THE FINE PRINT Also by David Cay Johnston Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else [the fine print] THE FINE THE FINE PRINT PRINT HOW BIG COMPANIES USE “PLAIN ENGLISH” TO ROB YOU BLIND DAVID CAY JOHNSTON PORTFOLIO / PENGUIN PORTFOLIO / PENGUIN Published by the Penguin Group Penguin Group (USA) Inc., 375 Hudson Street, New York, New York 10014, U.S.A. • Penguin Group (Canada), 90 Eglinton Avenue East, Suite 700, Toronto, Ontario, Canada M4P 2Y3 (a division of Pearson Penguin Canada Inc.) • Penguin Books Ltd, 80 Strand, London WC2R 0RL, England • Penguin Ireland, 25 St. Stephen’s Green, Dublin 2, Ireland (a division of Penguin Books Ltd) • Penguin Books Australia Ltd, 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd) • Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi – 110 017, India • Penguin Group (NZ), 67 Apollo Drive, Rosedale, Auckland 0632, New Zealand (a division of Pearson New Zealand Ltd) • Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R 0RL, England First published in 2012 by Portfolio / Penguin, a member of Penguin Group (USA) Inc. 10 9 8 7 6 5 4 3 2 1 Copyright © David Cay Johnston, 2012 All rights reserved LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA Johnston, David. The fine print : how big companies use “plain English” to rob you blind / David Cay Johnston. p. cm. Includes bibliographical references and index. ISBN: 978-1-101-47630-7 1. Invoices. 2. Corporations—Corrupt practices. I. Title. HF5681.I7J64 2012 364.16’8—dc23 2012019318 Printed in the United States of America Set in Janson Text LT Std Designed by Elyse Strongin, Neuwirth & Associates, Inc. While the author has made every effort to provide accurate telephone numbers, Internet addresses, and other contact information at the time of publication, neither the publisher nor the author assumes any responsibility for errors, or for changes that occur after publication. Further, the publisher does not have any control over and does not assume any reponsibility for author or third-party Web sites or their content. No part of this book may be reproduced, scanned, or distributed in any printed or electronic form without permission. Please do not participate in or encourage piracy of copyrighted materials in violation of the author’s rights. Purchase only authorized editions. ALWAYS LEARNING PEARSON For David Crook [ CONTENTS ] AUTHOR’S NOTE 1. Jacking Up Prices 2. Corporate Power Unlimited 3. Buffett Buys a Railroad 4. Railroaded 5. In Twenty-ninth Place and Fading Fast 6. Profits Upkeep Commissions 7. “We Lead the Industry with Integrity” 8. Paying Other People’s Taxes 9. Investors Beware 10. Playing with Fire 11. Draining Pockets 12. How We Beat the Garbage Gougers and Their Stinking High Prices 13. Fee Fatigue 14. “Wells Fargo Will Take Your House” 15. Giving to Goldman 16. Please Die Soon 17. Your 201(k) Plan 18. Wimpy’s Tab 19. Pfizer’s Bitter Pill 20. Hollywood Robbery 21. Silly Software 22. Pilfering Your Paycheck 23. Of Commas and Character 24. What It All Means 25. Solutions ADDING IT ALL UP ACKNOWLEDGMENTS NOTES INDEX [ AUTHOR’S NOTE ] When Major League Baseball came to San Francisco in 1958, someone gave my father two Giants tickets. Dad had no interest in what he called commercial sports, but Mom was a baseball fanatic, so one chilly May evening she took her third-grader to his first ball game. Peppered with my questions, my gray-haired mother found a way to keep my mind occupied. “Imagine if you could figure out how to make everyone in Seals Stadium give you a nickel!” she said. I took the implied arithmetic problem and ran with it. By picking a nickel, my mother had complicated the math. I diligently counted blocks of seats and multiplied by five, remembering numbers as I moved on to the next section, starting over when I made a mistake. After the seventh inning I declared my answer: $1,100, about $8,800 in today’s money. My mother folded back a page on the program that listed the number of seats and showed me her penciled- in calculation. “Very good,” she said of my estimate, “but how much is only half the answer. Now, tell me how could you get a nickel from everyone here?” That second question is the one that stayed with me—and that inspired this book. Half a century later, I’m still pondering, but in a bigger way, how it applies to your life and mine. As in: How have all of us consumers ended up paying so many extra charges on electric, phone and other bills? This book is about the many ways that corporations extract from you those extra nickels—which add up to thousands of dollars. Many of the mechanisms require the government’s cooperation; some of them are the result of seemingly unconnected sources; others are hidden in plain sight. I promise you, however, the explanation is right there before you, whether you’ve done the reading or not. It’s in the fine print.