Your time, money, and patience may be precious to you, yet they hold far greater significance for a company’s financial bottom line.
A new report from the Groundwork Collaborative shows that Americans are facing longer customer service hold times, paying billions in unnecessary fees, and enduring more healthcare-related frustrations, paving the way for what the group terms the “annoyance economy.”
The study discovered that unnecessary fees for concerts, hotels, and food deliveries are costing Americans more than $90 billion annually. By assigning a monetary value to the hours consumers spend on hold, researchers determined that Americans lose over $21.6 billion due to healthcare administrative difficulties.
Companies are also profiting from your time. Over the past 20 years, the time Americans spend on customer service calls has surged by 60% as companies cut back on customer service and make processes like getting refunds more cumbersome to boost revenue.
These false fees and frustrating experiences are part of a “vibes-based” tax companies are imposing on Americans to complicate every consumer interaction. Companies are leveraging lack of competition and strict cancellation policies to lock consumers into services.
“We became highly intrigued by how exactly a time tax converts into both dollars and cents,” stated Alex Jacquez, Chief of Policy and Advocacy at the Groundwork Collaborative. Jacquez noted the report presents a “vibes-based economic analysis” where “every consumer interaction is now more difficult than before.”
By using existing studies to measure the time consumers spend on frustrating tasks such as remaining on customer service or attempting to cancel a subscription, researchers converted those durations into monetary values. Factoring in both direct financial losses and the worth of wasted time, researchers found Americans spend $165 billion annually in the ‘annoyance economy’.
Wasting your time and money
Corporations are deliberately turning simple tasks into drawn-out processes to maximize profits, particularly by promoting rentals over outright ownership.
“One aspect we want to delve deeper into is the growing trend of subscription-based economies,” Jacquez said. “Owning a car means you’re paying monthly to access all its features. It seems they’re pushing towards models that ensure recurring revenue rather than simple buying and owning.”
The report found that making these subscriptions hard to cancel can increase corporate revenue by over 200%.
Healthcare costs and administrative hurdles are also part of the annoyance economy, with the study showing nearly 80% of Americans are frustrated by paperwork and coordination for insurance and medical appointments.
Companies also use roundabout AI-powered chatbots to create difficulties, discouraging consumers from seeking refunds or solving issues. Jacquez states that customer service is a field where AI “is definitely going to” replace jobs. Customer service ratings in 2024 hit an all-time low, and the “Consumer Rage Survey” found 74% of customers had a problem in the past year—double the rate from 1976.
“As a person, you don’t want to spend all day in a call center,” Jacquez said. “While AI potentially taking over customer service might seem beneficial, I think when you look at how companies actually use these solutions, it’s almost always to squeeze more money out of consumers and make these experiences more frustrating.”
The downsides of bad customer service
By examining lawsuits filed with the Consumer Financial Protection Bureau (CFPB), the Groundwork Collaborative found some banks used a “long queue” policy to deliberately hang up on customers before they reached a representative. “The expectation is that not all these people will call back, and if they do, the process to reach a real person who can solve their problems will be more cumbersome, making them less likely to do so in the future.”
“Providing poor customer service, especially with these chatbots and automated AI systems, really doesn’t have many drawbacks,” Jacquez said.
AI is also used in customer service to charge randomized optional prices for higher profits. Companies are using AI software to randomize prices to find the best price consumers will pay. Delta recently proposed this idea for personalizing airline seat prices.
AI has also disrupted the spam calling industry. Americans get 130 million scam calls daily and over 20 billion spam texts monthly. Over 85% of consumers are frustrated by spam and scams, making it the most irritating issue.
Jacquez and the report do suggest a solution: more government regulation. Polls show 68% of voters want Congress to focus on addressing these annoying business practices. One proposal is for federal regulators to impose fines directly based on the time consumers spend on hold or facing obstacles, making “annoyance” a company liability.