The 12 Biggest Ripoffs in America

Written by Jonathan Rivers

Many of us feel ripped off in our day to day spending, so much so that bringing up even a single rip-off story in a group of people is likely to trigger a flood of them from everyone else. Whether it’s at the movies, in restaurants or on vacation, we seldom believe we are getting as much for our money as we ought to. Of course, some rip-off stories are more debatable than others. Often times, what is called a ripoff is little more than someone’s subjective opinion of what they “really” deserve for their money, whatever that means. However, other purchases actually do appear, by all objective criteria, to be a raw deal just about all the time. Today, BillShrink analyzes 12 common ripoffs that most of our readers are likely to be well acquainted with.

Movie Theater Popcorn

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Movie theater popcorn is as much an American icon as baseball and apple pie. Like a moth to its flame, movie-goers instinctively load up on hot, buttery popcorn before sitting down to enjoy the show. It’s hard to imagine things being any other way. That being said, movie theater popcorn is without question one of the biggest, most egregious ripoffs around. ABC News reported in July 2008 that a small bucket of movie theater popcorn will run you “around $5.50 — more per ounce than filet mignon.” University of California-Irvine professor Richard McKenzie, who wrote a book on this very subject, conjectures that popcorn costs less than ten cents an ounce to produce. That makes the markup somewhere between 900%-1,300%! The reason appears to be that movie theaters do not make much money on actual ticket sales. According to McKenzie, “the theater can be paying 70 or more percent of the ticket price to the studios.” That leaves concessions, like popcorn and candy, as the next logical place to raise prices and recoup some of the revenue being sacrificed at the ticket counter.

Text Messages

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Another ripoff most of us would hate to go without is text messaging. According to Srinivasan Keshav, a computer scientist who testified before the Senate on the matter during summer 2009, text messages cost about one third of a cent each for a carrier to deliver. But despite that cost, the typical pay-per-text plan whacks cell phone users to the tune of twenty cents and ten cents per each outgoing and incoming text, respectively. That equates to an eye-popping markup of 6,500%. Nor do unlimited texting plans completely eliminate the ripoff factor, since the carrier’s overhead is likely to be right around the $10 or so that is usually charged for such plans. Most of the time, the carrier comes out ahead regardless.

College Textbooks

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College textbooks have the unique feature of being a ripoff on at least two different dimensions. First is the price charged to students. CNN cites a study by the Government Accountability Office showing that “textbook prices nearly tripled from 1986 to 2004 — a jump that’s twice the rate of annual inflation over the last two decades.” In fact, the average estimated cost of books and supplies in a given college year is $900, and many students report paying far more than that. However, it’s not just the actual price of the textbooks. In many college courses, the textbooks are never or seldom even used! Savvy college students have found that they can often glean the material needed from the Internet, or simply by looking on with a friend on rare days when the text is being used by the professor. It’s bad enough to be gouged at the checkout counter, but to rarely even use the textbooks takes the ripoff factor to new heights!

Branded Painkillers

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Brand name, over-the-counter painkillers like Advil are sold at a 60% markup, according to Yahoo! Finance. Many will no doubt counter this fact by objecting that yes, the price is higher, but the pain relief is superior. But this is incorrect. As Yahoo explains, the law requires all generic drugs to be just as effective (and even use the exact same active ingredients) as the branded drugs they are modeled after. Yet still, a 50 tablet bottle of 200mg Advil somehow costs $8.49, while Duane Reade charges “just $5.29 for the exact same bottle of generic ibuprofen.” So unlike the age-old “store brand” debate where there is a qualitative difference between a generic and branded product, painkillers are the rare exception of being, literally, the very same product for a lower price.

“Free” Credit Reports

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Admit it – you’ve found yourself humming one of those catchy commercials at least once or twice. But while the commercials are memorable, the service being offered – allegedly “free” access to your credit report – is an unmitigated ripoff. For one thing, it’s questionable that there is a need for any business to offer such a service, as the government mandates that all consumers can check their credit score once a year for free anyway. Beyond that, most of these services unwittingly bilk people into signing up for paid monthly subscriptions that actually charge them for what was supposedly being offered free. Time Magazine reported in November 2009 that the government went so far as to issue public warnings that and their ilk were not free at all. When you charge money despite the word “free” being in your corporate name, it’s tough to argue that your service isn’t a ripoff to consumers.

Wine Service at Restaurants

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This ripoff rests upon a shrewd appraisal of human psychology by bar and restaurant owners. Most people, when dining with a date, will never order the least expensive bottle of wine on the menu for fear of looking cheap. Instead, they will opt for the second least expensive wine to cover their bases. According to Time Magazine, “restaurateurs know this behavior well, and so they often put the heftiest markup on that second-cheapest bottle.” In fact, the cheapest bottle on the restaurant’s menu might actually cost more if you bought the same thing at a package store. The best course of action is deciding upon a wine that you objectively enjoy drinking (regardless of where you are) and order that without regard for the psychological pricing tactics of restaurants and bars.

Hotel Mini-Bars

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Anyone who has ever paid $2.00 for a minuscule bag of Doritos is already nodding their head in agreement. It’s true: hotel mini-bars are one of the biggest ripoffs around. Here, again, human psychology is taken into account by the hotel operators doing the pricing. Years of experience have demonstrated that the typical hotel guest is tired and weary from a day or more of traveling. Once they arrive, the last thing they want to do is get back into the car and drive around a strange new area looking for a convenience store. In fact, they are so loathe to venture out on the road that paying 1,300% more than usual for candy and soda starts to look like a decent idea after all. Rather than paying such inflated prices, just anticipate that you will want snacks in advance and stop off somewhere before checking in.

All You Can Eat Buffets

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All you can eat buffets thrive on an all too appealing sales pitch: pay once, eat all you want. It might seem difficult at first to find fault with such a generous offer. However, buffet operators do not offer that deal because they’re generous – they offer it because they know their numbers and study their customers. While the typical buffet charges somewhere between $12-$15, they know that that the average customer is not likely to eat very much more than they would’ve purchased for $7 or $8 at McDonalds, despite the fact that they can if they choose to. Furthermore, it’s questionable whether the quality of the food being served is much better than that of a fast food restaurant. Therefore, what often ends up happening is that a buffet’s customers pay for the ability to eat twice as much as they actually eat, on average.

Premium Gasoline

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This one is sure to draw the ire of at least a few auto buffs. For whatever reason, many people believe that filling up with premium grade gasoline is somehow “better” for their car, or even that it “cleans out the engine.” Others actually believe that it is essential to put premium gas in their car and that it will malfunction if you try to run it on anything less. For most drivers, nothing could be further from the truth. Just check your car’s owners manual. If you need to use premium gas for a legitimate, mechanical reason, it will be stated in the manual so many times that it will be impossible to miss. Luxury cars (like Cadillacs, for example) often require premium gas because their high performance engines require higher octane – that is, slower burning – fuel. But if your owners manual makes no mention of it, you are simply wasting money on each premium gallon you purchase.

Actively Managed Investments

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In his book I Will Teach You to Be Rich, personal finance blogger Ramit Sethi writes that “fund managers fail to beat the market 75% of the time.” Not only do they fail to beat the market, Sethi writes, “but they actually charge a fee to do this.” With such a lousy track record of performance, one might expect mutual fund managers to lower the fees they charge. Unfortunately, nothing of the sort is true. It is common for mutual fund managers to charge 1.5%-3% on however much money you invest into their funds. It might not sound like much, but a 2% expense ratio on a $10,000 portfolio means $200 out of your pocket at the end of the year. Index funds, on the other hands, have few or no fees and generally at least match (if not slightly beat) the overall market’s performance year in and year out.

In-Room Movies

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As if gouging you at the mini-bar wasn’t enough, hotels are also happy to help themselves to your money via in-room movie sales. While there’s certainly nothing wrong with offering such a service, the rates charged are hardly what one would call competitive – as much as $10-$15 for a single movie, according to CNN. A Redbox machine, by contrast, will rent you a DVD for as little as $1 a night. A NetFlix account isn’t much more expensive, and streaming movies on your laptop is another inexpensive alternative. In other words, paying for in-room movie service at a hotel is just about the most expensive way to watch a movie imaginable. As with snacks and soda, it’s smarter to anticipate that you will want to watch one before checking in and make less expensive arrangements.

Health Club Memberships

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While not every gym or health club membership is a raw deal, many of them are. In most cases, it’s not the price that’s unjustified but the terms of the contract itself. Bally’s Total Fitness, for instance, hides a clause in their contracts stating that you cannot cancel your membership – even if you lose your job and sincerely no longer wish to use the gym – unless you die or move to a town where there are no gyms. No exceptions are made. Consumer Affairs even reports that a man who provided “military orders sending me to Europe” was denied the ability to cancel his membership. A gym that insists upon charging someone money for a service they are not using and do not wish to use, even when they are given orders to leave the country for combat, is a ripoff in the purest sense of the word!

25 thoughts on “The 12 Biggest Ripoffs in America

  1. William

    Higher premium gas is more resistant to pre-ignition which causes engine knocking (it sounds like something’s pinging in your engine) which is bad for your car.

    If you can drive your car on lower grade fuel without engine knock, then by all means go for it.

    On a side note, octane is calculated differently in many places across the world. For example, 93 octane in the US isn’t the same as 93 octane in Japan.

    On another separate note, the only difference between different gas companies are the additives they put in their gas.

  2. todd

    On the premium gas thing, my current car requires it, so thats that. But i had an older, crappier car before and noticed that typically i got move MPG with the higher quality gas. So it just kinda paid for itself.

  3. Jeff Weimer

    The real ripoff for Gasoline? Mid grade. It’s too high an octane needed for most cars, and not enough for those that require premium. Here’s the kicker – it’s blended from the first two, but it’s not 50/50. it’s more like 60/40 or 65/35 regular/premium. Which makes it 2-3 cents per gallon more profitable than premium OR regular. For no benefit.

  4. wallydog

    Guitar picks. 25 cents apiece, has got to be at least a 2,000% markup.

    I suppose that doesn’t affect that many people. But it’s still a ripoff.

  5. Dustin

    Actually, modern computer controlled cars can compensate for the octane in your tank of gas. The ‘anti-knocking’ argument is not a very good one unless your engine is peculiar or really old.

    If your engine is knocking, you’ll notice it. And if it isn’t, your gas is just fine and you’re burning money to use it. Even cars that recommend higher octane no longer actually need it in most cases. Just gas baggery, but I’m not surprised a few people chime in to say they need expensive gas… it’s great marketing for performance engines because people really buy into it and tie their ego in with their special little motor. Your car is inferior if it needs high octane and was built after 1995.

  6. Dave

    Actually, running a chip (that requires premium fuel) in my older car (which called for regular grade fuel from the factory and does not have knock sensors) gives such an improvement in gas mileage that it’s cheaper to run the car with premium and the chip when regular fuel is beyond $2.50 a gallon. The car also gains some power from the rework of the factory fuel/timing map.

    The key is that the dollar price difference between premium and regular fuel pretty much stays constant, historically even in $4-$5 gas time, while the relative price fluctuates wildly. So whatever benefits are derived from using premium gas (in my case, better fuel economy) become cheaper as fuel gets more expensive.

  7. Chad

    “…painkillers are the rare exception of being, literally, the very same product for a lower price.”

    Are you sure about that? I thought generics had a had a much greater margin for effectiveness, like 20% +/- the rate of the name brand. That’s a 40% swing. So one day your intake of the active ingredient could be much higher or lower than the name brand. That’s the way I understand it, but I could be wrong. Maybe that applies to everything except painkillers.

  8. Jeff

    I would argue that college textbooks are more expensive (maybe not the entire additional expense) due to the fact that they are specialty books and ordered at much lower rates than other books.

    As to the medicine, it’s true that generics are just as effective, but don’t forget that the original company put the money into the research and development of the medicine and is recouping their costs. Generic versions get to come in and use the formula and their costs are much lower.

  9. montyburns

    The photo used for “Actively Managed Investments” actually shows a bigger rip-off – Eyeglass Frames. That $5 worth of metal and plastic probably goes for around $300.

  10. daleandersen

    Happily, you’re not an expert, Jonathan. You’re just a guy with a computer and too much time on your hands. The Bally’s thing, for example. You cannot enforce a lifetime contract for a fitness program. Use your head, ratboy. What court would rule in Bally’s favor? Evidently, only the court in your drug-addled head…

  11. Ricky Hall

    My 88 Acura is supposed to run on regular but it’s antiknock censor causes the car to hesitate on acceleration so I run my own mix of half regular/half premium so it doesn’t stumble. Of course, since 911 the price of premium went from a 20 cent to a 40 cent markup at some stations. What’s that about?

  12. Sigivald

    The real reason to pay for name-brand medication is cold remedies and the like.

    Unlike in-a-bottle painkillers, those are in blister packs, and I find the store brand ones usually require scissors.

    While the “overpriced” Sudafed etc? Peel and push.

    Much less annoying when you’re already miserable…

  13. lordkeg


    You missed the point. He was saying that the health club contract won’t let you cancel midterm. For example, say you sign up for a 3 year contract, you’re locked in, there is no way to break out of it. Even a cellphone contract has a cancellation procedure, subject to a cancellation fee.

  14. michael

    Don’t get me started on rip offs. America corporations live by P.T. Barnum’s saying “There is a sucker born every minute”when it comes to just about everything we consume. It’s a stacked deck. Go back to buying just what you need as the did before the great depression don’t be a chump for a designer name and buy at places like Costco. I say fight back againsts the greedy pigs.

  15. Kurt

    Fantastic. One note: in the US, there is no bottle of wine in a restaurant that doesn’t have at least a 300% markup. The house wine by the carafe is sometimes not a giant ripoff.

  16. Squido W Cash

    People that believe, “you get what you pay for”. This is a fools justification for buying the most expensive item they can find.
    A wise man knows that you are damn lucky to ever get what you pay for.

  17. Jackie

    We love using Chegg to rent textbooks and save a lot of money! I wanted to share a code that your readers can use to get a discount on their text order. Put in the code when ordering and hit the “apply” button. The code also gives you back an additional $5 when selling Chegg your used texts.

    The code does not have an expiration date so it can be used with every order. Here it is:


    Feel free to pass this code to friends.

  18. Taliahbm

    Unless you just keep your cartridges and take them to Costco, they'll refill them for almost 1/10th of the price of buying a whole, new cartridge.

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