Convenience fees, service fees, processing fees, destination fees, restocking fees, handling fees, maintenance fees. Spam calls, scam texts, robocalls, unhelpful chatbots, hold for customer service. Duplicate forms, pre-authorizations, subscription traps. Feel free to play along.
Various ancillary charges, interruptions, impediments and hassles are a feature of modern life. While relatively minor in isolation, these irritants add up to real money over the entire economy. Like to venture a guess as to how much?
New research by the Groundwork Collaborative, a progressive-leaning think tank, provides an estimate. Policy analyst Chad Meisel and Stanford economist Neale Mahoney toted up the cost in wasted time and money Americans expend each year comprising what they have dubbed the “annoyance economy,” and it’s a whopper: $165 billion, greater than the entire annual economic output of Mississippi.
Some of these frictional costs are due to outdated or inefficient systems or technology, but much of the consumer burden is designed to boost corporate revenues and profits. For example, many nickel-and-dime fees added to the base price of a purchase at checkout or convoluted and burdensome subscription cancellation processes have been shown to increase the bottom line despite the aggravation. The annoyance economy, according to Mahoney, describes “the everyday interactions that should be simple but often turn into fraught ordeals.” See if any of these examples sound familiar.
JUNK FEES
By far the largest contributor to the annoyance economy is the scourge of junk fees, the myriad unexpected add-ons and mandatory surcharges that run up the final tab. Think “resort” or “destination” fees at hotels or “convenience” fees tacked on to buying tickets to concerts or sporting events, as well as overdraft and late fees and account maintenance charges. According to the White House Council of Economic Advisors, these extra levies add up to $90 billion per year or $650 per household on average.
Drip pricing is a familiar example. Buying an airline ticket typically begins with a base price, with additional costs dripped (poured?) into the checkout process for baggage fees, seat selection, family grouping, ad infinitum. Meal delivery, cell phone plans, car rentals, hotel bookings and many other routine transactions often require multiple responses to upcharges, sometimes including mandatory fees that are not disclosed up front.
Another common source of frustration is subscription services that make it difficult to cancel. Most of us have had the experience of signing up for a service or a free trial offer only to encounter obstacles when we try to break up. These hurdles are a feature and not a bug, according to a paper from the National Bureau of Economic Research that found making cancellations difficult can boost corporate revenues by 14% to 200% depending on the product.
MEDICAL, INSURANCE
The polling firm Data for Progress reports that 80% of Americans have experienced frustration with health insurance paperwork and coordination. A 2020 analysis found that American workers collectively spend $22 billion worth of time each year on calls and paperwork related to health insurance administration each year. Another $19 billion in lost time value is expended waiting for appointments and medical testing.
These estimates do not include the additional downstream costs of delayed or foregone treatment. The authors found that 1 in 4 Americans either postpone medical care or give up on scheduling treatment each year due to administrative hassles. Once in the waiting room, patients often face a blizzard of frequently duplicative paperwork. A survey by Carta Healthcare found that over 80% of patients were asked to provide the same information or the same forms they had during their previous visit.
Of the $22 billion in direct costs of time spent on insurance paperwork, over half of that time was on the clock at work, representing an additional cost of $95 billion in lost productivity.
PHONE SCAMS
Did you receive a scam or spam call today? You are hardly alone. Americans are subjected to 4 billion spam calls per year, or about 130 million calls every day, in addition to around 240 billion unwanted text messages each year. The wasted time value of spam calls and texts adds up to $8 billion per year in lost hours. Phone scams are responsible for another $25 billion in direct losses and time expended.
Political candidates would struggle to find a more universal issue across party lines than addressing spam calls and texts. Recent polling finds 85% of Americans are frustrated with the deluge of unwanted and, in some cases, illegal contacts that so frequently interrupt our time. Yet the problem has received little attention, and some actions have been stymied in court. For example, in a rare 9-0 decision, the Supreme Court held that the 1991 law regulating automated telephone dialing systems was hopelessly outdated, effectively clearing the field for the onslaught of robocalls that have become the bane of our existence. It is up to Congress to update legislation to at least bring us into the 21st century.
RELAXED ENFORCEMENT
While enhanced consumer protection was a Biden administration priority, President Donald Trump has taken a different tack. Public Citizen’s Corporate Enforcement Tracker reports that the administration has terminated 145 open federal enforcement actions against corporations and cancelled $3.1 billion in penalties and consumer restitution. Meanwhile, the acting director of the Consumer Financial Protection Bureau has ordered the revocation of 70 regulatory guidance documents and has deleted nearly 4,000 pages of historical enforcement information from the agency’s website.
The case for federal intervention. Economist Mahoney acknowledges that opponents of regulation insist market forces should ultimately correct consumer abuses. However, in a 2025 paper, he argues that hidden fees and cancellation impediments serve to distort market signals and artificially raise equilibrium prices. Free markets only work if price discovery is efficient, and when those signals are distorted, regulation may be required to ensure that consumers are getting all the information necessary or to remove barriers that impair market efficiency. And in this case, according to the polls, most American consumers agree.
Christopher A. Hopkins, CFA, is a co-founder of Apogee Wealth Partners in Chattanooga.
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