Are online comparison companies a scam by big-business?

By The Truth Reporter  –  The layer cake economy – how not to get sliced.

More and more we’re getting used to doing almost everything online, we can buy virtually anything, pay our bills, meet our partner and get the latest entertainment, all from a screen in front of our faces.  I am not here to argue the internet is a bad thing – without it you would not be reading this now. What we must however recognise is that the internet is a tool, and a powerful tool. Compare the internet to a chainsaw, if your road is blocked by a fallen tree then a chainsaw is a useful tool but in the hands of a madman however, it is a deadly weapon. 

What this process has meant is that a great many boring but essential tasks have been packaged up and sold to us with various cute and cuddly schemes to make it sound like fun.  You can’t have failed to notice that the insurance market is now largely controlled by a few big-name gatekeepers like Compare the Market and Confused.com who tell us that they will get us ‘the best price’ – but is this really true?

To answer this question we need to look in more detail at how these ‘compare’ sites work.  What they will tell you is that they offer your details to a range of insurers and then get a variety of prices allowing you to choose the best price. This is true BUT there are a couple of things they won’t tell you about their procedures.

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First, if you do a search on these sites, you’ll very often see some of the best prices are from a company you won’t have heard of.  These ‘companies’ are in fact, owned by that particular price comparison site, so of course, they do not need to pay the comparison site a fee for sending business to them.  So in effect, you have a middle man selling your business to another company for a fee but always offering the best price from themselves first. 

If you look at the amount these companies spend on building their brand, you can’t help but conclude that their business model is generating a lot of money but where does the money come from?  It comes from you. 

This is the first example of what I have called ‘The layer cake economy’ – an economy where businesses no longer seek to make something new, different or better that they can sell by its own virtue but instead look at the existing business environment and find ways to take a small part of an existing market by acting as an intermediary or ‘middle man’ or by using technology to sell you something you already buy on a regular basis but via your phone. 

Just look at the growth of Just Eat, Uber or Deliveroo, all they do is put you in touch with people you used to ring on the phone – a taxi or your local kebab shop.  Is the product any better? 

These things are not going to go away, in fact, they’ll no doubt become much more common but what you can do to fight back and free yourself is to exercise CHOICE and to understand that letting yourself be absorbed into a cushion of convenience is separating you bit by bit from control of your life. 

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Here’s a really trivial example to demonstrate what I mean. My town has three kebab shops, two of them are on Just Eat and I could order from them with a tap of my phone.  The other you can order by phone but you have to do it the old fashioned way by speaking to them directly. Also, I often go into the shop if I pass on my way home instead of having it delivered. I like my kebab meat cooked on the hotplate as I like it crispy, and I ask for this when I go into the shop. Because they now know me, when I order by phone they crisp the meat without me having to ask… 

Building relationships with people have been devalued by the move toward moving everything online, you’ll be surprised how much better things can be when you deal with people face to face, I’ll give you one more example.

Recently I received my home insurance renewal, I go through a small local broker but I always check their quote is competitive using one of the comparison sites. This year I was quoted much less online and so I took the quote to the broker and asked if he could match it. The broker took some time to go through all the terms and conditions and he found out that despite me putting in all the correct information into the website, the site had not allowed for the fact that the house is in a flood risk zone and therefore if we did get flooded the insurance from the comedy opera singer’s company would have been invalid. 

This is why people end up on the BBC Watchdog programme crying that their hairdryer burned their house down. By trusting everything online is wonderful and reliable, they place their trust in people they do not know and have no relationship with. When things go wrong there is inevitably a section in the small print that you never read that means you’re on your own. 

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Advertising increasingly wants you to surrender control to the system – just in case it’s difficult. There is a new car site that continually warns you against ‘haggling’ or indeed dealing with people at all and insists that because they know better that you can instantly know if you’re getting a good deal – because the website tells you it’s a good deal. If I’m paying thousands for a vehicle I want to jump up and down in it, drive it, and most importantly look the salesman in the eye and ask questions face to face. 

Are we really going to surrender our autonomy to a series of algorithms in a server somewhere, to the faceless, lifeless cogs of a corporate system that doesn’t know us, care about us and only wants one thing – your money?

Don’t let the layer cake economy take your money, reconnect with people, get used to negotiation and stop being afraid to ask questions. You worked hard for those digits in your bank, when you’re spending those digits, spend them wisely with people you trust.