How to Tell If a Company is Lying About Its Prices

If I’ve learned one thing as a consumer advocate, it’s this: businesses don’t always tell the truth about their products. And they almost never tell the whole truth about their prices.

Companies manipulate their costs with alarming regularity, whether it’s inconsequential (like failing to include taxes on the price tag for a loaf of bread), to blatantly (a car dealership quoting you a base MSRP on a stripped-down vehicle no one would ever buy), to downright devious (like the home security company offering a low price on a new alarm system, but based on a four-year contract).

I was reminded of corporate America’s little price deceptions just a few days ago when IdeaWorks released its latest report on airline ancillary revenue.

You may not know what ancillary revenue is, but if you fly, you’ve probably contributed to it; it’s the fees and surcharges for seat reservations, priority boarding, checked bag costs and ticket changes.

And it’s a huge business: the global airline industry raked in $22.6 billion worth of ancillary revenues last year, up 66 percent from 2009.

How did airlines get so much money so quickly? Easy. They broke away all the things that used to be included in the price of the flight but left their ticket prices the same.

And then they conveniently forgot to tell us about the extra fees, sometimes waiting until we showed up at the airport. (“Oh, you want a boarding pass? That’ll cost you another $5.”)

So, how do you know if you’re about to be hoodwinked? Here are five ways to tell if a company is lying about it’s prices:

The price is preceded by “starting at” or “from.”

This is probably the biggest way companies weasel their way out of quoting you a full price, which almost always will be significantly higher.

These key words are often used to sell durable goods like homes and cars. (Homes “starting in the $190s” — you’ve seen the billboard on the side of the road, haven’t you?)

If you’ve ever tried to buy one of the $190,000 homes, you probably know it doesn’t exist. Either the developer just sold the last unit, or the true cost of the home, once you factor in closing fees and other payoffs, is significantly higher.

When I see “starting at” or “from” I usually do a 180 and walk over to the competition.

The asterisk.

That little star can mean big trouble. On advertised airfares, for example, the asterisk is used to disclose the fact that the price only represents one-way of a round-trip flight. And, that in order to qualify for the low fare, you have to purchase a round-trip ticket.

Fortunately, the Transportation Department has stepped in and declared the asterisk to be in violation of its ban on unfair and deceptive practices.

Yet the symbol lives on in other businesses. I shudder whenever I see a * anywhere near a price. It usually means the price is incomplete.

The price is followed by the words, “based on.”

It seems like such a small qualifier, but you can hide a mountain of money behind those two little words.

Say you’re buying a home alarm system. The unit and installation might only cost a few hundred dollars, or it could be free, but when you add the qualifier “based on” and factor in a required four-year contract, everything changes. Now you’re talking thousands of dollars.

Car dealers love to use “based on” to lure you into a lease, but you have to run the numbers. You might be overpaying for the car. In fact, you probably are.

There are a lot of 9s in the price.

I know this one’s going to raise some eyebrows, but I’m also wary of any price that includes an excessive amount of 9s, particularly in the cents column.

If an item is being sold for $19.99, the red flags go up. When it’s an appliance being sold for $1999.99, I’m even warier.

Experience tells me that any business trying to make its products look cheaper by coming in one cent short of a round number might also not be playing it straight when it comes to the price.

When you have to “call” for a price.

That almost never ends well, unless you’re talking about seafood and the restaurant is charging the market price for today’s catch.

“Call” for prices normally means the business doesn’t want to tell you now, and it may not give you the complete price when you ask. (It could, but why not disclose it right now, up front?)

Let me be clear: a business could do all of these things and still give you an honest price, but it could also be a sign of trouble. If you see any of them, be extra careful.

Christopher Elliott is a consumer advocate who blogs about getting better customer service at On Your Side. Connect with him on Twitter and Facebook or send him your questions by email.