Eddie On Everything » consumer protection

ING Direct Easy Orange Mortgage – Not As Easy As You Think

eddie — Thu, 18 Feb 2010 21:57:07 +0000

I got a postcard from ING today. They are inviting me to convert my mortgage to an “Easy Orange” mortgage at the unbelievably low rate of 3.875%. As with most things that sound too good to be true, this deal almost certainly is. And a quick inspection of their website seems to indicate that ING is hoping that some people won’t realize it.

I’m writing this article because this sort of exact sort of predatory lending that caused the current housing crisis. Enticed by teaser rates and adjustable rate mortgages, people bought more house than they could afford. When the rates adjusted and teaser periods ended, people couldn’t afford the minimum payments. As a result, they lost their homes to foreclosure. This is the exact same animal in different clothing.

First, the postcard: While I normally throw all junkmail in the trash before it even gets through the door, this one caught my eye. I have a pretty great mortgage rate right now, but a rate of 3.875% is worth taking a closer look. So I brought the postcard inside.

At first glance, you’ll note that even though the flyer uses strong sounding terms like “fixed,” this is an Adjustable Rate Mortgage, or ARM. There is absolutely nothing “fixed” about it. Why, ING, are you avoiding terms “Adjustable” and ARM? Why are you only using the term “fixed” when that’s exactly what your mortgage isn’t?

The advertised term is just 5 years, which means that this is a 5 year loan, not a 30 year loan. When those 5 years are up, you’ll owe a lump-sum payment on the balance of the loan,which, according to this mailing, will be around $228,389.01. I don’t know about you, but I don’t have $228,389.01 just sitting around. And while I would like to have $228,389.01 at my disposal in 5 years’ time, I can’t bank on that happening.

“But wait!”, you say. “You can simply refinance in 5 years!” Maybe. I don’t have a crystal ball, so I can’t say what the rate will be in 5 years, but my guess is that most people will not qualify to refinance. Here’s why:

The mortgage rate in 5 years time will be higher, probably much higher, than the current market rate, which is darn-near an all time low.
As interest rates rise, housing prices fall. This is because housing prices are largely set by what people can afford to pay each month. Since household income is not going up, and since interest rates will undoubtedly rise, a larger percentage of a homebuyer’s monthly payment will be going towards interest. Ergo, housing prices will continue to fall.

Not only will the rate be higher in 5 years, but you probably won’t even qualify to refinance, since you will be upside down on your home loan.

I went to the website listed on the mailing, and clicked on the “What does this mean” link.

Here is the text that is displayed:

What does the projected rate and payment mean that’s listed next to the current rates for Easy Orange?
The government requires us to display this information. So what does it mean? Easy Orange has a fixed rate and bi-weekly payment for 129 payments (a little less than five years). After that the remaining balance is due. Keep in mind, at that time you may qualify to renew your rate for another 5 years at the current Easy Orange rate.

(Emphasis mine.)
Now there’s a weasel word for ya – “You may qualify to renew your rate.” Not that you will, but you may. Yeah, and who knows, in 5 years I may be a famous Hollywood star. You never know. Hell, I just may.

But wait, there’s more. Clicking on the “learn more” link on the same page, I learned the following:

At the end of the 5-year term, your remaining balance is due to be paid back. At any time after the first six months you can use the Rate Renewal feature to renew your rate – all for one payment which is equal to 2 of your bi-weekly payments. You get our best Easy Orange rate at that time (fixed for 5 years) without having to pay full closing costs and you receive the security of another 5 years fixed.

This statement is vague. “After the first 6 months” refers to the first six months after the rate expires, not the first six months after receiving the loan. They’re telling you that after 5 years, you have the option of paying them $1,200 for the privilege of renewing your loan at whatever rate they happen to be offering at the time. Might be 10%. Might be 20%. Who knows. But make no mistake – they’re not offering you any ‘deal’ here – they’re telling you that you are free to buy something from them again, at whatever price they happen to be selling it. Just like any other customer.

This is like Walmart saying, “And as added benefit, since you’re such a loyal customer, when you run out of those Cheezy Doodles come and back and we’ll sell you some more, at whatever price we happen to be selling them for at the time.” Not a benefit. Not a deal. Just clever distraction to dupe you into giving up your secure 30-year rate for a measly savings of a few thousand dollars or so over the first 5 years. In other words, you take on all of the risk that rates will not rise, and you get very little of the reward.

Now, don’t get me wrong – there are some people for whom this mortgage may make sense. Just like there are some people who benefit from interest-only 40 year mortgages. They’re a very small percentage of people, and they know what they’re doing. For the most part, these people are seasoned financial veterans with loads of experience and matching loads of cash flow. ING is those people. And unless you’re one of them too, do yourself a favor and throw this “offer” in the trash.

Beware the Better Business Bureau (BBB)

eddie — Wed, 16 Dec 2009 01:28:44 +0000

I recently ran across this article about the Better Business Bureau. In it, one guy relates his story about his interaction with the organization. It reminded of about my own experience with the BBB, so I thought I’d share.

First, an excerpt from the linked to story:

They cold called me. Mind you, this was back when (last week) I thought that they were a legitimate organization. It went something like this:

The “Guy” called and said that he was from the Better Business Bureau. …

He asked questions that were already answered on the county DBA filing, so I answered diligently, thinking that he was probably checking up on me to verify if I had been honest on the DBA application. He finished his simple questions (e.g., do you have employees? How long have you been in business? What is the nature of the business?), and told me:

It costs $465 a year and that will carry you through June 2006. We take credit cards or check by phone.

I was floored. The “Guy” cold-called me and thought that I’d start doling out credit card numbers? Insane. I asked him, “Excuse me, you can’t bill?” He answered, “We do credit cards or check by phone.” Wary of phishing schemes, I told him that I had no way to know that he was who he claimed to be and that he would have to give me his information and I would call back if I was interested.

I’ve also had this conversation with the BBB – they’ve contacted me twice about membership, once when I was still running my last company and now again with my newest endeavor. Each experience was remarkably similar.

Each time, they called me out of the blue and said “Congratulations, you have been nominated for membership in the BBB! We only extend memberships to select organizations, and yours meets the criteria!”

“Wonderful,” I said. The rep then launched into her speil about how great membership is, how well-respected the BBB name is, etc. She outlined all of benefits I would receive upon membership, including a listing on their website, “mediation services,” and a shiny new sticker I could stick on my door. She told me that “many consumers only do business with BBB member companies, so it’s a smart move to join.”

In my many years of entrepreneurship, not once have I had a prospective client or customer ask if I was a BBB member. I told her this, and she said, “Then you’re leaving money on the table! Millions of people use the BBB as a directory to find businesses to work with!”

Really? Millions? Seems high to me. I’m a pretty savvy consumer, and I have never used the BBB to find anyone or anything. Neither has anyone I know of. The only time I hear anyone mention the BBB is when they’re pissed off at some big company, leading them to then threaten “filing a complaint with the Better Business Bureau.” (Which they almost never do.)

I asked about the “mediation services” they provide, and she told me that as a BBB member, I would have to agree to let their mediators settle disputes with my customers. Now, I’ve never had a problem settling disputes with my customers. First, they rarely arise – I do honest work and bend over backwards to make my customers happy. Second, on the rare occasions that disputes have arisen, I’ve had no problem settling those disputes on my own. In my experience, most disputes are the result of bad communication. I always take full responsibility and work to make the customer whole.

I asked her to mail a copy of all of the materials, you know, so I’d know what I was agreeing to, and she said, “That’ll all be included in your membership packet, I just need your credit card number so I can charge you the $500 membership fee and get you set up.”

Wow, $500? (I forget the exact number. It was about $500.)

“Can’t you send it out so I can look it over first?,” I asked. “No. We don’t send out informational packets. We are an invite-only organization.”

“Right, and you’re inviting me now. I just want to see something in writing so I can make a decision. So just send the invitation along in the mail and I’ll have a look.”

Which led her to ask, “You’re not really serious about joining, are you? If I send that out, you’ll probably just throw it away anyway. That’s why we like to do it all over the phone.”

“Can I do it online? Are your materials there?”

“No. It’s invitation only. We can’t just let people sign up online! It sounds to me like you’re not serious about your customers…”

I was floored. Here’s an organization that claims to preach good business practices refusing to provide me with any written materials. No contract, no written terms, nothing. And when I insisted that they put it all down in writing, telling them I don’t give my credit card number out to cold-callers, they accused me of being a shady businessman.

Shady is cold calling people and asking for $500. Shady is refusing to provide written materials about membership. Shady is spewing misleading facts about how joining will cause my customer base to explode.

I started to tell her that I thought her practices were shady, for the above-mentioned reasons, and she cut me off, saying “So I guess you are not interested in joining today. Good bye.”

I advise everyone I know against buying from telemarketers. And that’s what the BBB looks like to me – a telemarketing shake-down scheme preying on the naivety of new business owners. They’re no better than the “Yellow Pages Listing Service” mailings that flood every new business owner.

I’d like to think that the BBB is more than just an expensive sticker-selling operation, but my own experience tells me otherwise.

Small business owners, beware the Better Business Bureau.

The Phone Spamming Doves at 1-800-679-0336

It’s Hard to Cancel Angie’s List Subscriptions – Beware

eddie — Tue, 27 Oct 2009 22:56:26 +0000

Since I recently purchased a home, I signed up for Angie’s List last month. If you’re not familliar with the site, it’s a website where consumers can rate a variety of service businesses – plumbers, roofers, window guys, etc. It’s not free – a membership to Angie’s List runs about $6/month in my city. They say that this pay-for-play business model keeps the ratings more genuine. That may be true, but I don’t really see a lot of value in the service so I chose to cancel my membership after just one month.

Boy was I in for a shocker – the “Manage my account” feature of their website does not allow cancellations! Annoying, right? Instead, you have to call, email, or FAX them a cancellation request. I first emailed, then thought that the sort of company that makes cancelling so difficult would probably lie & say they never received my email. So I followed up with a phone call & used an annoyingly slow “automated” cancellation feature. (I use quotes around “automated” because it’s not that at all – you just read your information into a recorder.)

The internet is filled with horror stories about people having a hard time cancelling Angie’s List.

here’s one
here’s one
here’s one
here’s one

Wish I’d seen those before joining. Oh well. Let that be a lesson to me – I should have used a one-time use credit card number for any recurring type subscriptions that I’m not sure I want to recur.

Tip: If you’re thinking of joining, try using code “FREE” to save the membership fee. (Or check Retail Me Not for a newer coupon code.)

10% Of Customers Pay 90% Of Bank Overdraft Fees

eddie — Thu, 13 Aug 2009 19:47:50 +0000

Ever wonder how may bank customers actually pay overdraft fees? According to The Consumerist and the Financial Times, 10% of bank customers pay a whopping 90% of the overdraft fees.

The most cash-strapped customers are the hardest hit by such fees, with 90 per cent of overdraft revenues coming from 10 per cent of the 130m checking accounts in the US. Regular use of overdrafts is most common among consumers with low credit scores, Moebs discovered.

Wow. I knew that some consumers are really bad with money, but I had no idea that the numbers shake out like this.

While some people are crying foul, accusing the banks of unfairly targeting the “poor,” I have to wonder : Why do these same 10% of people continue to rack up overdraft fees? Why don’t they learn their lesson after being hit with the first, second, or, say, twelveth? I understand being poor, but this just makes you poorer.

Most banks offer free or low-fee overdraft protection – that is, they will let you “link” a credit card to your checking account, so that if you should ever fall short of funds, the balance will be applied to your credit card. Even at cash-advance rates, it’s a hell of deal when compared to paying these high penalties.

And the average fee for an overdraft? $26, in case you’re wondering.

The median bank overdraft fee has this year rose from $25 to $26, according to Moebs, the first time it has gone up in a recession for more than 40 years.

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Fraudulent calls from 904-398-4657

eddie — Fri, 14 Nov 2008 04:00:59 +0000

Got a call from 904-398-4657 today, on my office line. After picking up and saying “Hello,” I was greeted with a pre-recorded message saying “Don’t be alarmed!”, and telling me that I had an important message waiting from “credit services.”

Curious, I hit 1 and was connected with a representative. “Sir, this is your last chance to save money on your account!”, I was told.

“What account?”, I asked.

“Your credit account!”, was the vague response.

“Oh, which of my creditors are you with?”

“We work with over 900 creditors, sir.”

“OK, so which one are you calling on behalf of?”

“This is you last chance, sir.”

“Let me get this straight – I don’t have an account with you, but you’re trying to make me think that I do. That’s pretty misleading. What is the name of your company?”

“Credit Services.”

“I see. And what is your address?”

Click.

That’s right, she hung up on me.

I get calls from telemarketers from time to time, but what makes me upset about this particular call is that I could see my grandmother falling for this scam. It was so vague, so misleading, that a prudent person could be led to believe that this was a legitimate call from a creditor. They even had carefully crafted misleading answers to direct questions like “Which of my creditors are you?” (“We work with over 900 creditors, Sir” was the response)

I did a few searches and found that these people completely ignore the Do Not Call List, and they use the same fraudulent schtick on everyone they call.

I filed a complaint with the FCC over this call, and will likely file a complaint with my states’ Attorney General next week.

If you get a call like this, please consider filing a complaint – it’s the only way to get these people shut down.

File a complaint with the FCC here

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Major League Baseball: “Get a free ball from the team that just knocked your team out of the playoffs”

eddie — Mon, 06 Oct 2008 16:05:13 +0000

I’m a Milwaukee Brewers fan.

While it was sad to see the Brewers get bounced in the NLDS by the Phillies, it was still nice to see the Brewers long post-season drought finally come to an end.

Because I am a Milwaukee Brewers fan, I am subscribed to a Milwaukee Brewers email list and have opted in to receive special offers regarding the Brewers.

Still, nothing prepared me for what I saw when I opened my email box this morning:

That’s right, if I act now, I can get a “get a Cole Hamels autographed baseball after [my] first qualifying transaction(s) using [my] Philadelphia Phillies® Extra Bases credit card.” (!!!) Since the Phillies beat the Brewers, all Brewers fans must now be Phillies fans. Makers perfect sense.

This is the problem with spam and email – it costs next to nothing to blast hundreds of thousands of people with your inane marketing messages, so why not give it a shot?

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Another Reason to not use Gift Cards

eddie — Mon, 25 Feb 2008 00:33:17 +0000

Reports have retailer Sharper Image, currently undergoing a bankruptcy, is refusing to honor gift cards both in both its retail stores and online.

If you really needed another reason to stay far, far away from these ripoff gift cards, this is it.

So let’s sum up just a few reasons to not use gift cards:

Limited to spending your money at one store.
Unused balance often left unspent, meaning pure profit for the retailer
The cards are pre-paid, non-interest bearing accounts. This means that the store, not you, makes interest on your money.
Most have monthly maintenance fees after a period of inactivity
No purchase protection like that offered by credit cards and even debit cards.
Store may refuse to honor the gift cards at any time, subject to their issuance terms.
Many Visa branded gift cards do not work at all retailers; in fact, they rarely work at gas pumps.
As we learn here, gift cards are a form of unsecured debt for the store, meaning that if the store should happen to file for bankruptcy, card holders are very low down on the totem pole when it comes to reimbursement.

With all of these negatives, why do people continue to purchase these things? My guess is that most purchases are made as gifts for others – you don’t know what to buy your friend/aunt/cousing, so instead of picking out a gift, you buy him/her/it a Target-branded gift card. Word to the wise – next time, just give cash.

Customer Experiences from the Consumerst:

… Now, I finally go to the store and hand them my certificate and I’m told that due to Chapter 11, SI is not accepting Merchandise Certificates or Gift Cards from anyone.

He called Sharper Image customer service see what the problem was and the representative told him they had suspended gift card redemptions due to the bankruptcy.

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No, Dell, I don’t want a warranty extension. But you already knew that, didn’t you?

eddie — Fri, 21 Dec 2007 21:50:58 +0000

Extended warranties are very lucrative. So lucrative, in fact, that it’s reported that over 60% of large electronics retailers’ profits come from selling these protection plans.

Knowing how profitable these plans are, it didn’t surprise me when Dell called to ask if I wanted to extend the warranty on a computer I had purchased about a year ago. “No thanks, I answered.” It didn’t surprise me when I got a similar call about 2 days later, either – last December, I purchased quite a few Dell machines for both my home & office. With the third call, it started to get annoying. Then came the fourth call. Then the fifth. Then the sixth. And so on, and so on.

They call me on both my cell phone and my work phone, and they always start out with a fake buddy-buddy approach of “Hey, this is Jim from Dell, how are you doing today?” The message: at Dell, we don’t want to be in business with you, we’d rather be your friend.

If you really want to be my friend, Dell, you’ll stop calling me. I’ve asked (very politely, I might add) each of the last 4 people who’ve called to please stop calling. “No, I don’t want the warranty, just like I told the last few people who’ve called. Please stop calling me.”

“Oh, I’m so sorry sir…”

Really? If you were sorry, you’d stop calling.

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The Phone Spamming Doves at 1-800-679-0336

eddie — Fri, 19 Jan 2007 22:54:44 +0000

Over the last 3 weeks, my business has received at least 15 calls from the number 800-679-0336. Each call features a computer voice that says “Hi, this is Kami, may I please speak to the woman of the house?” No, Kami, you may not.

A little research shows that this number belongs to a “charity” calling themselves “The Dove Foundation.” They claim to be a Christian charity, ironic since they’re clearly not living Jesus’ teachings – I’m quite sure that “Thou shalt not be a robo-spammer” is in there somewhere. At least it would be if the good book was written today.

Calling the number 800-679-0336 to complain brought on more frustration – they have a computer over there pretending to be a person. Using voice recognition software, this thing goes as far as to pretend that it’s an actual employee, saying “My name is Megan, and my Employee ID is ….”

Way to go. I guess it’s not lying if you have a computer do it for you, eh?

Since organizations like these seem to be immune from Do Not Call list violations, there is little we can do to stop them.

Dell Support, or lack thereof

eddie — Mon, 18 Dec 2006 18:15:30 +0000

As a computer hobbyist and business owner, I’ve ordered a lot of equipment from Dell – computers, accessories, even an LCD television. Fortunately, I haven’t had to contact customer support very often. Today, however, I logged in to my account to see that Dell had taken it upon itself to cancel one of my orders without any notice. Thanks, Dell!

So I call the 1-800-WWW-DELL number to find out what the heck is going on. Now, I’ve been frustrated by automated voice operated phone trees before, but I have to say, Dell’s has to be one of the worst I’ve ever come across. The obnoxious “lady” on the other end misunderstood almost everything I said, and after 10 minutes of trying to get to a person I was finally put on hold for another 15 while they tried to find someone to take my call. The person who finally answered informed me that “Ok sir, it looks like that order has been cancelled.” Thanks, extremely helpful person from India. Here I am 30 minutes into this experience and you told me exactly what I already know.

“Let me see if I can find out why…. (CLICK!”

That’s right, cut off, right there. So I call back, repeat the process, and am cut off again after waiting for 20 minutes. No, I’m not kidding.

I track down a different number for dell order support, 1(800) 915-3355, option 1, ext. 7243784, and am told (again, quite helpfully) that the number will soon be disconnected, and that I should instead call 1(800) 247-2076.

So I do that. 10 minutes into being on hold there and “CLICK” cut off again.

You think I’m making all of this up, don’t you? I’m not. Frustrated by the phone systems, I go to try online support. “Sorry, all online representatives are busy.” What? Don’t you people have a queue?

OK – back to the phone support. I FINALLY get a fellow who I have a lot of trouble understanding. He tells me that “someone in Round Rock, Texas canceled the order. You will have to ask that person why.” Are you serious? I tell him to just reinstate the order, and he tells me that he can’t – the system won’t let him. So he advises me to call a “special” number – 1(800) 915 3355, extension 7428652. He assures me that the person there will be able to place my order. I call the number, type in the extension, and guess what — “This number has been disconnected…. Please call (wait for it) the main dell number, 800 999 3355.

Right. Back. Where. I. Started.

So here we are, over 2 hours later, and me still with no clue why my orders have been canceled.

Just a bad day for Dell? Maybe. Perhaps. It certainly ruined by day. And accomplished another goal as well — I am done with Dell. Not that they’ll miss my business – even though I spent about $50k with them last year, I’m by no means a large customer of theirs.

Eddie On Everything » consumer protection

ING Direct Easy Orange Mortgage – Not As Easy As You Think

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Beware the Better Business Bureau (BBB)

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Major League Baseball: “Get a free ball from the team that just knocked your team out of the playoffs”

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Another Reason to not use Gift Cards

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No, Dell, I don’t want a warranty extension. But you already knew that, didn’t you?

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The Phone Spamming Doves at 1-800-679-0336

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Dell Support, or lack thereof

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