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Sneaky extra charges hit consumers

Mideast businesses are imposing crafty additional fees in an attempt to recoup losses, making life more expensive for us all.

April 23, 2010 9:03 by

  • Inflation in the UAE is at its lowest in point in nine years, according to official figures. Yet some retailers don’t seem to be pricing goods and services accordingly.

    With consumers tightening their belts, retailers, banks and many other businesses are getting inventive with new fees and hidden charges – all in an effort to stay afloat during tough times.

    “This is related to the slowdown of economic activity and the lack of revenues,” John Sfakianakis, an economist at Banque Saudi Fransi in Riyadh, told The National earlier this month. “Companies and organizations compensate by levying hidden fees,” he explained.

    Click ‘next’ to find out how life is becoming more expensive in the Middle East.

  • With banks facing a slew of bad debt and millions in provisioning for non-performing loans, they have gotten creative with the little hidden fees and sneaky charges that are leaving clients feeling the pinch.

    While some banks still issue free checkbooks to customers, others have begun charging. Standard & Chartered, Byblos Bank, BLOM, and HSBC charge between $5 and $10 for checkbooks, according to a February report by Lebanon Opportunities magazine. Replacement of lost debit cards, fees for provision of paper statements, and charges for online banking services are becoming routine. Fees for failure to maintain a minimum account balance can be as steep as $12 (with HSBC). Increasingly, clients can expect to pay for auto bill paying services and multiple currency accounts.

  • As consumers are less inclined toward spending sprees, merchants are looking to make up for lost revenues by imposing steep markups on hot new products.

    The arrival of the iPad came with its fair share of hype – and a price tag to match. In the UAE, eager iPad buyers were being charged double what their US counterparts were shelling out. Some retailers were charging a cool $1,000 for the basic 16-gigabyte model, which sold for $499 in the US, according to a report in The National.

  • Going out on the town less? If the turbulent economy has you cutting down on dining out, local restaurateurs are making up for weak demand with higher prices.

    Michael, a busy advertising executive in Dubai, notes that his expense account has taken quite a hit recently. “Entertaining clients and dining out is an important aspect of our business. Rising restaurant prices are affecting our decisions about how often to entertain and where to go,” he told Kipp.

  • In Dubai, parking fees have reportedly doubled to as much as AED2 per hour – spelling especially bad news for commuters. A report in The National earlier this month estimated that working commuters can now expect to pay more than AED3,000 a year for parking.

  • While the UAE’s consumer price index for 2009 revealed only a marginal rise in the cost of food, miscellaneous goods and services, other necessities have disproportionately skyrocketed in price.

    School tuition fees rose by an astounding 18 percent in Dubai in 2009 – a year in which Dubai’s inflation barely broke 4 percent. Figures released by the UAE’s Ministry of Finance underscore the rising cost of education in the country; the ministry intends to spend almost $2.7 billion on education this year, nearly a quarter of the total federal budget for 2010.

  • Some car companies claim discrepancies between prices in the Middle East and Europe or the US are down to shipping fees. But residents complain of paying far more and getting less in the way of automobile options, for example, with retailers blaming it on ‘GCC specs’. Some disgruntled residents note that if buyers will pay almost anything, then retailers are taking advantage. “It’s nothing but “Greed,” reads one online post.

  • As Kipp reported recently, telecoms charges in the UAE are already extremely high, with consumers paying up to fourteen times the fees for their broadband services compared with other markets. And telcos are increasing charges further. For example, Etisalat recently increased its rates for calling and text messaging for subscribers when out of the UAE.

  • Shipping costs are also getting increasingly expensive. Fees at Mina Zayed port in Abu Dhabi, for example, were recently increased by 40 percent, according to local press reports.

 

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