Inflation - y2k surcharges on bills : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Think I will ask for that raise now. We can call it a y2k cost of living coping increase. **************************

Charges for computer problem bug customers

Richard Burnett of The Orlando Sentinel Staff

Published in The Orlando Sentinel on May 16, 1999.

America's price tag for solving the year 2000 computer problem is surging well into the billions of dollars. But who's footing some of the bill for slaying the so-called millennium bug?

Don't look now. It might be you.

Some people already are taking a hit as companies pass on the costs of solving Y2K, the decades-old software flaw that could cause many computers to malfunction on Jan. 1.

Just ask Tim Tuech of Orlando.

Tuech, owner of Tim's Orlando Sportscards, was paying his monthly business bills recently when he noticed this charge on one of the statements: "Y2K account maintenance fee: $40."

Enraged, Tuech said he quickly called the company -- EFS National Bank of Memphis, Tenn., which processes credit-card transactions for his business.

"I fought with them for a couple of minutes, threatened to switch to another company, and finally they agreed to take it off my bill," he said. "To me, it was just another gimmick credit-card companies use to get over on people."

Tuech was not the only unhappy client, EFS said. But most accepted the charge as the price of ensuring their equipment would work uninterrupted in 2000, said Ed Labry, president of Concord EFS Inc., parent of EFS.

"If anybody called to complain, we immediately removed the fee instead of losing a customer relationship over it," he said. "But we feel this one-time fee is a very small price to pay to make sure the system is operational. And the revenue derived from it will not nearly absorb our total Y2K costs."

Some EFS customers were not surprised at the Y2K fees.

"One way or the other, they're going to pass on their expenses to customers," said Chris Mixon, a veterinarian and co-owner of Alafaya Trail Animal Hospital. "If it's not through a Y2K fee, they will raise rates. No business spends money out of pocket, then takes it from shareholders."

Mixon may be right, experts say, although many companies insist they are writing off most of their Y2K expenses.

Whether it's through specific Y2K fees or subtle price increases, companies must eventually recoup their Y2K costs, said Cathy Hotka, a vice president of the National Retail Federation, a Washington trade group.

"It is unavoidable," she said. "The money to get ready for Y2K has to come from somewhere. Like any other business expense, Y2K costs ultimately have to be covered by revenue from the customers."

And many customers appear ready to bear some of those costs -- as long as the Y2K charges aren't too high or often.

"If it became a monthly Y2K fee, then we'd have to take a second look at them," said Lori Elliott, spokeswoman for the Florida Retail Federation, which endorses EFS as a credit-card processing company for its members.

"Certainly, we would rather not pay it, but considering the overall rates they charge, we still think they've given us a good deal."

But in some cases, customers have been far from understanding when faced with Y2K charges, said Jim Duggan, vice president of research for The Gartner Group, a computer consulting firm based in Stamford, Conn.

"We haven't seen a lot of explicit pass-along charges in competitive fields," he said. "But we have seen them in some specialized areas, such as doctor's office software."

The result, Duggan said, was litigation.

Medical Manager Corp. of Tampa, which sells physician-office management software, faced several lawsuits over its effort to charge extra fees for a Y2K-compliant version of its product. The company recently settled the cases by agreeing to provide free upgrades.

Even software giants such as Microsoft Corp. and Intuit Corp. have been sued.

Such actions have had a chilling effect on companies that might otherwise consider charging Y2K fees.

For example, banks and credit-card companies -- which battle fiercely for customers -- distance themselves from the idea.

"There's been no mention of it from anybody," said Clint Swift, a Y2K specialist for the Bank Administration Institute, a think tank based in Chicago. "Banking is just too competitive of an industry to try that."

But if Y2K charges do become vogue, it could lead to a host of inflationary actions, said William Ulrich, an author and president of Tactical Strategy Group Inc., a computer consulting company based in Silicon Valley.

There could be Y2K surcharges on manufactured goods, insurance policies and bank accounts, he said. Even government may pass special Y2K taxes, something the state of Nebraska tried unsuccessfully to do, Ulrich said.

"If more companies get in on it, this whole thing could get out of hand," he said. "I just find the practice abominable, something that the accounting department justifies, but really abuses customer loyalty."

-- marsh (, May 17, 1999


It's outrageous. the credit card companies are charging all business- use cards $40 a pop.

Multiply this by the number of cards worldwide = gazillions of dollars. All for bad code that is the Banks' responsibility in the first place - as if they're not making enough usurious profits on artificial fiat money and 26.9% APR scams evry month.

the latest on Channel 7 news here in Colorado is that some CC companies are DELIBERATELY holding off on processing cheques that were sent in ahead of time so that the customer would be charged a late fee penalty plus extra interest!!!!!!!

Hope you can get your $40 back when they tank on rollover. Don't hold your breath.

-- Andy (, May 17, 1999.

In February this was on my Credit Card Merchant Summary (I own a company that accepts credit cards):

...An annual technology update fee of $75 will appear on your March statement.

When I signed up, there was no technology fee spoken of in any of the contracts that I signed.

Curiouser and curiouser...Alice in Wonderland

-- Diane (, May 17, 1999.

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