Doubt of Business: 1, USA Jobs: 0

You have to celebrate the small wins, and I'll take credit for one this month.  I wrote a post in April about the federal government's official jobs website, calling out a major error in their applicant eligibility questionnaire.  Just this month, I'm happy to report a new release of the USA Jobs website.  Why it's taken so long and why they had to completely redesign the website for a simple change in list items is beyond me, but hey, it makes sense now:

Well, the wording is still confusing as hell, but at least the bullet points are structured correctly!

In case you were confused about how to vote in San Fran ...

... this should pretty much clear it all up

Bank of America: Every little bailout helps

After banking with Bank of America for 16 years, I finally just couldn't handle it anymore and waved goodbye.  An article in today's Wall Street Journal prompted me to write this post today.

About a month ago I made a mistake while paying a credit card bill online.  I accidentally selected the wrong account, and unfortunately that account's balance was too low to pay the bill.  I immediately called both Bank of America and American Express and informed them of my mistake.  American Express was understanding, cancelled the transaction, and informed me they would reimburse me if I would be charged any fees on their end.

Bank of America told me it was too late, the amount had already been overdrawn, would be returned, and I would be charged a $35 non-sufficient funds fee.  Fair enough, I thought.  After all, this was my mistake. 

A few days later I get another email from Bank of America alerting me to a non-sufficient funds transaction and corresponding $35 fee.  Then this happened again 2 days later.  I called Bank of America, and after being transferred around the globe a handful of times, I was informed that they kept trying to pay the American Express bill on my behalf!  Certainly this was a mistake on their part, right?  Certainly they would refund me all or some of the $105 non-sufficient fund fees I've racked up.  Nope!

In that same phone call I asked to close all my accounts.  They seemed a little too efficient in this process, and the agent informed me I would receive a check within a couple weeks.  Perhaps as a final "f- you" from Bank of America, I received yet a fourth notice in the mail just a few days ago:

As an interesting side note, take a look at the customer feedback survey on the top. 
Have you ever seen a survey require the customer to pay for postage?

Yes, apparently my account was overdrawn by 1 penny when they closed it.  You can't make this stuff up!

Realtors Run Amok, Part 1 of a Series on Realtors

I'm sorry I haven't posted in a while, but rest assured that I've been thinking a lot about DoB issues. One thing that I keep reflecting on is the idea of obsolete industries. One such industry, IMHO, is residential real estate. I have so much to say about this issue that I've decided to start a series, and this is just part 1.

Home sellers and buyers pay too much and receive too little for realtors’ services. This is mainly due to a complete misalignment of incentives among the four primary stakeholders: sellers, buyers, sellers’agents, and buyers’ agents. Furthermore, home buyers are even more unique because they do not always share the one common aim of the other three stakeholders: to broker the sale of property.

Home Sellers

A home seller’s objective is to sell their home at the highest price possible. Accomplishing this requires a lot of “traffic” (legitimate and qualified buyers viewing the home) and a lot of dedicated and specific work on the part of the realtor. Specifically, the realtor would need to actively market the home through specialized channels and differentiate it from the other homes on the market. For example, a home with a large, fenced backyard is going to be more valuable to a buyer with a dog; therefore, target marketing the home to buyers with dogs would provide more value to both the buyer and seller.

Seller Agents

Unfortunately, the incentives of seller agents are not usually aligned with the sellers they represent. For a sizable and steady income, seller agents (also referred to as listing agents) focus on volume – they simply want to sell as many homes as possible and thereby have no time to market via specialized channels, as exemplified with the home with the large, fenced yard. Experts and novices alike agree that low-priced homes are more likely to sell than comparable, higher priced homes. Accordingly, it is in the seller agents’best interests to price their homes low. Furthermore, because a typical seller agent’s commission is only 3%, he or she would be more willing to budge on price negotiations than the seller. For example, a $10,000 price change may represent a significant loss of capital gains for the seller; for the realtor, however, it’s a loss of only $300. This $300 is neglibile when compared to the overall commission (i.e., assuming the house lists for $210,000 and sells for $200,000, the realtor makes $6,000 and the owner loses $10,000). Generally speaking, sellers are much more susceptible to downside than seller agents. For those finacial practitioners out there, this is equivalent to a negatively skewed investment paradigm.

Buyer Agents

Buyer agents have entirely different incentives from seller agents. While they do care about volume for the same reasons as seller agents, the pace at which they broker purchases is almost entirely based on their buyers’ motivation to purchase a home. With nearly 100% of buyers having access to the internet -- and specifically www.realtor.com -- many do their own research prior to contacting a realtor. Consequently, a selection bias may exist where buyer agents are more likely to take on clients who know what they want. In reality, the true added value of a buyer agent is helping find the client a good home. Therefore, even if a buyer agent selects a client who needs an above average level of assistance, the agent will be incented to find the easiest homes to market (e.g., those that are well priced.) Once again to reference financial terms, buyer agents do not possess a fiduciary responsibility toward their client.

Home Buyers

Home buyers may be described as the “innocent bystander” in this debacle of an industry. Buyers can be summarized into two groups: those who don’t need realtors and those who do. The buyers who don’t need realtors do their own research and know what they’re looking for. However, since 90%of homes are sold via realtors, these buyers will need to pay a realtor anyway. (Note that buyers typically do not pay their realtor’s fees. The fees are usually paid by the seller and are based on a commission of the final selling price. However, since the seller knows this, he or she will typically “embed” the cost for the buyer’s agent into the selling price.) The buyers who do need realtors have ready access to them, but as mentioned above, their realtor’s incentives may not be aligned with the buyer.

In the next part of this series, I'll provide a pretty interesting historical context about why the situation is as bad as it is.

How many times should your phone ring?

Why do cell phones only ring 4 times before voicemail picks up?  I’m sure that I can’t be the only one in the world who misses a decent number of calls because I don’t have a chance to pick up.  It doesn’t matter where I am… If I’m outside, it might be a ring or 2 before I even realize my phones ringing, and by the time I stop what I’m doing and retrieve it from my pocket, “Missed Call.”  If I’m inside, especially at home, if I hear the phone ring, it takes me at least a few rings to remember where the hell I left it.  And I’d imagine women have it even worse, with it typically buttoned up inside a purse.

I’ve actually tried calling my phone provider to see if I can adjust the number of rings, and interestingly enough, I learned that Verizon used to do this, but now it’s a standard 4 rings for everyone.  I’ve also found that VOIP and home lines typically offer minimal customization of rings, and the max allowed I’ve ever seen is 6 rings.

I’m looking for something like 8 rings!  Furthermore, I even think 6 or 8 rings should be the standard, not a measly 4.  I have two excellent reasons for this.

First, like I mentioned before, it’s sometimes difficult to answer the phone within 4 rings, especially if your cell phone vibrates for the first ring (which is exceedingly convenient if you’re in a meeting and forget to turn it to silent).  If you’re at home, no more running around the house, up and down stairs, and checking your bags for your phone.  Just take your leisurely time to answer the phone.

The second reason this is a great idea is to provide an automatic filter on voicemail.  If someone only has to wait 4 rings to leave you a message, than they’re probably going to let it ring and leave a message regardless of the importance of the call.  However, if they have to wait 8 rings, they may now think twice about leaving a message.  If they choose not to leave a message, then the way I see it is that it clearly wasn’t that important to begin with (or they’ll text or email me, etc).

At the end of the day, leave it up to the consumer to customize.  There’s an idea that can help lots of businesses.

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How DirecTV "Supports" the Military

A while back I was in the military, and one of my secondary responsibilities was to manage our unit’s morale and recreation program.  We primarily brought in money by operating vending machines and selling some food during lunch.  While we spent our funds on a number of various events, such as picnics and outings, one of the more popular things was us having DirecTV, including all the great add-ons, such as NFL Sunday Ticket and MLB Extra Innings.

As the program manager, I was responsible for setting up our DirecTV service.  I made sure we got the best negotiated price, arranged for the installation, and paid the bills.  For the most part, this was a relatively straightforward satellite package; really, the only difference was that instead of the service being in a single person’s name, it was a corporate account, so it was in our unit’s name.  There was one potentially complicating factor, however.  Our unit was going to be disbanded* in 9 months, and the typical DirecTV contract is for 1 year.  I communicated this to our salesperson, and he said that this would absolutely not be a problem, annotated this on the account, and included it in the contract.

(*Units being disbanded is not uncommon.  For example, units can be disbanded in association with BRAC (Base Realignment and Closure), upon completing specific missions, or decommissioning of naval vessels.)

Over the next 9 months, we all thoroughly enjoyed our satellite programming, and sometimes we even purchased special PPV events (e.g., UFC), and all bills were paid on time.  When there was about 1 week remaining prior to our unit being officially disbanded and remaining personnel to be redistributed to several hundred different units, I called up DirecTV to inform them that we would be stopping our service.  As a bonus, I was going to hand over our dish and receivers to a nearby unit that was just starting the disbanding process, and they would start new DirecTV service and utilize it for about a year.  This, no doubt, was a win-win for both DirecTV and the other unit.

As you probably expected, I was told by customer service that we were in a one year contract and we would have to pay a $350 cancellation fee for early termination.  Supervisor after supervisor told me the same thing, until finally I was told I’d get a call back from a “special” department.

I did get a call several days later, literally on the day that we were saying our goodbyes and disbanding the unit.  The agent told me that we would not be required to pay the cancellation fee, but we would have to send a letter announcing our circumstances on command letterhead.  I informed the agent that we unfortunately no longer had computers and printers, let alone letterhead, and that for all intents and purposes, we were effectively a corporation going out of business.  He claimed that if DirecTV didn’t receive the letter within 3 weeks, we would have to pay the cancellation fee.  Apparently it didn’t matter that it was already annotated on the account.  I exclaimed to him that there would not be anyone to pay the cancellation fee, but of course to no avail.

About a year later, I get a call (on my mobile) from DirecTV collections department, asking me if they had reached our military unit.  I told them that I used to be affiliated with the unit, but it no longer exists.  They then asked who was responsible for paying the bills, and I said “we’re out of business – there’s no one here anymore.”  Wisely, the collections agent asked, “The military is not out of business, so who can I reach to pay the bill?”  More wisely, I gave the agent the phone number to the office of the Undersecretary of Defense Comptroller’s office.  For those of you who have tried to reach someone via a government phone number, you’d know the endless labyrinth of phone systems in which this collections agent was about to embark.

A couple years later, and maybe once or twice a year since then, I get a phone call from DirecTV collections, and with a smile on my face, still hoping to have the last laugh, I kindly say, “you must have the wrong number.”

Budget Car Rental: You Can Judge a Company By Its Name

I've been travelling a lot lately. While this serves as an excuse to my lack of postings, I can promise you I have a vault full of great DoB stories.

I rented a car from Budget recently, and I noticed an odd smell when I first drove off the lot. It took me about 15 minutes and watery eyes before I figured out that the car, despite having only 5,000 miles, had been heavily smoked in. I also noticed the large "NON-SMOKING" stickers on the windows which declared a $250 fine for smoking. Once I got to my hotel (about 30 minutes from the car rental location), I called Budget to tell them about the issue. I was neither looking for a different car nor any type of credit; rather, I just wanted to make sure that I wasn't going to be inadvertently charged the fine. The customer service representative informed me that I had 2 options. One option was to bring the car back to the rental location and swap it out for a different car. The second option was to risk paying the $250 fine. Yeah, so thanks a lot.

Ignoring the smoke infusion issue for the time being, I went to use the car the next day and found a partially flat tire. That's when I remembered that the tire pressure warning light did indeed come on shortly after leaving the airport, but I was too busy gasping for fresh air that I didn't notice. I looked up the nearest Budget location to my hotel, and took the car there to see what they could do about the flat tire.

I pulled up front to the Budget office (it was in an urban area, so I wanted to check in before I found a parking space), I informed the agent of my situation,  and she told me I had to park first. About 20 minutes had elapsed by the time I drove to the parking garage and walked back. The agent then found it convenient to inform me that they had no vehicles available and that I had 2 options. One option was for me to replace the tire with the spare. The second option was to call roadside assistance. Again, thanks a lot.

For the sake of keeping this post short, I'll skip the parts about there not being a spare tire,  about waiting on hold for roadside assistance for 45 minutes, and about me showing the garage mechanic how to use an air compressor. In the end, I was informed that it would take between 1 and 8 hours for Budget to come and bring a new car (since there was no spare tire) and that I would have to be there when the tow truck came. I was also informed that there was no way that the 8-hour window could be reduced. Oh, and by the way, we were on vacation. So, again, thanks a lot!