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Expedited CARD Reform for Consumers Act of 2009

by Smithee on November 6, 2009

in Uncategorized

After the Credit CARD Act of 2009 was signed into law, we saw how credit card issuers started making life tougher for their customers. In short, banks were levying fees on their customers indiscriminately, affecting both the good and the bad.

This has been going on for months. Lawmakers have publicly condemned it, and made requests to the federal reserve, but all to no avail. This week, however, an amendment to expedite the Credit CARD Act (giving it an effective date of December 1st) has passed the House of Representatives in a better-than-average bipartisan manner (only 53% of Republicans opposed it), and I’m hopeful for all of our sakes that a similar measure quickly passes in the Senate.

I read through the words in both versions, and found a few differences, which might make it take longer to work through Congress:

In the House

The House version (full text) makes an exception for depository institutions (banks) with fewer than two million credit cards in circulation. It also comes with various clarifications to make sure that the new law doesn’t apply to banks and creditors who haven’t punished their customers (many of whom continued to pay on time and remain in good standing) in advance of the new law.

It also includes new features starting at Section 6 which state that:

  • if you receive notice of a new fee, and you pay off your balance in full, or cancel your account, that won’t negatively impact your credit score
  • there will be a nine-month moratorium on rate increases with a start date of the enactment of the Credit CARD Act of 2009

If these amendments pass, the moratorium would start December 1, 2009, instead of nine months after the law was passed, on about February 22, 2010.

In the Senate

The Senate version (full text) includes no additional clarifications or amendments, only a date change to December 1.

Flexo and I don’t agree on everything (if everybody did, life sure would be boring), but we agree that Congress should pass each idea into law based on its own merits, and not bundle them together into a jumbled mess of unrelated ideas. In this case, if you want to expedite a law, then document the new date and move on. Now’s probably not the time to be adding new regulations.

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Spend Money to Save Money: Smart Power Meters

by Smithee on November 3, 2009

in Frugality

We all have power meters attached to the buildings in which we live, and the little needle keeps spinning around and around, ad nauseum, at least until solar panels become affordable. I recently read a story of a family who managed to install solar panels, and while that would normally have cost over $20,000, with various national and state rebate programs, they only spent $8,000.

Wow. Imagine having $8,000 to spend.

We’re customers of Green Mountain Energy here in Dallas, so our bill payments go toward producing more renewable energy (see the big bathtub analogy for more on how this works). But the hardware is operated by a company called Oncor, which has decided it’s time to upgrade our power meters to be smarter. Oncor worked through some calculations (Surcharge Analysis PDF) and figured that the best way to install them would be to charge the average customer $2.12. Every month. For eleven years.

That’s $291.72 for a new power meter.

Within the last month, a hundred grants were given out to companies making improvements to power meters. The company in our area was not one of them. So residents of DFW are likely stuck with the fee.

On their FAQ about the Advanced Meters, Oncor made this suggestion for dealing with the extra $2.12 per month:

How can you offset this fee? Just replace a 100W light bulb with an Energy Star CFL light bulb and you could save more than $2.30 a month.

That’s cute, and likely true, but I don’t believe we’re still using any of the old style bulbs at our house.

This entire scenario of being charged over an eleven-year period for something that won’t be available to everyone until 2012 would be supremely depressing, were it not for the fact that I’m a big data nerd. I love efficiency, and you can’t improve efficiency unless you know exactly what is being wasted. A smart meter will do that for me.

Google PowerMeterBut what’s depressing again is that I could have this right now, for only $200. The Energy Detective (TED) Series 5000 is a device that attaches to the power control panel on the inside of your house, rather than the outside. Other than that, it does all the same stuff: analyze your power usage in real-time, and over regular intervals, then adjust your behavior accordingly.

I’d be excited to get a TED set up in my house, then walk around unplugging one thing at a time, finding the major offenders, maybe put some devices on a schedule; or find out exactly how much we’d save by keeping the house, say, 2 degrees warmer. Those are just a couple of examples. For all I know, more energy is being wasted when two particular devices are running together for one hour than by running both separately for one hour each. Like I said, I’m a big data nerd.

I’d be very interested to hear your story of using a smart meter. Has anybody had the pleasure, yet?

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Hulu and the Subscription Model

by Smithee on October 27, 2009

in Consumer

This is an editorial by Smithee and a plea for your help in shaping the future of entertainment.

At our house, we enjoy some Hulu programming on occasion. Even though during the recent DVR years I’ve become accustomed to skipping commercials, I don’t mind them on Hulu, for these reasons:

  1. I’ve only seen one per commercial break
  2. They haven’t been suddenly, obnoxiously loud
  3. Hulu is free, and so advertising makes sense

And so far, there’s no ability to skip them. I can deal with that, because in an episode of, say, “Defying Gravity” on Hulu, there are five commercial breaks, for a total of five minutes of Lipitor commercials (at first, every episode would play five of the same Lipitor commercial, it was almost funny). I can accept five minutes. That means about 9.6% of a 43-minute show is an ad. That’s fine, so long as the service is free.

But that is going to change sometime in 2010. Hulu is owned by NewsCorp (who owns roughly half of everything), and they have decided:

It’s time to start getting paid for broadcast content online. I think a free model is a very difficult way to capture the value of our content. I think what we need to do is deliver that content to consumers in a way where they will appreciate the value. Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business

Anything more specific than this decision is just speculation: subscriptions for what, everything? premium channels only? groups of channels? Nobody knows.

What I propose is unacceptable is this: a subscription fee for any user, for any content, so long as the advertising remains part of the experience. In other words: unskippable ads are no problem, subscription fees for any content are no problem, but both together would be a problem.

You and I have a chance right now to help influence and inform Hulu’s decision to go forward with a subscription model, before we let ourselves get duped.

Sadly, we’ve been letting ourselves get duped for a long time.

Newspapers, Cable TV, mobile phones

Newspapers are filled with advertisements, and they also expect you to pay for each copy. The same is true of magazines. In fact you could argue that any fashion magazine is just one huge multi-part advertisement. So, I don’t read them. Oh, I look at the news online all the time, but between my banner-blindness and various browser plugins, it’s not often I see an advertisement.

TV is a different story. TV used to be just like radio: the good parts were ad-supported, and you also had a station that relied on member subscriptions. Cable messed that all up, and we were too busy with the colorful new channels to notice. A cable company would set up shop in your town and tell you all about the dozens of extra options you’d get for $X / month. We were totally psyched to get MTV and Nickelodeon at our house, but it didn’t occur to me until later than since the cable company replaced our over-the-air channels, we were now paying for something that used to be free. Thirteen free somethings, in fact (UHF was admittedly pretty empty).

There’s an argument that in the case of OTA / broadcast channels, what you’re paying the cable company for is consistent quality of signal. I’d be happy to see some proof of that, in the form of a cable company’s accounting spreadsheet. I’m sure that NBC is charging the cable companies regional monopolies a fee to include their programming, and cable is passing that cost on to the customer.

The mobile phone business model just depresses me whenever I think of it. Here’s how a phone worked since the time it was invented: if you called someone, you were expected to pay for it, but if someone called you, it was free. This makes total sense: the phone call recipient didn’t intend to have that conversation, he or she isn’t really responsible. Besides that, this seemed to work very well for decades, and phone companies never changed it. That is, until we were tooling around town with phones in our pockets and cars. Since it was new and fancy, providers decided to invent a different business model: you’d be paying for calls now whether you started it or not.

As far as I know, mobile phone companies have never had to justify this to their customers en masse.

AOL vs. World of Warcraft

Remember those CDs of AOL software? They were everywhere. It seemed like you’d get a new version in your mailbox every three months, especially if you weren’t even a customer. They were free, because AOL’s business model was a monthly fee for access, content, and software upgrades. And AOL did fine for a long time.

Everquest came along and messed that all up, charging both a monthly fee and an upfront fee for the software, and now WoW players suffer the same fate. You’re paying the company twice for the same things they were going to be doing anyway. What is wrong with us? Why do we enable companies to use more than one business model at a time?

Advertising is a replacement for subscriptions

And vice versa: subscriptions are a replacement for advertising. Advertising is one business model, and subscriptions are another. Employing both for the same product is unacceptable.

I’d like to ask for your help now in spreading this message to the managers at Hulu, so they understand the intelligent way to move forward is to either saddle us with a recurring fee and remove the commercials, or leave the commercials in an otherwise free service.

On Hulu’s discussion forum, there are already many threads decrying the decision to start charging. You could try adding your own voice there, or e-mailing feedback@hulu.com. Another less elegant method would be to add an irrelevant comment on one of the entries at the official Hulu blog. In my experience, site owners are more likely to read blog comments than they are discussion forums, but your mileage may vary.

Hulu’s Free Glory Days Are Official Numbered, John Herrman, Gizmodo, Oct. 22 2009

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Net Neutrality Simplified

by Smithee on October 23, 2009

in Consumer

Depending on how you get your news, the topic of network neutrality can seem boring, or confusing, or both. Possibly you haven’t yet heard about it, or you’ve already formed an opinion. The reports I see are too often complicated, lacking reasoned arguments and full of hyperbolic guesses as to what the future might hold. Not to mention that both supporters and critics say that their side is the one promoting “freedom”. I’ve read all the boringly-written PDFs about the FCC’s new guidelines for you, and here’s what it means.

Same as it is now

Enacting an official policy of network neutrality means that the Internet you use now will not change. Broadband providers have ideas about limiting access to some content for customers who don’t pay as much, or aren’t on their networks.

As the specific FCC guideline is written:

broadband providers cannot discriminate against particular Internet content or applications

Without Net Neutrality

For example, imagine if you needed to be a Verizon FiOS subscriber in order to access www.startrek.com. Star Trek fans who didn’t have FiOS would throw a fit (those same Star Trek fans might recall this actually happened on AOL many years ago). As an alternative, the owners of www.startrek.com work out a deal with the other big broadband companies and they say, “okay, fine, you can have access to it, but your broadband bill will be $5 more per month”. Meanwhile, FiOS subscribers aren’t paying $5 a month for the Web site. Sound fair?

Here’s another made-up example of a world without net neutrality: you have AT&T broadband at home, and a Sprint mobile phone through work. Your company uses Google Apps, but AT&T decides they don’t like Google, so you can’t get to your work e-mail from home. Does that sound like a good idea to you? If you’re against that idea, then you are in favor of net neutrality.

No reason for prices to change

The Internet was built by a bunch of nerdy scientists to be open and accessible to everyone. It isn’t free, because moving data requires paying people to do various jobs. At my house, we’re paying about $60 / month for some very fast Internet. Critics of net neutrality claim that “new rules” will force providers to raise prices. But remember, neutrality is what we have now, as it’s been regulated by the FCC in the past on a case-by-case basis, so there’s no logical reason to raise prices for anyone. Besides, $60 a month is almost highway robbery as it is.

Internet providers charge more for faster speeds, and less for slower speeds. Critics of neutrality want to invent new ways to charge people in addition to this one simple rule.

Regarding congestion and illegal activities

The FCC’s published guidelines (they’re just getting started writing the actual rules), make exceptions that give Internet providers the ability to manage network congestion and prevent illegal activities. So if you’re on cable, and you’ve got neighbors downloading (and uploading) 68 gigabytes of Star Trek movies, providers can find a way to stop your speeds from being negatively affected. The new rules do not prevent throttling, and they do not encourage illegal activities.

Avoiding an ugly fight

I’m speculating here, but ensuring network neutrality will also mean side-stepping huge Public Relations nightmares for broadband companies. I think a provider has the right to consider limiting access to certain content or applications, and I think it would be massively stupid of them to go through with it. Millions of people would be instantly enraged.

Back when you needed to be an AOL subscriber to access www.startrek.com, they got complaint after complaint, and it was less than a year before access was returned to everyone. Why would anyone want to go through with that again?

Preserving a Free and Open Internet, at the FCC’s OpenInternet.gov web site (which is accessible to everyone)

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Senator Dodd Going Ahead With Overdraft Legislation

by Smithee on October 20, 2009

in Banking

We told you last month about banks deciding to let customers opt out of overdraft fees, first announced by Bank of America and JP Morgan Chase, and then the next day by Wells Fargo (and Wachovia, which it owns).

These big banks made the changes very soon after lawmakers announced an intention to try to regulate the extent to which customers are punished for spending money they don’t have.

Here’s a summary of the changes already made:

Opt out? Max daily
overdrafts		 Balance to trigger
overdraft fee
Bank of America Yes 4 -$10 *
Chase Yes 3 -$5
Wells Fargo Yes 4 -$5

* Fee will also be charged for overdrafts maintained longer than 5 days, regardless of balance.

Not satisfied, Senator Chris Dodd is still pursuing a new law that will enforce some limits on all banks.

Proposed legislation

The law introduced yesterday aims to prevent:

  • more than one overdraft fee per month;
  • more than six overdraft fees per year;
  • fees that are more expensive than the cost of processing an overdraft;
  • banks from manipulating the order in which they post transactions in order to rack up extra fees;
  • fees if an overdraft is due solely to a bank hold, such as the hold placed on funds when reserving a hotel, if the hold is greater than the actual amount of the transaction; and,
  • enabling overdraft protection on customers who don’t explicitly sign up for it.

3455410819_aed2a1b3ccIn addition, automated bank systems (SMS, e-mail, etc.), ATMs and bank tellers would be obligated to warn a customer if they were in danger of going negative (presumably with the current transaction), and be given the option to avoid that result.

Analysis

Opt-in

I am all in favor of “opt-in”. I want opt-in everything, but as we saw when Windows Vista was new, it’s maddening to be asked for your permission after initiating every single activity. Some things are perfectly innocent and should be opt-out instead. Frankly, I find it thrilling that for the first time, customers can opt out of overdraft fees. Apparently, it took the threat of new legislation to prod banks into introducing this, so sure, let’s make it all consistent.

Fee instances per year, and per month

One overdraft fee per month and six per year seems arbitrary to me. If I had to guess, I’d say this is related to the fact that banks stand to earn over $38 billion this year on overdraft fees, and they weren’t in danger of losing anywhere near that much from accounts which went negative and then stayed that way.

But I’m enough of a capitalist to admit that it seems wrong to limit profits just because it can be done, which this seems to smack of. When the full text of the bill is available, I’ll try to find more about where these numbers came from.

Fees more expensive than the cost of processing

To be sure, it’s part of a bank’s operation to process an overdraft, deal with a negative account, and pay the salaries of people who write the software and maintain the literal and figurative machinery.

But as was explained to me while working the phones at Bank of America, part of the fee is also meant to dissuade the customer from going negative, and failing that, to encourage the customer to bank elsewhere. Clearly, the fees are adding up to lavish profits at the expense of probably-well-meaning customers. In my opinion, it’s simply not right to profit because someone else fails, especially when that someone is your customer.

Manipulating the order of posting items to create extra fees

This should be obvious as a disgusting practice performed by a heartless behemoth of a corporation.

Overdraft fees because of a bank hold

This also seems like common sense. If a hotel has reduced your available balance by $250 when you’re only going to be paying $110, it’s unreasonably for the bank to punish you for being overdrawn. You had no intention of spending more than you have.

The same is true if there’s a hold placed on a deposit. I’m sure the vast majority of deposits that have holds placed on them end up being legitimate, probably at least 98%. A check made out to you isn’t the same as cash, but why not give your customers the benefit of the doubt, or at least avoid punishing them when you don’t and you end up being wrong?

Warning customers who are in danger of going negative

This just seems like excellent customer service. If a bank truly finds it inconvenient to process overdraft fees, they’d all be doing this today.

Sources

Dodd Introduces Legislation to Curtail Overdraft Fees, Jeff Plungis, Bloomberg, Oct. 19, 2009
Dodd Unveils Bill to Protect Customers From Abusive Checking Account Overdraft Fees, Sen. Dodd’s Official Web site, Oct. 19, 2009
Photo Credit: Tom T

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Google Editions: E-Books From Anywhere

by Smithee on October 16, 2009

in Consumer

In addition to Sony’s and Amazon’s electronic bookstores (about 100,000 and 330,000 titles available, respectively), booksellers now have another huge option for getting their books into our hands: Google Editions, which will launch next year with between 400,000 and 600,000 titles.

Not necessarily a store or a device

Google Editions is built on top of Google’s enormous book digitizing project called Google Books, and is a platform that stores can take advantage of.

Google plans to share the sales with both publishers and the online bookstores. For books sold directly from its Web site, the search giant said at the book fair that it would give publishers 63 percent of the sales and keep 37 percent itself. For books sold through Amazon or other retailers, the publisher would get 45 percent, while the retailer would get almost 55 percent with a small share for Google.

Google has not (yet?) announced any plans to sell a reader device, primarily because they are making the purchased books available on any device with a browser. In theory, as long as you are logged into your Google account, you can read the same book on your laptop, mobile phone, the netbook you keep in the kitchen, etc.

The electronic ink difference

I’ve periodically tried to read entire books from a computer screen, and I’ve never been able to finish one. Daily computing tasks are different from reading paragraph after paragraph for hours. Conversely, devices like Amazon’s Kindle use an electronic ink that is much easier on the eyes and feels like reading off of paper.

In addition, computers like the iPhone use a kind of screen that drains the battery much faster than the Kindle. Hopefully, competition will be spurred forward with an electronic ink device that has support for Google Editions.

Saving money and peace of mind

2771611344_b87477aef4_mMy wife has had a 2nd-generation Kindle for about eight months, and loves it to pieces. I asked her the other day whether, because electronic versions of books are cheaper, she thinks she’s saved money on her book purchases, and she nearly guffawed. She figures she’s bought three times as many books as she otherwise would have. It even affords her the ability to read books that normally she’d be embarrassed to be seen with, like the “Twilight” silliness series.

However, having your book purchases on one thin device also means that you’re not storing the ones you’ve already read somewhere in your house, on the off-chance that someday you might read it again. Many of you might be in the habit of donating your old books to a local library or Goodwill, and for that I salute you, but at our house we never seem to get around to it.

Conclusion

No matter what, it’s always better to have more than one store for a given product. I’m particularly pleased that Google is entering this market, because in addition to their motto, they actually do have a strong past record of not being evil.

By the way, did you know you can subscribe to Consumerism Commentary on the Kindle?

Photo credit: Robin Iversen Rönnlund
Reports: Google to launch online bookstore, Lance Whitney, CNET, Oct. 15 2009
Google to launch Google Editions platform, Peter Zschunke, Associated Press, Oct. 15 2009

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Fulfilling a Dream for $8 an Hour

by Smithee on October 13, 2009

in Career and Work

I just graduated a “Level One” (read: newbie) improv class. At first, I signed up for the class because I can think of few thing scarier than getting on stage with no script. I’m not known for thinking on my feet, I don’t “BS” well, and even when I know my lines, I get terrible stage fright.

So I made myself go to this class as soon as I knew I’d have eight free weekends in a row. It took about four years to get up the courage. I’d like to say that it also took some time to get the admission fee together, but of course the $200 went on a credit card (technically it came from the $800 that would otherwise have gone toward paying down the credit card, but the net effect is the same).

I didn’t have an extra $200 to take that class, but man, was it exciting. I had to deal with strangers, criticism, bad accents (most of them mine), and a basic requirement of acting in a scene where 1) you don’t know what you’re going to be saying, and 2) you also don’t know what the other people will be saying.

I didn’t think I could do it, but after eight weeks, we put on a show, and darn it if the audience didn’t laugh and cheer.

So, I figure, the class was 3 hours every weekend, for 8 weeks, for $200. That’s $8.33 an hour to have a creative outlet, learn to think on my feet, and re-learn to perform in front of strangers. I think that’s a reasonable price.

I still don’t have an extra $200. In fact, I’m still about $6,000 in a credit card hole, but I signed up for Level Two, anyway.

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TV Ad Volume May Finally Be Moderated

by Smithee on October 9, 2009

in Consumer

This is something I’ve wanted to see happen for my entire life. I never thought it would, and I’m only mildly political so I never pushed for it, but we may see a new law that says a TV commercial can’t be “louder than the program it accompanies”, nor can it be “excessively noisy or strident”.

At our house, we don’t get to see a lot of commercials, but our TV-service-provided DVR isn’t as elegant as a TiVo, and the 30-second skip button leaves a gap between skips, and some of those gaps are obnoxiously loud. Usually it’s people wanting to melt down my “extra” gold or sell me some unpainted furniture from a warehouse, but it could be anything. It makes me instantly angry, every time.

But just yesterday,

The House Subcommittee on Communications, Technology and the Internet on Thursday approved a bill that would prohibit television commercials from being excessively loud. The FCC would be required to come up with recommended volume levels for commercials.

Broadcasters, TV stations and cable and satellite providers would then have one year to purchase the necessary equipment to temper noisy ads.

I wasn’t expecting new equipment to be necessary, since when we watch things on Hulu, the ads are never louder than the show I’m watching. When we watch videos on the Xbox, a TV show’s volume isn’t any louder than it would be if I were playing a game, and the same goes with a DVD. Even when watching any of the dozen channels on Boxee, I never have to scramble to adjust the volume. But I guess that “old school” TV providers (I have the extremely recent Verizon FiOS) are a mish-mash of suppliers and delivery devices, and there’s still a hole that needs to be plugged.

House panel seeks to hush noisy ads, Kim Hart, The Hill, Oct. 8, 2009

Hit the mute! Why TV commercials are so loud, and how that may change, Jeff Bercovici, Daily Finance, Oct. 8, 2009

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