Boldly Going… Nowhere.

I recently stumbled across a game called “Star Trek: Timelines:

Thanks to Q’s intervention, you have access to characters from all Star Trek series, from Kirk, Spock and McCoy in the original series, to Archer, Tucker, Reed and Maywether of “Enterprise”. It is an RPG, which means you have to equip and upgrade characters, as well as upgrading your ship. Upgrades and items can be earned by performing different types of missions, or they can be purchased at the time portal.

Unfortunately, this excellent idea was killed by a nasty, ugly little problem.

This error message makes it impossible to progress beyond “The Mad Vedek”, so my Captain is stuck at Level 9.

When I reported this problem to support, I got the following reply:

I’m sorry for this inconvenience in your gaming experience. We are aware of this issue and our technical team is working on a resolution.

In the meantime, I have added 100 Chronitons to your account to replay lost mission.

Again, thank you for reporting this and appreciate your patience as we resolve the issue.

That was two weeks ago. In spite of an upgrade of the client, There has been no resolution of this matter. This is unacceptable.

I’m done with this game

Mysteries of the banking system

Or: Why is the banking industry still stuck in the nineteenth century?

• When I use my debit card to authorize a transfer of funds from one bank account to another, the transaction is completed in seconds. But when I transfer money from my bank account to a “linked” account of mine with another bank in the same town, it takes two working (or up to SIX total) days?
• Why do totally automated transactions (such as transferring money between savings and checking accounts in the same bank) have to wait for the next working day? Why can they not clear immediately?
• Why is it that when I deposit a check into my account I have to sign the back of the check? Nobody inspects the signature, and it is not compared with a signature on file? They do not do this in England. The best explanation that I have heard is that it makes check fraud easier to prove.
• If that is the case, then it is for the bank’s protection, not yours. If so, here is a suggestion” why not take a picture of the person depositing the check and store it electronically with the transaction?
• PayPal looks like a bank, walks like a bank and quacks like a bank. So why is it not a bank? Apparently it is because they do not participate in “fractional reserve banking”, whatever that is. Which is exactly the way that PayPal wants it; none of those pesky banking regulations means that they can get away with murder. Which is precisely whey they should be regulated.
• Ever wondered what happened to those credit cards that had the owner’s picture on them? Turns out that the couple of bucks it cost to put the picture on the card was more than the ongoing cost of Credit-card fraud (the cost of CC fraud is mostly borne by the merchants). So the banks decided to “ditch the pix” and save a few (million) dollars.
• Ever noticed that point-of-sale terminals across the US tend to steer you towards (PIN-authorization) debit card transactions and away from Credit-Card transactions (signature authorization)? This is intentional. Debit card transactions clear immediately, have much lower fraud and cost the merchant a lot less than Credit Card transactions.
• The advantages are all one-sided though – there is no advantage to you. Indeed, the opposite is true – the CC companies are offering points and bonuses for signature transactions. So my advice is reject PIN and use signature wherever possible – at least until the merchants start offering discounts for cash/Debit payments.
• Ever wondered why the rest of the world has gone “chip-and-pin” and the US is “stripe-and-signature”? While chip-and-PIN is the most secure method, it turns out that the cost of upgrading everything is more than the banking system is willing to bear. So yah, boo, and sucks to you.

eBay/Paypal is at it again

I found this in my mailbox yesterday afternoon.

Yes, it’s a real card. No, I didn’t ask for or sign up for it. I have seen ads for it on PayPal’s website, but did not want one, so I ignored it. Apparently they don’t take “no” for an answer, and decided that I needed one whether I wanted it or not.

This is truly evil, and here’s the main reason why.

That’s right – if you activate the card, you set yourself up for nearly $60 per year in charges and fees before you have even used the card… all for the privilege of being able to spend your own money. I have two bank debit cards, and neither one costs me a penny – if they did, I would drop ’em like a hot brick.

eBay is a de facto monopoly on the web, and PayPal is a de jure monopoly on eBay – they no longer allow other methods of payment. And their behavior stinks. For instance, as a seller, you are required to link your PayPal account to a real-world bank account. In the event of a dispute, PayPal can lock the linked bank account for up to six months without warning or explanation. they can also reverse transactions. This is the main reason that I stopped selling things on eBay and closed my eBay seller account.

PayPal is not a bank. And they like it that way. There are several reasons/excuse for this:

• PayPal does not “move money around”
• PayPal does not engage in fractional reserve banking.
• “PayPal doesn’t have a charter, thus it is not a bank”, say the FDIC
• “PayPal does not physically handle or hold funds placed into the PayPal service”. (er… neither do my accounts with ING direct or Perkstreet Financial – and they are both banks).

I don’t know whether or not PayPal is technically a bank. Maybe they are, maybe they are not. But there are few businesses in the world in more dire need of oversight and regulation than eBay/PayPal.

If you are as outraged about this as I am, feel free to leave a comment – and write to your Congressman.

Hobson’s Choice

I recently tried to send some money overseas through Western Union. I went to their website and put in all the requisite information, including my Credit Card information. At the end of the process, almost as an afterthought, I was presented with this dialog.

That’s right, folks… MasterCard wants to improve my security. This is a good thing. Visa have a similar feature – “Verified by Visa” – which I have been offered several times in the past and politely refused on every occasion. Unlike them, however, MasterCard would not take “no” for an answer – there was no way to decline this “feature” and still continue to execute the transaction.

Security is a good thing – I am all about security – but issuing me with yet another PIN that I have to remember is not security. Most people will probably write it down, and some will probably write it on the back of the card, which nullifies the security in the first place. On an infected computer, the PIN can be sniffed or keylogged, and be on the other side of the world before the customer has lifted their finger from the mouse button.

If MasterCard were really serious about security, they could have a person or a machine call or text the customer on their cellphone. This could be inconvenient, but I would rather have real security, even if it meant a little inconvenience. Or they could use a hardware key like the Yubikey. But that kind of solution costs money (about $5 per key, when purchased in thousand-up quantities), which makes it unacceptable to the banks.

Some of you may remember when Bank of America offered Credit Cards with the customer’s picture printed on the card. Now that was good security, at least for retail transactions – a quick glance was enough to see that the person was at least superficially similar to the picture. But they don’t make them like that any more. Why not? Because of two small problems: the first was that many cashiers simply did not look at the card, but that could be cured with training and penalties.

The main reason was that the pittance that it cost to put pictures on cards added up to many millions of dollars. Since neither the customer nor the bank was on the hook for fraudulent transactions, this was a cost that the bank was unwilling to bear. So rather than bear the cost of security, they scrapped it to save a dollar and a half per card… and offloaded the cost of the fraud on to the merchants. Problem solved.

And there, as Jack Sparrow might say, is the rub; the only security that is acceptable to the bank is cheap security. And yet another PIN for you to remember is cheap security indeed.

So what did I do? I closed the browser and, after verifying with Western Union that no transaction had occurred, I installed their app on my smartphone. Ten minutes later, the money was on its way, paid from the same card. Quickly, conveniently, and without the usual kerfuffle or flummery from MasterCard.

Cos that, dear reader, is how we roll…

Freeloaders

.Somebody recently asked me what I despised most of all, what made me angry more than anything else. My reply, to my own surprise, was “freeloaders”.

After thinking about this for a while, I realized that freeloaders come in many different shapes and sizes.

• If you take something that belongs to someone else, you are a freeloader. You have taken a shortcut to stuff at someone else’s expense.
• If you expect someone else to make sacrifices so you can realize gains, you are a freeloader.
• If you are receiving royalties for someone else’s work, or for something you did decades ago, you are a freeloader. Copyright and Patent laws were designed to allow progress. This is done by rewarding creative folks sufficiently to make them create and invent more stuff. This also applies to publishers and people who have stopped creating because they make too much money… but that is another story.
• If you are unwilling to work, but expect others to feed, clothe and shelter you, you are a freeloader.
• If you expect someone else to pay for your health care, you are a freeloader. Health care is not a human right.
• If your business expects the government to enact laws to help you destroy the competition, you are  a freeloader.
• If your business expects the government to bail you out, you are a freeloader.

That’s all for now.

The price of security

Milady and I were conversing with a friend last night, and an interesting topic came up. Some years ago, several banks (BofA and CapitalOne were mentioned) started putting customers’ photos on their credit cards. This widely hailed as an excellent idea.

And then, inexplicably, they stopped doing this.

The obvious question was “why?”. Why did they stop doing something that was universally hailed as a good idea?

So I put my thinking cap on, and came up with some ideas.

• I remember reading somewhere that the price of putting a photo on a credit card was a couple of dollars per card. Multiply this up by the millions of cards in circulation, and you have a huge expense that the bank has to bear.
• Credit-card fraud, on the other hand, is not a cost that the bank has to bear. They do a chargeback, which effectively passes the cost on to the merchant. So, the customer is covered, the bank is covered, the merchant gets the shaft and pays the price. That is perfectly legit – it is part of the merchant agreement.
• There are also many transactions where the merchant cannot see the card; for instance, pay-at-the-pump transactions in gas stations, and internet transactions.
• Finally, with card-swipe machines in operation at most stores, there is often no need for the cashier to see the card — and too many of them don’t bother looking, anyway.

Sometimes “security measures” don’t really do that much for security. And sometimes, the price of security is too high.

I think I understand now.

But I still wish that they would give customers the option to have their photos on their cards. I’d buy that for a dollar.

Fear Not

A few days ago I received my annual statement for my 401(k). The results were pleasantly surprising; the return for the year came to just under 29%.

That’s my best year’s return ever.

So what did I do to be blessed with such a superb return? Absolutely nothing.

That’s right; nothing. At the beginning of last year my employers suspended the 401(k) match, so for the whole of last year I did not put in a penny. Aside for a mid-year portfolio re-balance I did not move any money in or out or change investment options. Another 401(k) – for a previous employer – gained 28%, so this is not rocket science.

The irony is that after a two year diet of non-stop gloom-and-doom from the media, they have been silent about this.

I am not ignoring the current situation, nor am I castigating those who are suffering, but when you get right down to it, most of the problems we are experiencing are the consequences of stupidity in one form or another.

• The mortgage/lending/credit/financial crisis was caused by a combination of stupid borrowers and stupid lenders (I refinance my mortgage in the middle of this “crisis” with no trouble at all)
• The financial markets “crisis” was caused by board-level stupidity and too much debt.
• The unemployment crisis was caused by excessive outsourcing, and short-term thinking. Result: short term cost savings, long-term loss of skills.

It is just a shame that so many thousands of people and families have found themselves in dire straits as a result of the stupidity of others.

The media have referred to the current situation as “the worst recession since the great depression“. They are wrong and dangerously so. I have lived through worse. This too shall pass.

They also fail to learn the lessons of the great depression. The Back in the ’30s, the Government tinkered incessantly with the economy for many years; they tried bailouts, they tried stimulus, they tried takeovers and created entitlement programs. But all the King’s Horses and all the President’s men could not cure the great depression – World War II did – though along the way they did a great deal of long-term harm.

What we need is a long term strategy and a common vision. A Government that restrains itself from trying to take charge of everything (I have never had a problem that Washington DC has solved) and leaders of Industry who will take the long view instead of the next-quarter bottom-line view.

This too shall pass. Fear Not.

Now Reading: The Public Domain: Enclosing the Commons of the Mind By James Boyle

Inflation

The first Wembley Stadium was completed in 1923, and cost £750,000 to build.
The second was completed in 2007, and cost £798,000,000.
That’s more than one thousand times as much.

Alan Rufus or Alain le Roux (“Alan the Red”) died in 1089 with an estimated wealth of £11,000, which made him the richest man in England and the 9th richest man in history (in those days, money actually meant something, think about it: eleven thousand pounds of silver…)

A pound in 1750 had more purchasing power than 150 in 2005

From Wikipedia:
“In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time… inflation is also a decline in the real value of money”

What causes inflation? “Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply”.
In other words, inflation is caused by printing too much money.
This makes the existing pool of notes worth less.
The dollar has lost over 90% of its value in the past 100 years this way.

Or, to put another way:

The Dollar is the new dime

“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring permanent ruin. But both are the refuge of political and economic opportunists” Ernest Hemingway

Sorry Dave.

…or Why I disagree with Dave Ramsey about Credit Cards

I am a big fan of Dave Ramsey, perhaps the leading exponent of common sense in the country. He has helped literally thousands of families out from under the yoke of debt-slavery. We have purchased – and given away – several of his books, and I regularly listen to his podcast. He is a constant source of encouragement to me and millions across the nation.

But there is one area in which I disagree with him, and that is in the use of Credit Cards. His position is simple: cut up the cards and close the accounts.

I understand and respect his position; the Credit Card companies have spent billions  to try to persuade us to live outside our means and use Credit to fund the deficit. As a result, many people do not know how to use Credit Cards responsibly; they use the Credit Card as their “Emergency Fund”; they carry a balance and pay finance charges; they pay late and attract exorbitant fees.

A good friend of mine got badly mauled by credit cards once, and considers them evil. He may be right. Rather than lending money only to those who can afford to repay, the moneylenders rewrote the bankruptcy laws instead. Under the new law, it becomes much harder to declare a “clean-slate” (chapter 7) bankruptcy; instead, people are boxed into a “repayment-plan” (Chapter 13) bankruptcy – which has the highly desirable side effect of securing their previously-unsecured loans by court order.

So why do I disagree with Dave on this fundamental issue? Because I don’t use credit cards like most people do. I have not paid any Credit Card interest or fees since 1999…and I never will. A years ago I had three cards. Now I have only one (the other two annoyed me and I dropped them). I have used it twice in the past year. I use my debit card for all of my regular bills and most of my purchases. Having said all that, the simple fact is that there are some situations where a it is more sensible to us a Credit Card than a debit card.

• Federal law protects you when you use a credit card. Your bank may extend the same protection to your debit card, but they don’t have to – and that courtesy may be withdrawn at will. Bottom line: Your Credit Cards are protected by law; your Debit Card isn’t.
• When you buy something with a Credit Card, it is not legally yours until you have paid the bill – which gives you some leverage if the item is not as expected. When you buy with a Debit card you bought it. If there is a problem, whose money do you think the bank will work harder to protect – theirs or yours?
• If you are buying something online from a seller you have not dealt with before. There are a lot of phishing scams and bogus websites out there – would you rather give them a credit card number or a direct line to your bank account? For this reason I have recommended that Internet Newbies use a low-balance ($100 or $200) Credit Card when ordering from unfamiliar online merchants.
• If you “overdraw” your Credit Card, the CC company will decline the transaction, which can be embarrassing. If you overdraw on your debit card, the bank will pay out… and then eat you alive with charges and fees.

And finally, Dave, this one’s for you: I’ve heard you say “No millionaire I talk to says they made it with Points”, but that is a straw man argument – it is not about “points” and never was. The real question is “How many millionaires do you know who use Credits Cards? How many don’t?”

Having said all this, I have to say that I do not recommend using Credit Cards. That seems an odd thing to say, but what Dave calls “snake charming” requires iron discipline and concentration, and most people cannot do it – giving them a credit card would be like giving a drunk a drink.

A credit card should only be used if :

• You have the money. You have the money in the bank to pay off the card. You have it now, not at some point in the future. Using a credit card to “live now, pay later” is courting disaster.
• You NEVER carry a balance. Only fools carry a balance on their Credit Cards.You pay off the bill when it arrives: Don’t play chicken when due dates. They are praying that you miss the deadline.
• You have zero tolerance for fools: The moment that they do anything that annoys you, you are willing to cut up and cancel the card. Of course you can only do this if you have a zero balance… in the last six months I have canceled two of my three cards because the card issuers annoyed me.
• You don’t care about your FICO score. Only people with money in the bank can afford to cancel their credit cards. Ironically this hurts your “I-Love-Debt” score (also known as the FICO score). I recently cancelled a year-old Discover card and my FICO score went down by 18 points.

My Credit Card purchases during the past year are as follows:

1. Water Heater (old one broke).
2. Dining Set.
3. Airline Tickets.

In every case, the money to repay the balance was already in savings (sounds odd, but it takes about a week to move money from my savings, which is by design). In every case the balance was paid off in full. Any other use is unacceptable.

Bob Hope once said “A Bank will lend you money if you can prove that you don’t need it“. To that I would add:

“Buy it with a credit card only if you can already afford it“.

A Tale of Three Banks

Bank A – Thank you and good night.

I’ve been with bank “A” since August 1999. In December 2007 I got a letter from them informing me that they were switching my account to a new account in January. On examining the documentation more closely, I was incensed to find that the account that they were switching me to carried with it a $15 monthly charge that they generously waived for the first six months.

To say that I was not best pleased would be a massive understatement.

I phoned Customer Service, and spoke with “Tony”. He informed me that it would be impossible to keep my old account, because all accounts were being “harmonized”. An interesting choice of words; you might think it harmony to charge me to the tune (geddit?) of $15/month, but for me it sounds like discord.

The following day, I arrived home to find a message from an employee of this bank. I called back a few days later, but she was off that day. I left a message for her to call me. I never heard from her.

I resolved to change banks before that charge reared its ugly head.

Bank B – Wonderful people, broken system.

My first port of call was the local branch of a major national bank. Their website mentioned that they would pay a $100 bonus if I opened a new account and set up Direct Deposit—hey, a hundred bucks to do something I was going to do anyway can’t be bad, so…

1/23: Went into my local branch to open an account. After about a three-minute wait I was ushered into an office where the Manager greeted me and gave me options and details. I decided that this bank would be as good as any other, so off we go.

When I mentioned the $100 bonus she claimed not to know about it—she thought it was $75, then she checked the website. (Did I mention that she was the manager?) We shall see…

Anyway, she took my details, did her due diligence, and had me input my PIN. When signing the paperwork, I noticed that my middle initial was wrong. I mentioned this to her. She did not say anything, but typed a few keys on her computer; I assumed that she had made the correction. She also took my opening balance ($20) and ordered my first batch of checks. I asked if I could specify the starting number, and she said “no”, they start at 500.

Time spent: 30 minutes.

1/25: Went online to set up web access to my account. The website gave two ways to set up online banking: The first was “I have my Debit Card“, and required Debit Card Number, PIN, SSN and Account number; the second was “I don’t have a Debit Card“, and required SSN, PIN and Account number. Since my debit card had not arrived yet, I took the second option.

It didn’t work.

Naturally I called customer service. After being told that my call was important (but not important, enough, evidently, to warrant hiring sufficient staff), I was told that the second option was for those who had not been issued with a debit card. Since a Debit card had issued I had to wait till the card arrived and use that option.

Suggestion: Change the wording to “I have/have not been issued with a debit card“. That would have saved me a lot of time and trouble.

Time wasted: 45 minutes.

1/26: Good news: my debit card arrived – YAY! Bad news: unfortunately the card still had the wrong middle initial. Whatever the manager had done, the name on the account was still wrong.

Phoned up customer service. Again. Ran the “Your call is important to us” gauntlet. Again.. Sadly, in order to fix the account I had to clear security, and since I did not have online access set up, they did not have enough information to clear me. Fair enough, though a bit of a catch-22 situation if you ask me…

I went online and got web access set up. Fast and simple.

Time wasted: 20 minutes.

1/30: Phoned up Customer Support and had them change the name of the account.

At first she said that it could not be done by her; I would have to go into the local branch and get it sorted out there. I persisted and explained what I had been told. She said that she would take care of it. After she put me on hold for a couple of minutes, she told me that the named on the account had been changed (I had asked her to drop my middle initial entirely), and that a new Card would be issued in 7-10 days. Fair enough. I asked if the checks that had been ordered were also corrected, she said that no checks had been ordered.

Finally, she mentioned that a charge for the replacement card may appear on the account (apparently suppressing that charge was not an option at this time). If that happened, I was to call and have it reversed.

Time wasted: 30 minutes.

1/31: Went online and checked my account. Sure enough, there was a pending “Miscellaneous Payment” for $7.50 on the account. Called Customer service again (I now know the number from memory). She told me that she couldn’t do anything about it until the charge had “cleared”.

Time wasted: 10 minutes.

2/1: The charge has now “cleared”, so I phoned up Customer Service again. After the obligatory wait I spoke to a pleasant chap who took my details and put me on hold again. Finally he told me that the charge would be refunded.

Time wasted: 15 minutes.

2/6: My account has received a mysterious credit of $75! A few days ago I transferred $500 from a savings account with a different bank; looks like they thought that it was my paycheck and the $100 bonus was paid as the $75 that the manager was expecting. I spoke to the manager, but she seems convinced that the bonus was $75, not $100.

2/15: Got a letter from the manager, with a form that I need to sign and date, and return to her. A form that I have already signed…

2/20: Dropped by with the form. The manager admitted that I had signed the form but the back office had lost it—kudos to her for honesty. I mentioned the $75/$100 bonus; she remains convinced that it should be only $75.

2/25 My first batch of checks arrives. A large box contains one book of only 30 checks. Talk about cheap.

Bank C – Smooth Operators

About a week after opening my account with Bank B, I was sufficiently browned off by my less-than-salutary experience at their hands to with open a new account elsewhere. A neighbor of mine works for a small local bank that we shall imaginatively call “Bank C”; she was a customer before she was an employee, which is a high recommendation in itself – would you want to work for an outfit that has mistreated you as a customer?

2/2: Milady and I arrived at the bank at 10:45 on a Saturday morning. We were greeted at the door and seconds later we were whisked into the presence of our bank-account-opening person. She was very friendly and professional. After explaining our options, she took copies of our Driving licenses and opened our joint checking account (we decided not to open the savings account yet; there was a $200 minimum balance requirement, and being between paychecks, money was a little tight; we’ll do that later).

There was a $10 setup charge—though you do get a free batch of checks and a $25 bonus every year. I asked if we could specify the starting number, she said “sure”. I asked for the checks to begin at 1626 (our current batch of Bank A checks ends at 1625).

She was very thorough; she went through our automated payments and filled out and gave us paperwork for them “just in case the payee requires something in writing”. It would have been nice to have a folder for all this paperwork, but that is a minor gripe.

Another gripe was that when filling out paperwork the e-statement section was presented as if it was mandatory. I am not averse to electronic statements, but I prefer to have paperwork, all other things being equal. I have found that businesses love it when their customers “go paperless”, because it saves them printing and postage costs to the tune of millions. But so far only one company—Verizon Wireless—has offered to pass some of those cost savings on to their customers. Any road up, I asked if it were possible to receive paper statements; she said yes and crossed out the e-statement section. I am happy.

She also informed me that I would receive an e-mail when my online banking was set up. The entire process took twenty minutes from start to finish.

2/4: My wife received a call from the bank asking if everything was all right and if there was anything they could do for us. This small personal touch goes a long way.

2/6: Received an e-mail letting me know that online banking had been set up. Sign-up took less then ten minutes, most of which was spent choosing a password that was acceptable to both of us.

2/8: Received a card from the bank, hand-signed by the staff, welcoming us.

2/10: A thick envelope arrived in the mail, containing a flattened box and two books of 25 checks, starting with 1626, as promised. Yay

Final thoughts:

Bank A: Buh-bye. Maybe not today, maybe not tomorrow, but someday soon and for the rest of your life.

Bank B: Nice website—the best of the three—but too many screw-ups to be trustworthy. I plan on keeping that account open and using it as my tech stash/eBay account (Paypal’s terms and conditions give them the ability to lock the bank account that is linked to a Paypal account, so it pays to not give them the keys to the kingdom), so the effort was not completely wasted.

Bank C: We expect our cars to just work; you turn the key and the engine roars to life. The car takes you where you are going, and you get on with your business. This was the only bank that charged to open an account, which just goes to prove that you get what you pay for. I’m impressed. Good products, good service, nice people to do business with. We all make mistakes, it’s how they are handled that counts. And I get the impression that these folks do things right.