Random Thoughts – Randocity!

Rant Time: MagicJack – Scam or Legit?

Posted in botch, business, scam, scams by commorancy on September 11, 2018

magicJackThe magicJack company offers a voice over IP phone service. You can use it with an app on your phone or by a device plugged into an actual landline-type phone. It does require Internet to function. Either way you go, it’s VoIP and they have very questionable and deceptive billing practices. Let’s explore.

Internet Phone Service Choices

If you’re in need of phone services on a device that only has access to WiFi, then a voice over IP service (VoIP) is what you need. There are many different VoIP services available on the Internet. You can even make audio and video calls via Facetime on iOS, via Skype on pretty much any mobile or desktop computer or even via Google Hangouts. For this reason, magicJack is yet another VoIP phone service in a sea of choices.

Why would you want to choose magicJack? Initially, they were one of the lowest priced VoIP phone services. They also offered a tiny computer dongle that made it easy to plug in a standard home phone. That was then. Today, mobile devices make this a different story. Lately, this company has raised their prices dramatically and they’re performing some quite deceptive and questionable billing practices.

911 Service

As with any phone service that offers the ability to use 911, the service must tack on charges to the bill by the municipality. You’d think that part of the invoice that magicJack is already collecting in payment of services would also cover for those 911 services. I certainly did. Instead, magicJack isn’t willing to part with any of their service revenue to actually cover services that, you know, they provide as part of your phone service… like any other phone company does.

MagicJack seems to think they can simply pass on said charges right to you in an email invoice and have you pay them separately. Here’s where magicJack gets firmly into scam and deceptive billing territory.

I’m sorry magicJack, but you’re forcing the 911 service when we don’t really need it or want it on that magicJack VoIP phone line. If you’re going to force this service as part of the overall service, then damned well you need to suck it up and pay the expenses from what we pay you. There is no way in hell I’m going to pay an ‘extra’ bill simply because you are unwilling to use the collected service fees to pay for those bills, like any other carrier on the planet. It’s not my problem that you choose not to do this.

You, magicJack, need to pay those bills to the 911 service. It’s your service, you forced 911 onto my line and now you must pay the piper. If you can’t do this, then you need to go out of business. This means, you need to collect the 911 service fees at the time you collect the payment for your services. And you know what, you already collected well enough money from me to cover those 911 service fees many times over. So, hop to it and pay that bill. This is not my bill to pay, it’s yours.

MagicJack Services

Should I consider magicJack services as an option when choosing a VoIP phone service? Not only no, but hell no. This service doesn’t deserve any business from anyone! This is especially true considering how many alternatives exist for making phone calls in apps today. Skip the stupidly deceptive billing hassles and choose a service that will bill you properly for ALL services rendered at the time of payment.

MagicJack is entirely misinformed if they think they can randomly send extra bills for whatever things that they deem are appropriate. Worse, magicJack is collecting payments for that 911 service, but you have no idea if that money will actually make it to the 911 municipal services in your area. That money might not even make it there and you may still receive a bill. In fact, if the municipality does send you a bill, you need to contact them and tell them to resend their bill to magicJack and collect their fees owed from magicJack, which has already been collected in the funds to cover any and all phone services. If magicJack claims otherwise, they are lying. If you are currently using magicJack’s services, you should cancel now (even if you have credit remaining).

Is magicJack a scam? Yes, considering these types of unethical and dubious billing practices. Even though their VoIP service works, it’s not without many perils dealing with this company. As with any service you buy into, Caveat Emptor.

MagicJack Headquarters

Here is the absolute biggest red flag of this scam company. MagicJack claims their corporate headquarters address is located here:

PO BOX 6785
West Palm Beach, FL 33405

Uh, no. Your headquarters cannot be inside of a PO Box.

Yelp claims that magicJack’s US address is here:

5700 Georgia Ave
West Palm Beach, FL 33405

Better, but still not accurate. This is not their corporate headquarters. This is simply a US office address. Who knows how many people actually work there? We all should know by 2018 just how many scams originate from Florida.

When you visit magicJack’s web site, no where on any of the pages does it show their actual physical headquarters address. This is a HUGE red flag. Where is magicJack’s actual headquarters?

magicJack Vocaltev Ltd (opens Google Maps)
Ha-Omanut Street 12
Netanya, Israel

As a point of consumer caution, you should always be extra careful when purchasing utility and fundamental services from any Israeli (or other middle east) companies. Worse, when companies cannot even be honest about where their corporate headquarters are on their own web site, that says SCAM in big red letters.

Class Action Lawsuit

Here’s another situation where this company needs to be in a class action lawsuit. I’m quite certain there are a number of folks who have been tricked into this scammy outfit and are now paying the price for their unethical and scammy business practices. However, because they are located in Israel, setting up a class action lawsuit against this company may be practically impossible. Better, just avoid the company and buy your phone services from U.S. based (or other local) companies where they are required to follow all local laws.

Rating: 1 star out of 10
Phone Service: 5 out of 10 (too many restrictions, limits call length)
Customer Service: 1 star out of 10
Billing: 0 stars out of 10
Overall: Scam outfit, cannot recommend.

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Beware of Silicon Valley Clean Energy and energy slamming

Posted in botch, business, california by commorancy on September 19, 2017

If you live in California, you need to read this. This situation has scam written ALL OVER IT. Let’s explore.

State / City Mandated ‘Clean Energy’

Apparently, as a result of city voting, some cities (such as Cupertino) have decided to force residents in that city to change their power generation provider to a third party instead of PG&E. In my case, it ends up being the scam outfit Silicon Valley Clean Energy. Why are they a scam? Here’s what happened.

First, they enrolled my electrical generation service under SVCE’s generation service without my permission. Then, SVCE waited over 60 days to notify me of my enrollment into their power generation service. Because they offered opting out at less than 60 days for free, this means I am not only being assessed a $5 exit fee from SVCE and I am now being put under PG&E’s transitional rates (which are likely to be higher than normal PG&E for at least 6 months). Oh, it gets even better.

Second, because I was force exited from PG&E’s generation services, PG&E gets to assess a Power charge indifference adjustment (PCIA) charge (effectively it is an exit charge for leaving PG&E’s power generation services). This charge on my last bill was $25.60. If you add this charge together with SVCE’s power generation charges, the total generation fee becomes identical to PG&E’s generation charges. If you spread this fee out over 12 months, SVCE’s charges aren’t as low as they seem. Also, this PCIA seems to be assessed once a year (or as frequently as the CPUC allows PG&E to assess it). Basically, this is a charge that PG&E gets to assess to cover generation fees they lost because you moved to a competitor. And, they get to do it each year.

Third, SVCE’s crap web site would not accept my opt-out request. Their opt-out form is entirely broken. I ended up calling their phone and opt-ing out there. Unfortunately, I have no idea if they really got my opt-out request because this fly-by-night outfit only has 9-5 call-center business hours. So, I have to wait until the following day and contact them.

Fourth, I was only notified of my ‘enrollment’ in this service because of a cheap card sent to me in the mail over 60 days after my enrollment.

Fifth, they make a lot of bold claims about using wind and solar energy for generation, but do not back up those claims anywhere. They could simply be buying PG&E generated power and reselling it.

Charges and electric slamming

Not only does PG&E get to assess random charges as a result of the customer now using a third party power generation company, the power generation company gets to assess random exit charges for leaving their service when I never voluntarily joined it in the first place.

This entire situation smells of CLASS ACTION LAWSUIT. So far, I will have been assessed around $35 in fees plus an unknown amount for rates (up to 6 months) simply because SVCE grabbed my service without notifying me timely. This is the exact thing that long distance phone companies were doing in the 90’s. It is called slamming. This scam type is just another form of state / city endorsed slamming, now with the electric service.

The Feds need to jump on board and stop this slamming activity quick and force the same payback charges on the company who slammed the customer. Here’s what long distance providers were forced to do if they slammed someone onto their service and the end user paid the bill:

If you have been slammed, but discover it after you HAVE paid the bill of the slamming company, the slamming company must pay your authorized company 150 percent of the charges you paid the slamming company. Out of this amount, your authorized company will reimburse you 50 percent of the charges you paid the slamming company. Or, you can ask your authorized company to recalculate and resend your bill using its rates instead of the slamming company’s rates.

Electric generation companies need to be held accountable for slamming in the same way as long distance providers. Companies like SVCE riding on the coattails of city votes shouldn’t get a pass to switch services without permission. Slamming is slamming whether it’s for telephone service or power generation. No matter what it is, it’s a rip off unless the change is by consumer permission. If there are fees involved, the customer MUST authorize the change in advance. Otherwise, it is slamming.

How not to run a business (Part 12) — Case Study: Trust

Posted in botch, business by commorancy on August 1, 2015

A business is as good as the trust it practices. Trust is a crucial element in gaining new business. If prospects cannot trust you or what you offer, that your business is genuinely there to help your customer, that you will provide a high quality service, your business will never succeed. Trust is critical to business success. Let’s explore.

Kickstarter

Recently, you may have heard about the H+ Holus project on Kickstarter. Its premise is to create a display device that can provide a wide variety of viewing angles. Some words used to describe the device include ‘holographic’, ‘holographic experience’ and ‘3D’.  From the link above, the description states,

Holus provides a blend between the digital and real world by converting any digital content into a 3D holographic experience

To visually get the point across, H+ uploaded some CG representations of what the finished product might look like… including this video….


By Day 3 of this Kickstarter project, the project had already been funded the amount of $200k CAD. So here’s where things get a little dicey with both this project and Kickstarter when complaints begin to roll in. At the end, the Holus project raised $297,790 CAD. Some sites are already asking if the Holus is the most expensive scam in Kickstarter history. Reddit readers state these grievances of the Holus device.

Kickstarter’s rules are clear on misrepresentation. In the above video, it is clearly shown that as the camera moves, so does the 3D of the imagery. With Pepper’s Ghost and a flat screen, this is not possible which misrepresents the capabilities of this device. In other words, Kickstarter doesn’t allow realistic 3D rendered concept photos or videos as part of the project. Including photos of the prototype or drawings of the concept is perfectly fine. However, 3D realistic images depicting a concept are not acceptable and Kickstarter’s rules prohibit the use of such imagery.

3D Displays

We all know what these are. They’re basically your flat screen TV with shutter glasses. They’re cumbersome to use, give you headaches and, in general, are mostly a novelty. Yet, this is the state of 3D displays in 2015. No, we do not yet have floating displays such as what’s shown in Minority Report or Avatar. These displays, if even possible, are years away from becoming reality. Yet, here we are on Kickstarter with a small company claiming they’re about to produce a 3D Holographic display. Frankly, it’s not possible. What Holus offers is no better than Pepper’s Ghost.

Pepper’s Ghost is a technology that dates back to 1862 and is named after John Henry Pepper who discovered the illusion. A Pepper’s Ghost display has no relationship to holograms or holography, further misrepresenting the display. What Holus offers is a flat screen reflected off of a transparent surface. Because the screen located in the roof of the cabinet is flat, it’s definitely not 3D (without using glasses). Worse, there are already devices like this available on Amazon right now for the iPhone for $10.99. Visit Amazon and compare.

Holus Deception

Whether the H+ folks intended to deceive or were naïve about what they could show on Kickstarter, it doesn’t really matter from a fraud management perspective. The listing violated Kickstarter’s rules. Yet, Kickstarter did nothing to stop or prevent this listing from continuing. In fact, it seems that Kickstarter even awarded staff pick to this project at some point. When this listing was brought to Kickstarter’s attention for misrepresentation, they ignored the warnings and allowed the project to fund anyway.

Trust

As a CEO, it is important to maintain trust with all of your customers. If you don’t attempt to maintain that trust, your business is hopelessly lost.  Case in point… Kickstarter CEO Yancey Strickler leaves a comment on Joanie Lemercier’s ‘covering up a scam’ blog article after she and several others unsuccessfully attempt to bring this misrepresented project to the attention of Kickstarter. Strickler’s comment is defensive and deflecting. Here’s what Strickler has to say (full comment below):

Hi Joanie —

Yancey from Kickstarter here.

I’m responding, in part, to thank you for the attention you’ve paid to the Holus project. We’ve seen a lot of debate and strong feelings around the project, and we’ve heard a lot of questions about our policies and how we enforce them. I’d love to clear up a few things about how we did so in this case.

Part of the issue we’ve seen with this project revolves around words like “hologram,” “holographic,” and “holographic experience,” which people have come to use in so many different colloquial ways. Some of our most-discussed “holograms” — Tupac Shakur’s appearance at Coachella, CNN’s election-night guests — aren’t holograms at all. Even Microsoft bills its HoloLens as a holographic product. There’s an odd lack of clarity involved in what many people mean and understand when they say the words.

So in this case, our approach was to focus in on how Holus actually worked. We asked the Holus team to post an update that demonstrated, clearly and openly, exactly what they were working on. They responded with a public update that outlined the technique they use. That update was emailed to backers of the project, to help make sure everyone involved was fully clear on what they were supporting and what they could expect.

Then there’s the question of our rules for hardware projects. First, we require creators to show prototypes of their work. Second, we prohibit them from using photorealistic renderings.

Holus satisfied the first rule, posting a number of demo videos and documentation showing working prototypes. But when the project originally launched, it included CGI renderings. We informed them that this was strictly prohibited; they promptly removed the material. They also emailed backers to clarify their process, including a video demonstrating their iterative prototypes.

And last, there’s the question of the staff pick. Holus was originally selected as one, until we spotted and received reports about CGI renderings. We immediately removed the staff pick status, and asked the Holus team to remove the badge they’d added to their project image. (Staff pick badges aren’t a part of our system; we don’t create them or provide them. Actually, we strongly advise creators not to use them at all.) They promptly did so.

In other words, the project conformed to our stated rules, added more information on request, and made a transparent, good-faith effort to thoroughly inform backers about the nature of their work. Based on that, we continued to monitor it, but allowed it to remain on the site. The question then became: were people interested in backing it?

And this is the part where you — and the broader Kickstarter community watching these projects — become invaluable. One of the reasons Kickstarter uses all-or-nothing funding is because it gives everyone involved in a project time to really research what the creators are doing, discuss it with others, and come to a collective decision about whether it’s still worth supporting. Ultimately, it’s backers who decide what gets funding, not us.

That’s why we’re always grateful to anyone who joins in the public debate about projects, asks tough questions about the claims they’re hearing, and shares their expertise with other backers. That kind of discussion is crucial, especially when it comes to new technology. It helps our Integrity team monitor projects for problems or violations of our rules — as we did throughout the Holus campaign. It helps backers vet ideas and make the most informed decisions possible. It holds creators to a high standard, and helps them build stronger communities. It does all these things no matter what action Kickstarter winds up needing to take, and whether projects succeed or fail.

And that’s why I’d like to thank you — and to say that, if you’ve chosen not to get involved in any more projects, we’re sad to hear it. The role you played in this one is incredibly important. Members like you are welcome in this community any time: you make things better for everyone involved.

Cheers
Yancey

This is not the type of diatribe I expect to hear from a CEO. CEO’s are the top agent of the company. They are the person who investigates wrongdoing and the person who puts a stop to it. No where above did Yancey even mention investigation, taking the strictest action or in doing anything to prevent such an occurrence in the future. Sure, they requested the prohibited content removal, but only after the project was already mostly funded. Kickstarter also didn’t apparently require full disclosure of this content removal to the backers.

Instead, he defends the project and states that it is the backer’s responsibility to post meaningful discussions, debate the project and then choose or not choose to back based on these comments. That’s all well and good until Joanie points out in a later blog post that in among other behaviors by Kickstarter to ignore the project and let it proceed, Kickstarter also

DELETED the embarrassing questions asked in the project comments (see screenshots).

When Kickstarter deletes comments that could help backers make informed decisions, that ultimately means that Kickstarter no longer respects the backers and is in it to make sure the project succeeds whether it’s a real project or not. This also means that Kickstarter is in it for the money they will get from the project rather than protecting backers from fraud. This is a serious breach of trust and one that should resonate to every backer who has ever backed a project at Kickstarter.

In fact, Joanie points out all of the trust related issues around this Kickstarter project:

YOU DID NOT REPLY to the official ‘reports’ made from day 1 (except email auto-replies).
YOU DID NOT LISTEN to the experts: Jason Sapan has been making real holograms in NYC for over 40 years, he warned you about the fraud.
YOU DIDN’T CARE TO COMMENT  the 3 in-depth articles (123) written by Raphaël de Courville about his investigations on the scam.
YOU DELETED the embarrassing questions asked in the project comments (see screenshots).
YOU DID NOT MODERATE messages from suspicious accounts (1 – 2) and Holus partner comments (1) who broke another rule.
BACKERS WERE NEVER INFORMED about the replacement of prohibited CGI and removal of staff pick status.

There were probably even more behaviors not documented here, but these are enough to show that even though Kickstarter was made aware of the project early in its life, Kickstarter ignored it all and even colluded in making sure the project appeared to be legitimate.

Even Yancey’s comment to Joanie attempts to justify the above actions in an obtuse fashion.

Business Don’t — Don’t allow fraud on your service

This is probably one of the biggest business don’ts I’ve ever documented in this series. You don’t do what Kickstarter did. If you establish rules by which the community must follow, then you need to ensure they are enforced regardless of outcome. Even if you stand to lose 20% of that 200k or whatever Kickstarter’s commission is, that is chump change compared to the trust you’ve lost from your community and the possible legal ramifications you face (which I guarantee will cost you more money than any commission you’d make from the fraud). Your community keeps you in business. For this reason, this trust case is worth studying. It’s worth realizing what not to do when running your business.

In Kickstarter’s case, the appropriate action would have been to delist and refund all backers before the project closed. Then, request the project owner to relist the project using drawings or other imagery that doesn’t violate Kickstarter’s terms… instead of silently requesting the images be removed without letting the existing backers know… instead of removing key discussions from the project to inform backers of what this project really is… instead of ignoring emails ultimately saying that the project is fraudulent.

Fraud is a very real possibility anywhere and everywhere, especially on crowdfunding projects. Fraud is intentional misrepresentation of something. It’s against the law in the US and the US government investigates and takes legal action against those who commit fraud against buyers. Allowing fraud to exist on your own web service and then doing nothing about it once you become aware is collusion and makes your business as much liable as the person who set up the listing in the first place. The one thing you cannot know is intent and intent is the difference between innocent misrepresentation and outright fraud. As a business, you must error on the side of caution and assume the intent is intentional misrepresentation which means taking the strictest action possible by forcibly removing the offensive content from your site.

Were someone to bring legal action against Kickstarter and H+ for the alleged fraud of this project, there is definitely enough evidence that Kickstarter could be held liable and culpable in this activity.

Enforcing Business Rules

Once you establish business rules by which your clients must abide, you need to absolutely enforce those rules by the strictest of actions in every case. If you allow even one client to slide by the rules, your business could end up in court. If you are on the other end of a Kickstarter project and you choose not to deliver on your backer rewards, the US Government will come after you. Fraud is a federal crime and can lead your business into a lot of federal legal problems. Ed Nash found this out the hard way when his company, Altius Management, failed to deliver the $25k Kickstarted funded Asylum card game in 2012.

Failure to provide the necessary level of trust through enforcement of your rules could lead your business into bankruptcy. In this case, Kickstarter’s woes are just starting. How this all ends for Kickstarter is yet to be known, but it’s probably not going to end well. How this ends for H+ and the Holus device is yet to be seen, but delivering a Pepper’s Ghost to backers will likely lead to outrage.

Part 11 | Chapter Index Page | Part 13

Paypal: Don’t trust them with your checking account!

Posted in banking, best practices, scam, scams by commorancy on April 1, 2009

Paypal has been in business for how many years now?  Yet, they still can’t manage to find a way to verify a person without using a bank account?  Since day 1 of Paypal, I’ve been sternly opposed to giving my checking account routing information to Paypal.  Why?  It’s very simple.  I don’t trust them.  I never have.  I never will.

Why you should never give out bank account + routing information to anyone!

Let me first say that when I discuss ‘routing numbers’, this means a combination of both your account and your routing number. Clearly, you wouldn’t just give out only a routing number as that’s not useful. It is only useful when in combination with an account number.

When you give someone a signed check, you implicitly give them your routing information.  That’s a danger when you write a check to a company.  The protection, of course, is that you’ve given them a physical paper check for a specific amount and you know exactly how much that check was.   So, when the check number arrives at the bank and drafts that amount of money from your account, it was expected.  They can’t draw more than the amount the check was written.

Routing numbers, on the other hand, are effectively blank checks.  When you give a company your routing number, you are handing them a signed blank check.  That’s because you’ve agreed to allow them blanket access to your checking account.  That company can then debit any amount of money from your account they see fit without so much as a thank you.   Because Paypal uses EFT (electronic fund transfers) in the form of ACH (automatic clearing house), they can debit your account up to the maximum amount of funds in your account.  This means, they can overdraw your account and completely drain your funds.  ACH/EFT offers no liabilities to the consumer whether accidental or intentional.  Because you gave that company explicit approval to debit your account at will, there are no liabilities for any inappropriate transactions.  That’s left between you and Paypal to resolve.  The bank will usually not become involved.  When banks do become involved, the best they can do is tell you when it happened. You can try to ask your bank for additional help, but they will most likely point you to Paypal for resolution.  The reason is simple, you agreed to give Paypal access to your account up front.

Worse, if the company that overdrafted your account chooses to not give you the money back, then you may be out of luck.  At that point, you better seek a lawyer, assuming you have any money left to pay them.

Paypal and Checking Accounts

Paypal does not need a checking account to verify you.  They just tell you they do because that’s the way they have always worked it.  This verification process can easily be done with a credit card charge that you input later to validate that you receive the bill for the card.  Paypal simply wants to have unfettered access to your checking account.  Frankly, it’s a huge liability for you.  It’s also a huge liability for Paypal to store this information.  One hacker in their system and they could have a field day with your money.

Credit Cards and Fraud

Paypal is well aware of the fraud issues with credit cards.  They are also well aware of chargebacks, merchant liabilities and fees associated with these processes.  To avoid them, they prefer unlimited access to your checking account that hold no such penalties or liabilities.  Because the consumer has no recourse over inadvertant transactions, Paypal has the upper hand.  This is why Paypal will not verify you with only a credit card.  Can they validate based on only a credit card, yes.  They simply choose not to.

Credit cards have long established liability rules that prevent fraud occuring from both rip-off artists and from merchants alike.  Unfortunately, there are no such rules for ACH.

Consumer Protection from Businesses

Whenever a company asks you to give them routing information from your checking account, tell them, “No!”.   Not only should you tell them “no”, you should explain exactly why.  Tell them that you don’t trust them with that level of access to your account.

Should you continue to do business with Paypal?  That’s entirely up to you.  But, I still do not have a verified account with Paypal because I simply will not give them the routing information from my checking or savings account.  I simply do not trust ANY company enough with that information.  Remember, Paypal is not a bank.  Thus, it does not fall under any banking rules, liabilities or any federal insurance.  In fact, who knows what insurance Paypal even carries?  So, whatever Paypal does, you’re at their mercy to do it right.  If they don’t, you have to fight with them to get your money back.  The bank won’t help you.

But, I need to give out my routing number…

Here’s another option.  It’s not optimal, but it works.  Simply, open a second checking account. By setting up a checking account specifically and solely to be used with Paypal and merchants, you can limit your financial liability.  You can then link another account to this new account for transferring in money only, but be sure NOT to link the new checking account to any overdraft protection on any other accounts.  So, if Paypal overdraws your account inadvertantly, they won’t get any more money than what you have specifically placed in there.  So, if you want to buy a $250 appliance, only transfer in $250 for just that appliance.

The problem with this technique is that banks sometime require minimums to open an account and minimums to keep it open.  So, you may have to leave $1000 (or some other arbitrary amount of money) to prevent accrual of monthly fees or account closure.  You’ll need to contact your bank for details.

While this does work, it’s not optimal by any stretch.   It requires you to be extra cautious with how you use that account.  You have to be diligent to place the money in there when you need it.  And, you need to remember that transfers of money into the account are not always instanteous.  So, you may have to transfer your money in the day before you intend to purchase to ensure the money is there to cover the transaction.

What if I’m a Merchant?

For merchants who want to get paid for products they sell, I understand the issue here with ACH/EFT.  Again, in this instance, I would set up a separate checking or savings account solely for Paypal use.  Only give this account to Paypal so that when you receive payments, you can transfer them out of that account and to your ‘regular’ account immediately.  This way, if Paypal decides to debit you for any reason, the money won’t be there.

Overdrawn Accounts

If Paypal overdraws your account for any reason, don’t expect them to pay you back for insufficient fund fees.  You will have to deal with these fees on top of the inappropriate debiting from Paypal.  You will then have to argue with Paypal to get your money back and your bank fees reimbursed.  But, good luck with both of those processes.

Spending Limits

If you choose not to give your routing information to Paypal, Paypal arbitrarily limits how much money you can send to an individual when you buy merchandise.   For this silly reason alone, this is enough to tell Paypal to take a hike.  There are plenty of ways to buy merchandise from merchants on the Internet.  In fact, when a merchant is reputable enough, they will set up their own merchant account with a bank and let you pay the merchant directly.  You should also feel comforted knowing that when you send a payment to a merchant, not through Paypal, you have the full card protections behind your transaction.  When you purchase through Paypal, your Paypal account agreement may prevent you from using some of your card’s built-in protections… such as a chargeback.

Credit Cards

For all of these reasons above combined with card liability limits, fraud protection and other protections that come built-in with the Visa, Mastercard and Amex logos, credit cards protect a whole lot more than ACH/EFT.  Cards limit your exposure to ID theft and they also limit your liability if someone steals your card and then, for example, buys a new car with it.

For payments, Paypal could choose to issue checks instead of requiring ACH/EFT.   But, they have never wanted to go this route for payments.  Instead, Paypal forces you to verify your Paypal account by giving them a routing number from your checking account.  As I have said, this is not necessary and is a huge liability.

If you want to protect your money in your bank account from unauthorized transactions, you should not give Paypal (or any company) access to your checking account via routing numbers.  Instead you should insist on the protections that credit cards offer.  Credit cards are more than sufficient for anything that Paypal would need (at least for paying for merchandise).  For merchants, you will need to determine what works best for you.

[UPDATE: 6/27/2012]

Paypal now has a new wrinkle in its verification process.  When attempting to verify a checking account and your bank has a web portal (i.e., Wells Fargo), they will ask for the login and password to your bank’s web portal to do an ‘immediate’ verification. Don’t do it! Don’t give it to them. Paypal says they won’t store the credentials, but with all of the stolen information from various sites, do not trust ANY site with your bank’s web portal login and password. This should really be common sense, but maybe it isn’t. With that said, if you must verify a bank account with Paypal, do it the old fashioned method by letting Paypal make two small sized deposits.  First, it makes Paypal give you about 25 cents. Second, you’re not giving out your bank’s web portal password to some random third party.

As much as I rant above about giving out routing numbers and blank checks, it’s far worse to give out your bank’s web portal login and password information. Do not do either if you can help it. However, if you can manage to set up a separate one-sided transfer system into a free savings or checking account for Paypal payments and transfers, then by all means set that up.  Do not give Paypal access to your primary checking account with full access your bank account. Also, make sure that you have disabled overdraft protections on any accounts you give Paypal so that if they reach in and grab money out, when the account hits $0 it doesn’t go any further.  You don’t want to be mopping up a mess of bad debits and at the same time having to pay interest payments on those bad debits.  Paypal is not a bank and they’re not likely to reimburse you for any bad transactions leading to overdraft fees or interest accrued. So, avoid the issue and prevent Paypal from doing this damage in the first place.

Ticketmaster: Master of nothing, king of fees

Posted in concerts, scam, scams, tickets by commorancy on February 16, 2009

If you’ve ever purchased tickets to a music concert, chances are you’ve had to deal with Ticketmaster.  You know, the ticket printing company that claims to help you obtain tickets to your favorite concert or event.  In reality, this company is nothing but one big scam.  Having sold tickets for Ticketmaster in the 80s, I’m well aware of their practices and how they choose to do business.

Scam or Scalper?

The only reason Ticketmaster exists is for convenience of the artists/promoters, not the concert goer.  If you’ve ever had to stand in line waiting for tickets at a venue, you can at least count the number of people ahead of you and know about what tickets you will receive.  Enter Ticketmaster with their near global presence.  Now, you stand in line at a Ticketmaster outlet and you have no idea how many other people are ahead of you or how many tickets they may purchase.  Combine this with Ticketmaster’s scam of holding back tickets for later release, random selection of tickets and you get the recipe for failure.  Even if you’re the first person in line at an outlet, you may walk away with upper promenade tickets simply because that’s ‘best available’.

Best Available

This notion is Ticketmaster’s way of searching their database and giving you whatever they deem is the ‘best available.  Note, however, that most outlets won’t let you specifically search or ask for tickets in other sections even if it doesn’t show to ‘Best Available’.  Yet, they may be available.  For example, I’ve specifically searched for seats in lower prom sections and found tickets there even when ‘Best Available’ shows to be upper prom.  So, whatever algorithm that Ticketmaster has written is completely flawed and doesn’t work (or is intentionally designed to NOT give you best available).

Released Tickets

Granted, some promotors do hold back sections of seats for their own use.  Some may be reserved for other purposes and some may be reserved for the venue to sell directly.  When these seats aren’t sold, given away or whatever, they are then released to Ticketmaster.  These seats (some front row seats) can appear even just hours before the event!  I have found front row seating for several events the day of the concert simply just poking around looking for tickets in Ticketmaster’s computer.    Granted, when you find them, you have to be willing to purchase them immediately because any of the other thousands of outlets could also be looking for them too.   For example, I had found front row seats for Neil Diamond (back during his heyday) and front row lower prom for Stevie Nicks (back in her heyday) within one or two days of the event.

Fees and more fees 

Ticketmaster now charges $12-$20 per ticket convenience charge.  Ticketmaster might as well be considered scalpers. In 1979, tickets to concerts COST $15.00.  The cost of Ticketmaster’s convenience charge is now close to or more than the event ticket cost in 1979!  For example, with Britney Spear’s 2009 tour tickets, why would you give Ticketmaster $18.75 for you to go to the web, search for ‘Best Available’ and then issue and print your  own tickets?  It doesn’t cost $18.75 to print two paper tickets and mail them.  The cost for that process is perhaps no more than $2.  $1 total for the ticket paper, ink and envelope and $1 for postage.  Ok, so there might be a small fee incurred in hand carrying the envlope to the post… So maybe $3.  Paying $18.75 for $3 worth of materials is outrageous.  If you choose to print your own tickets from your printer, they STILL charge you!  Yet, you paid for the paper and ink.

Online Ticketmaster

Now that Ticketmaster has moved to the web, their searching process has not changed.  But now, you have no control over what they find for you and you have no idea how many other people are out there doing the same thing.  They also do not give you the ability to actually search for tickets in specific seactions.  You take what they find for you even if they aren’t the best.  Worse, Ticketmaster still charges you the $18.75 convenience fee for you to do the work.  Other than their print and mail process, which is probably automated anyway, this fee is now completely outrageous and unnecessary.

No Ticketmaster concerts for me

Ticketmaster is part of the problem.  For the reasons above (price, fees, bad business practices), I do not trust Ticketmaster.  As a result of that lack of trust combined with outrageous ticket prices by the artists, I do not go to concerts.  When concerts cost no more than $20 to get in, I’m game.  When they get to $80, that’s when it’s no longer worth it.   After combining Ticketmaster’s outrageous and unnecessary fees with the cost of the event and the venue fees, I don’t understand why anyone continues to use Ticketmaster for purchase of tickets. You’re just paying to ensure Ticketmaster’s continued existence. Sure, it’s convenient, but it’s also a complete rip-off.  Insist on buying your tickets directly from the venue directly without the need for Ticketmaster.  If the venue sells you a ticket with a convenience fee, insist on not paying it as there is no such thing when you’re purchasing it directly from the venue.

Unless concert promoters wake-up realize that Ticketmaster is not the answer for selling tickets, they are likely excluding a lot of people, like myself, who would go to more events but simply will not use Ticketmaster, but still want a web based ticket purchase.  Promoters: Ticketmaster is not helping you fill the arena.

Competition is healthy

Visit your artist’s web sites and let them know that you don’t want to pay Ticketmaster’s gouging fees to obtain tickets to their event and encourage them to use other ticket distributors such as BandsInTown.  We desperately need competition in the ticket selling space to force Ticketmaster to rethink their outrageous fees.

Note that buying your tickets from a scalper is not the answer. nor is that competition.  Not only are you now paying Ticketmaster’s fees, you’re paying the scalper’s outrageous upcharge.  Again, scalpers are not competition to Ticketmaster, they are just there to mark up Ticketmaster’s already scalped prices.

Ponzi Schemes and Wall Street

Posted in corruption, ponzi schemes by commorancy on December 13, 2008

I hope that everyone who invests money knows that entrusting your money to someone else is risky.  It doesn’t matter if the yield is 0%, 2% or 5%.  The act of handing your money to someone else involves risk.  So, is it then no surprise when someone like Bernard Madoff, who once the chairman of the Nasdaq Stock Market, is arrested for an alleged ponzi scheme that bilked people out of billions?

Hello, no!  Wake up people.  When times are good, no one delves into such corrupt Wall Street vehicles because they are self-sustaining.  It’s only when times become bad that these schemes fall apart.  The way a ponzi scheme works is by paying old investors out with new investor money.  The fund itself is not self-sustaining (and probably was never intended to be).  So, as new investors dry up, the older investers can no longer be paid.  The whole thing then falls apart.

But, the question isn’t so much that this one person did this.  It’s the loss of trust and of faith in the system.  It’s the question of how many more people are doing it?  When respected people of the invesment community end up operating such scam vehicles, what does that say of Wall Street as a whole?  Clearly, this is not and will not be the only ponzi scheme to turn up.  It’s the first major case of it recently, but it certainly won’t be the last.

Is investing a bad idea?  Not necessarily.  But, it is risky.   This is why diversification is part of the answer.  Do not put your money into one fund or even two or three funds.  Spread the money out into many funds.  Granted, it’s harder to keep track of, but the chances that every single investment fund being corrupt is unlikely.  However, we all know that money corrupts.  So, you have to take the good with the bad when you give someone your cash to manage.

These are the kinds of problems that shake the foundations of investing to the core.  These are the kinds of trust issues that the investment community needs to avoid like the plague.  Yet, here we are.  These are also the kinds of problems that America itself has been fostering for the last 10-15 years.  Why is greed, power and corruption such a big part of the American dream today?  Only a historian will be able to look back and fully answer this question.  Today, these problems appear to be unrelated.  But, is this problem systemic?  Is it only likely to get worse?  When well respected Wall Street investment professionals, such as Madoff, can bilk so many out of their money, this is much more than isolated and, indeed, does appear to be systemic and a symptom of a much bigger issue.

At this point, America needs an overhaul and perhaps this downturn and the financial sector upheaval  is the beginning of that overhaul.  The corporate and financial system on which this country is based is near completely broken.  When 20 year veterans of Wall Street can turn to Ponzi schemes to keep their lifestyle afloat, anything can happen.  So, watch your money closely when you invest.  But, even doing so is no guarantee that you aren’t investing in a sham.  One quote is more salient now than ever… “Caveat Emptor”  (Buyer Beware).

Songwriting Competition or Lottery?

Posted in music, musician, scam, songwriting by commorancy on October 1, 2008

If you are a songwriter, you want your songs to be heard. However, there are so many web sites and people out there that promise you the world and deliver nothing. This article will discuss songwriting competitions.

Is it a lottery?

Most songwriting competitions charge money for each song entry. Think of the song entry as a form. You might as well have just submitted this form into a barrel. Then, they have judges who are supposed to review the entries and pick winners.

Because listening to a song is based entirely on subjective likes and dislikes, there can be no objective methodologies to pick a winner. Thus, subjective criteria equals random selection. This means that, overall, this is tantamount to pulling a slip of paper from the barrel and choosing winners at random. Because you must pay to enter and because it’s a random selection, it’s a lottery. Don’t fall for lotteries disguised as contests. Worse, there’s no guarantee the judges actually listen to every song submitted anyway… which further makes this a lottery by random selection.

Don’t support pay-for-play competitions

If you are an independent artist, songwriter or musician thinking of entering a songwriting competition, think twice before entering. Many of these competitions are scams. They are there to take your money and leave you high and dry. Instead, use your money to further your career (buy recording equipment, pay for studio time, book gigs to make money). If you really must play the lottery, play the state lottery. It costs less and you have equal odds of winning.

Allegedly, one of the largest ‘competitions’ is the ISC (International Songwriting Competition). They boast industry seasoned judges and lots of impressive things, but overall it’s still a lottery. As far as I know, independent lotteries are still illegal in most states.

What you win

Should you win, let’s put a spotlight on this aspect. If you do enter a competition and by some miracle fluke the judges actually pick your song, what’s next? This is tricky to answer. You need to read the fine print on the competition. You might win a recording contract, but then you might be required to turn over all rights of your music to the contest. Are you willing to part with your music rights just to record or win? These are not necessarily lucrative contracts. On the other hand, you might win a small pittance of cash or some dinky thing and still be required to relinquish your musical rights. You need to read closely to find out what you might be giving up.

Turning over music rights

This is a tricky subject because there’s no right answer. However, consider this. If you’ve written what you consider to be an absolutely fabulous song and other people agree, then you probably do not want to part with the rights to this song. If you turn over all rights for this music to the contest, that means that any money made from that music is no longer yours. If the music, for example, gets licensed to Justin Timberlake or Britney Spears and they turn it into a #1 hit, you still won’t get any money from it. Of course, you can always try to sue, but the contest probably has a reasonably binding contract in place. Thus, you aren’t likely to get very far with a lawsuit.

However, there’s the flip side of that. If you are wanting notoriety, then perhaps it is worth giving up the rights. Meaning, if you’re hungry and willing to lose the rights to one of your songs in order to get your name on the songwriter line that does become a #1 hit, it may actually help your career. That is, of course, assuming the contest has any obligation to put your name on the song as author based on the contest rules.

Furthering your career

If you really want to further your career as a songwriter, you’d probably do better to list your music through an A&R service like Taxi (see below) or another placement service who can get your music out to artists, TV shows, movies or video games. It may cost money to place your music, but it’s not a lottery. It’s more of a ‘music store’ where entertainment industry professionals can find new music for projects.

How about free contests?

By all means, enter as many free contests as you can find. That is, if you can find any. But, ignore contests that charge you money. You have no idea where that money goes… and many charge as much as $25-50 per song! By comparison, you can put an entire CD on iTunes, AmazonMP3 AND Rhapsody for that same $25-35 (the cost of 1 competition entry) using places like CDBaby. So, save your money and invest it into equipment (instruments, recording equipment, computers, etc) or advertising. This will take you a lot further in your career by allowing you to produce your own music. You can self-publish or submit demos right to labels. You can also take out your own personal advertisements for your CD as well.

Careful with your money

Always be careful as there are many musician placement (A&R) services out there that will scam you before they give you any real level of service. Taxi is one of the few that appears to be reputable in this regard, but they will charge you money for each submission on top of a monthly fee (so be cautious even here). Broadjam is another, but they also charge to submit music ($5-15 per song on top of a subscription fee) for placement consideration. When businesses charge you money to submit music for placement, you should be wary. There is no real way to know that they are doing the right thing for you. So, if you submit music without response or get an unexpected (strange) response, don’t spend money for that again.

Bottom line, there are plenty of places out there that can scam you… if it looks like a scam, feels like a scam and acts like a scam, it probably is.

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