Consumer Hassles Cost Americans $165 Billion a Year, Study Finds

The steady grind of everyday consumer frictions, from robocalls to insurance paperwork to junk fees, costs American families an estimated $165 billion a year, according to a new study from the Groundwork Collaborative and Stanford economist Neale Mahoney.

The figure aggregates a string of smaller tolls: $90 billion in junk fees, $25 billion in phone scams, $22 billion in phone calls with insurance administrators, $19 billion in medical waiting times, $8 billion in robocalls, and $2 billion in governmental wait times. The authors call the phenomenon "the annoyance economy," defined as "the steady grind of small hassles that eat away at our time, patience, and wallets." They describe the toll as an undercount.

The study lands as businesses and government agencies embed more friction into routine transactions. Consumers buy subscriptions, rentals, insurance coverage, and contracts where their grandparents bought goods outright, handling rebates, intermediaries, applications, and enrollment periods along the way. One cited study counted 826,537,000 consumer-arbitration agreements in force in the U.S. as of 2018.

"Companies have worked really hard to make it easy for you to spend," said Lindsay Owens, executive director of Groundwork Collaborative. "Of course, when it comes to trying to get out of a purchase or out of a subscription, the same design choices are flipped and reversed." She compared digital consumer platforms to Las Vegas casinos, where designers create environments with no visible path to the exit.

The government compounds the problem. Washington routes aid through subsidies, grants, credits, and loan guarantees rather than direct services, pushing administrative work onto the public. It underinvests in digital systems; part of the Social Security website still lists business hours. It also provides the legal framework that lets insurers deny procedures, hospitals set opaque prices, and employers impose contract terms on workers, the study argues.

A case in point: Ralph Coolman, a 62-year-old small-business owner in Ventura, California, died of a heart attack in June while uninsured, after a COBRA mix-up left his family with a roughly $270,000 hospital bill. His sister-in-law, Matt Rosenberg, negotiated the bill down to about $200,000, then fed an itemized statement into Claude, an AI system, to compare the charges against Medicare reimbursement rates. Claude flagged potential over- and double-billing, including tests marked up 2,300 percent. The family settled at $32,000. Community Memorial Hospital declined to comment.

The episode illustrates how AI tools can narrow the information gap between individuals and institutions. Consumers have used chatbots to negotiate with internet providers, write letters to airlines, and parse employment contracts. But institutions are adopting the same technology, pushing the asymmetry back. Consumers increasingly face chatbots instead of human agents, and algorithms that present different prices to different customers.

"Algorithms could make life easier," Owens said. "But it is dizzying to think about the additional shifts coming."

The study's authors argue the fix is regulatory: require transparency, restrict extractive administrative practices, and protect consumers from hidden fees. They note that restrictions on robocalls and junk fees rank among the most popular policy proposals on a bipartisan basis; two-thirds of Americans want Congress to address the problem.

Groundwork Collaborative, a progressive think tank, and Mahoney, who served as chief economist at the White House Council of Economic Advisers under President Joe Biden, released the study as a working paper. The paper has not been peer-reviewed.

Erika Coolman, Ralph's widow, said she started receiving a new round of bills from providers involved in his care this winter. The family is refusing to pay.