.
• Post Office Current Account - the Post Office will launch its own current account that will be accessible from any Post Office in the country.
• Access to accounts from other banks - detailed negotiations are taking place with RBS and Santander to give access to their current accounts - this would mean that around 86% of current accounts would be accessible at Post Offices.
• Business services - a new agreement between the Post Office and Santander will allow all its business account holders to access their accounts at the Post Office. The Post Office will also explore the development of a Post Office business bank account, which would be available throughout the network. Additionally, following responses made to this consultation, the Post Office and the Regional Development Agencies will explore how they can best work together to serve small and medium enterprises in each region.
• Mortgages - the Post Office will offer a new mortgage product with a 90% loan-to-value ratio aimed at first-time buyers. The Post Office will also increase its lending substantially, aiming to double the value of its mortgage book in the financial year 2010/11.

· Increasing affordable credit - plans to support a national distribution network with credit unions, reflecting the natural partnership with the Post Office, through a proposed levy on retail banks. This will ensure that credit union savings, loans and current accounts can be accessed anywhere in the country.

· Saving Gateway – the Post Office will launch a Saving Gateway account this year. This is a new account for people of working age who are on lower incomes which aims to kick-start the savings habit, with Government adding 50p for every £1 saved.

“Paying bills by direct debit often means a discount on bills of nearly £100 a year. This new account will mean some of the consumers who have to pay higher fuel bills can benefit from that discount and manage their energy bills better. We will continue to work with companies and consumers to ensure energy bills are as low and as fair as possible for everyone.”

Ed Miliband

At the Budget, the Government also said (as if they would or could enforce it) that all retail banks will be placed under an obligation to provide a universal service, with a legal requirement to offer a basic bank account to (we can all get bank accounts anyway) everyone who needs one, and has a valid address. I say the Government is simply showing off and solving needs that don't exist.... this is like saying we will ensure that the electorate will all get access to drinking water when we already have it!

Other measures already announced include new rules requiring responsible (every time we get a downturn this old chestnut pops up) lending, affordability checks and cooling off periods for consumers; and a clampdown on credit card lending practices, expected to save consumers £300million a year.

Is all this very exciting?

In my opinion it could be if the Post Office became a bank, offering free banking to small businesses and special rates for savers.

How handy would this be? Over 99 per cent of the UK population lives within three miles of a Post Office branch and over 20 million customers visit every week.

The consultation response is available from: www.bis.gov.uk/postofficebanking