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Consumers Want Easier Online Payments

This article was written by in Consumer. 9 comments.


Yes, it’s frustrating to need to reach for my wallet and type in my credit card number every time I want to complete a purchase online. According to a recent MasterCard and Harris Interactive survey, 58 percent of consumers agree with me. Consumers even abandon their online shopping carts when the check-out process requires too much effort.

That might be good news for consumers. If a small barrier is all it takes to prevent someone from making a purchase, perhaps that purchase was not a necessity. Leaving more money in the bank rather than spending that money on some product that does not drive enough desire to get through a relatively painless process can only be beneficial to the shopper’s financial condition. Retailers, on the other hand, will obviously see consumers’ lack of purchase consummation as a problem, directly affecting sales and revenue.

The solution is to store the details pertaining to your payment method so it can be automatically retrieved at the point of sale. Amazon.com is certainly a pioneer with this approach. This company’s one-click purchasing process using stored credit card or debit card information makes buying a smooth process, although it created an uprising about patents when this feature was introduced many years ago.

PayPal has a good solution as well. Stores that allow payments through PayPal enable users to associate a credit card and avoid the need to type in a credit or debit card number each time.

Consumers can also use browser add-ons or downloadable programs, like LastPass, to store credit card information retrievable with a click or two.

Purchasing items online is much safer and more secure than being out in the world, carrying a wallet with all your credit cards and cash, and handing your credit cards to a waiter or gas station attendant who disappears for several minutes. Online security, as long as you confirm you are visiting a secure website, is trustworthy. No one is going to intercept my secure internet connection when I’m buying something online, and for the most part, I trust companies not to expose a database of credit card numbers to the public. That exposure is just as likely to happen when shopping in brick-and-mortar stores as when shopping online. The situation is unlikely, and shopping online does not add to that risk.

There is no universal solution, a one-click purchasing experience like that on Amazon.com, available to all retail websites. But there is also no equivalent to the one-click purchasing experience when you shop in store locations, either. Swiping a payment card or transmitting a secure wireless signal from your mobile phone gets close to the experience, but you still need to take out your wallet or your phone.

While retailers want to make it easier for consumers to pay money, consumers should be careful about making this process to automatic. Trading money for an object of some type should involve at least some opportunity to stop and consider the purchase. Technology makes it incredibly easy for consumers to part with their cash or increase their debt burden, and retailers want to make it easier. Consumers should be working against that trend and moving in the opposite direction.

If not, retailers will soon be able to simply reach into consumers’ pockets and take that money. Some companies offer free trial periods for their products and services without making it blatantly obvious that customers will be charged at the end of the trial period. Some create significant barriers to canceling the service in advance of the ending of the trial period. Consumer groups often criticize these policies, and some might be considered scams. If consumers make it increasingly easy to give up money without thought, then we’re just as much to blame.

Photo: Håkan Dahlström
BusinessWire

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The Consumer Financial Protection Bureau’s Director, Richard Cordray

This article was written by in Economy. 14 comments.

As many Presidents of the United States have done, President Obama avoided confrontation with Congress by appointing an individual to direct a government organization while lawmakers were on recess. Yesterday, the President appointed former Ohio attorney general Richard Cordray to the long-delayed position of director of the Consumer Financial Protection Bureau (CFPB). Now that this department has a director, it can move forward in enacting regulations — not just suggestions — for non-bank financial entities.

Lately, the CFPB has been working on simplifying customer agreements for financial accounts. A great example is this redesigned credit card agreements. The new design highlights the important terms of the agreement, describes financial terms in plain language, and helps consumers increase awareness of their obligations and rights. The bureau is currently working on a similar resigned agreement for mortgage contracts.

Richard CordrayWithout a director, none of these recommendations would be required to be enacted by financial firms. Some banks have already taken steps to improve communication, but banks are also regulated by the Federal Reserve. The Fed issued some regulations as part of the Credit CARD Act of 2009, but the regulations do not extend to non-bank financial firms.

The CFPB may face legal challenges from industry groups who insist that the bureau can have no power to issue regulations.

Who is Richard Cordray?

When Richard Cordray was the attorney general in Ohio, and when he was Ohio’s treasurer before assuming the role of attorney general, I would receive marketing emails from him every couple of months. He championed pro-consumer causes and worked to ensure the public had a better understanding of predatory financial arrangements. His emails were directed at the press to help raise issues in the media. For example, he campaigned for closing loopholes that allows payday lenders to practice predatory tactics and he warned consumers of scams related to the Cash for Clunkers program. Cordray lost in his campaign to be re-elected attorney general in Ohio.

Cordray wasn’t without enemies in the banking industry. He filed a lawsuit against Bank of America and its executives in 2009 on behalf of Ohio’s state pension funds related to the acquisition of Merrill Lynch.

Cordray is also a five-time champion on Jeopardy.

In general, judging by his past actions, Cordray appears to be comfortable with a position strongly in opposition with Wall Street interests, which is a change in direction for Washington politicians for as long as I’ve been an adult. Clinton, Bush II, and Obama have all, despite occasional moments of pro-consumer rhetoric, appointed Wall Street insiders to major financial roles in government and pseudo-government agencies.

There is some validity to that philosophy, after all, Wall Street executives have the connections and relationships with other Wall Street executives, and these connections are necessary for the government to operate efficiently with one of the largest driving forces of the American and global economy. The government, however, can’t be expected to issue effective regulations if it needs to stay on Wall Street’s “good side,” however.

It’s a tough balance to manage, and it’s one of the many reasons why I avoid politics.

Photo: Richard Cordray

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Your Relationship With Money

This article was written by in People. 25 comments.

Have you ever had a boyfriend, girlfriend, husband, or wife you want to see again the moment he or she is out of your sight? Has love ever felt like a drug, something you need every minute, and you need more each time? Have you ever failed to understand why you constantly desire a lover who treats you poorly? Perhaps you long for the guy or girl you knew twenty years ago, a fleeting infatuation. Like love, it’s possible for any one person to have a differently relationship with money than the next individual. Love may be a mystery, but money is usually concrete.

What role does money play in your life? I’ve seen everything.

1. Money is the goal itself. Working in the financial industry, this attitude comes as no surprise to me. When the ultimate goal is to accumulate an impressive bank account balance or net worth, the unconditional love of money helps people rationalize their behavior; the end, being wealthy, often justifies the means with this attitude. Never mind the good that can be done with this money; often, those who are obsessed use the wealth they accumulate to buy items that exist primarily to show that wealth off, not items that increase happiness. The philosophy is that displaying wealth to the world increases the chances of attracting more wealth. Even if there is some truth to that, there are other costs, as well.

I may be critical of those who place their faith in money alone, but I’m not anti-wealthy.

2. Money is evil. At the other extreme, you might find people who turn away from wealth at all time. They may have had a bad experience with money in the past. Perhaps they watch the news and take to heart the latest scandals and scams, and assume that money always makes people to awful things to one another. Nations war and people die over money. Bad behavior is often rewarded in the marketplace. How can money be a positive force when it encourages people to make bad decisions? People who think money is evil may not trust the banks to hold onto savings accounts.

This approach is dangerous because it helps those who hold this philosophy to avoid financial freedom, the ability to live mostly on one’s own terms.

3. Money is a tool. This is my camp. Money didn’t exist forever, and happiness itself is a modern concept as well. Money only increases happiness to a point, so why accumulate more money than you need to achieve maximum happiness? There are good reasons. If you set relevant life goals, like helping eliminate hunger in your country, providing all opportunities possible for your children, or encouraging education in the arts, money is one of the strongest tools for reaching your goals. These goals don’t stop at a certain dollar amount. More can always be done.

When I hear someone say their life goal is to have a nest egg of $1 million when they retire, the question I think of is, “Then what?” I understand that decades of hard work can make someone long for retirement and an end to the rate race, but it’s the financial freedom that should be important, not a monetary target. Targets are useful when deciding how to allocate and invest your wealth as it grows, but money is not the purpose intrinsically.

Squirreler shared his thoughts about the role of money in his life, putting money on an equal ground with health and relationships. Health and relationships contribute to happiness. Wealth contributes as well, but only insofar as it fosters health, relationships, and other things like experiences, self-worth, and independence. Therefore, I would not put wealth in a symbiotic equilibrium with anything else. It’s another layer that helps amplify everything else; people who have a positive outlook on life while improve with wealth, while people who take a destructive approach to living will only become more dangerous.

Wealth makes life easier and helps you reach real goals, but money is neither inherently good nor inherently bad.

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Earn More Money: How to Be a Secret Shopper

This article was written by in Income. 16 comments.

For all of the eight years of Consumerism Commentary’s existence, I’ve written about big ways to earn more income, like changing a career path, learning how to negotiate, or building your own business, much more than I’ve written about options that might seem more available to most people. I’ve generally shied away from the smaller ways to add to your bank accounts. The time you spend on any projects can easily be worth more than the small income the activities generate. When I write about financial responsibility, I want to encourage using the time you want to trade for earning income thoughtfully rather than undertaking small projects that only add to financial well-being incrementally.

Because I like to focus on the big picture, I’ve never discussed they small ways people can use their spare time to generate extra income. Because this income is usually small, these are activities people may not want to do unless they also enjoy them. For the most part, these are not full time jobs or career paths. These are suggestions for the majority of middle-class workers in the developed world who feel their finances could use some assistance and are willing to trade some of their free time in return for some more money.

This is the first article in a series about earning more money.

The first option to explore is an activity that could make many modern consumers happy. If you like shopping, why not get paid to do it, and pick up some additional perks along the way? Secret shoppers or mystery shoppers are hired by corporate executives who want to get a real indication of how the companies’ branches, offices, or franchises are operating.

Secret shopping scams

Secret Shopping, Shopping BagsAs with any money-making prospect, the first rule of thumb is to avoid scams. Nefarious people abound, looking for people willing to take any steps if they think it will help them earn money. Most people find secret shopping opportunities by searching online, and scammers can easily post job listings. Here are some signs that the secret shopping opportunity is a scam.

  • You are required to pay to participate. If there’s an enrollment fee, a listing fee, or any kind of fee that you are required to pay before receiving a job, the opportunity is almost definitely a scam. Even if they promise you will earn your fee back, any up-front costs are red flags.
  • The company sends you a check to cash at the bank as part of your assignment. This is a common scam. You would receive a check for a large amount and be required to send part of the money back to the company quickly. Avoid this. Some banks do legitimately use secret shoppers to evaluate branches, but you won’t be required to deposit a check and send money to the company.
  • You must buy products or services using your own money. While it is common for legitimate secret shopping services to operate this way, and reimburse your expenses after the fact, many don’t require spending money at all. If you’re just starting out, stay away from companies that require you to use your own money until you’re comfortable with them.

Secret shopping responsibilities

When you receive an assignment, you will usually have a date or a range of dates during which you will need to perform the task. The company will outline the task. The task may involve walking into a store and asking for help, going to a doctor’s office and scheduling an appointment, or ordering a meal at a restaurant. The company may provide you a script to use, particularly if the assignment involves calling the company. After your experience, you will need to complete a questionnaire describing your encounter and return the completed form to the company. Almost always, these forms can be submitted online.

A key skill required for successful secret shopping is the ability to remember details. You generally won’t be able to take notes while you are undercover; this will alert employees that they’re being observed. You may need to remember details like how many employees were visible, the quality of the greeting you received, sales techniques, layout of store, and compliance with the company’s standards.

These same skills will help you succeed in other types of jobs as well. Determine the best use for these skills. While they could help you earn some money as a secret shopper, if you are inclined to do well, you might be able to use those skills in other, more lucrative jobs.

Secret shopping income potential

The income from secret shopping is limited only by the time you have to devote to taking on new assignments. The higher quality of the questionnaires you return, the higher the probability you’ll receive more assignments. Some jobs don’t pay at all, but you’re allowed to keep what you buy. A typical example is the meal you eat while secretly shopping a restaurant. Most jobs that pay offer $10 to $20, or perhaps lower due to fallout from the economic recession as supply of potential shoppers increased. If you are able to find enough jobs from the same company, you could build up a reputation for being a high-quality secret shopper. If the company has more lucrative assignments, this could increase the possibility of receiving those assignments. If you do well, you could receive more assignments than you can handle, so be realistic with the assignments you accept.

Do you have time to go on one shopping excursion per week? You could be looking at an extra $500 to $1,000 over the course of a year, or even more if you are able to land more lucrative assignments. This can pay for a vacation or strengthen your emergency fund. If the time it would take to go on a weekly secret shopping excursion would take away from your quality of life, perhaps spending more time with your family, working with a hobby you love more than shopping, or building your own business, you may decide that your time is worth more than what you could earn from this activity. It’s more than just a financial decision, its personal.

Secret shopping is an individual activity. Each assignment could bring you to a new shopping location, which might be exciting, but there aren’t really opportunities to get to know people. For people who prefer working on their own rather than building relationships and forming teams, secret shopping could be a good opportunity.

Have you ever been a secret shopper? What were your experiences?

Photo: I See Modern Britain

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Avoid Late-Night Infomercial Scams

by Flexo

I’m usually awake late at night, and I’ve occasionally helped myself shut out distracting noise late at night by keeping the television audio on at a low volume. Invariably, the late night programming is centered around show-length commercials for a variety of products. Kitchen devices seem to be some of the most popular products sold ... Continue reading this article…

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Safe Donations to Victims of the Tsunami in Japan

by Flexo

Updated March 16, 2011. If you have been paying attention to the media, you most likely saw terrifying footage of tsunami waves destroying much of the eastern coastal areas of Japan, particularly Miyagi prefecture. Friday’s earthquake measuring 9.0 magnitude on the Richter scale triggered massive waves that leveled homes and farms, left thousands missing, forced ... Continue reading this article…

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50 Cent Plugs Stock to 3.8 Million Followers on Twitter, Stock Soars

by Flexo
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Here’s a fun experiment. You don’t need many materials, just a little bit of work. Here are the steps: Create a huge following on Twitter. Put your money into a little-known stock with low trading value. Write several messages on Twitter to almost 4 million followers about how good the investment is. Watch the valuation ... Continue reading this article…

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Rationalizing an Expense By Changing Your Words

by Flexo

As any marketer knows, words have a power beyond their literal meaning. No one knows this more than political marketers, who create campaigns that usurp specific words and ensure their meaning is replaced with some sort of thought the’d like to embed in the public consciousness. This effect isn’t only thrust upon us by marketers; ... Continue reading this article…

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