Off the Kuff: Bidness Archives

Meet the robocallers

I didn't think it was possible for me to hate the auto warranty robocallers any more than I already do, but apparently it is.

[C]ourt documents filed this month in a Federal Trade Commission case against a Florida company -- Transcontinental Warranty -- provide what authorities say is a look inside a telemarketing operation that used widespread recorded calls and misrepresentations in selling its product.

A declaration from a former employee describes how he was supposed to go through hundreds of calls in a shift, trying to sell auto service warranties, which the FTC said typically cost $2,000 to $3,000, without giving up too much information about the company, especially if consumers became combative or suspicious.

"Transcontinental's company motto was 'Hang up. Next,' " said Mark Israel, who worked the evening shift with about 30 other operators at company headquarters in Fort Lauderdale, Fla. "Essentially, this meant that if the consumer did not readily go along with the scripted telemarketing pitch, I should immediately hang up."

[...]

Israel, who did not respond to requests for an interview, worked for the company only four days before quitting and contacting the FTC.

His description of the calls mirrored those of people nationwide, the FTC said, who complained to government agencies and consumer organizations. The FTC said some Transcontinental calls went to numbers registered on the national Do Not Call list. But all recorded sales calls are illegal with the exception of those that go to people with whom there's an established business relationship.

But it was difficult for consumers to report a company if it couldn't get its name. "I understood it to be an acceptable practice at Transcontinental to say whatever was necessary to get the consumer to divulge his or her credit card number," Israel said in the court documents.

Some people have left comments on previous posts about these jerks saying they'd managed to hang on the line long enough to get to a person and get that person to take them off their call list, at least for awhile. I never bothered with that - I always hung up as soon as I recognized the call, if I was unfortunate enough to answer it in the first place. I think that was for the better, all things considered. And I must say, I haven't received one of these calls in a few days now (knock wood), so maybe the feds are having an effect, One can only hope.

05/31/09 | permalink | comments [0]

Credit card reform

Good.

Landmark credit card legislation, poised to reach President Obama's desk as early as Memorial Day, will force the card industry to reinvent itself and consumers to rethink the way they use plastic.

The Senate Tuesday took a critical step forward by voting 90 to 5 to pass a bill that would sharply curtail credit card issuers' ability to raise interest rates and charge fees. Lawmakers will now turn to reconciling differences with a similar bill approved by the House last month. Swift passage was expected given that the Senate version received so much bipartisan support and that the White House has pressed for action.

When Obama signs a bill into law as expected, the $960 billion credit card industry will go through restructuring that could have broad implications for consumers. (Details of the bill can be found here.)

The bill will prohibit card companies from raising interest rates on existing balances unless the borrower is at least 60 days late. If the cardholder pays on time for the following six months, the company would have to restore the original rate. On cards with more than one interest rate, issuers will have to apply payments first to the debts with the highest rates, which would help borrowers pay off their cards more quickly.

Treasury Secretary Timothy Geithner said the bill "will help create a more fair, transparent and simple consumer credit market."

The credit card industry is a great example of the consequences of deregulation gone wild. The profits they were raking in above a certain point had little to do with creating wealth and everything to do with transferring it from lower-income consumers to their own bottom lines. This is long overdue, and frankly it should have gone farther. But this is a good start.

When credit cards were introduced about 50 years ago, issuers practiced a one-size-fits-all approach of charging an annual fee and roughly the same interest rate of about 18 percent to everyone. As the industry became more deregulated in the 1980s, around the time that credit scores were introduced, issuers were able to separate the risky from the not-so-risky borrower and tailor the terms of card contracts.

The money they made from customers who did not pay their bills in full each month became an important revenue source. The industry makes $15 billion annually from penalty fees, and one-fifth of consumers carrying credit card debt pay an interest rate above 20 percent, according to figures cited by the White House and compiled from the Government Accountability Office and the Federal Reserve.

To make up for the lost revenue, card issuers will turn to those customers who pay what they owe in full and on time every month, analysts said. Gone will be the days when creditworthy customers enjoyed the benefits of low interest rates and cards that offer rewards such as frequent flier miles and cash back, they said. Annual fees, which had been banished to cards with rewards programs, are likely to return. Offers for zero percent balance transfers are likely to become rarer.

"This industry will start looking more like a one-size-fits-all pricing approach which dominated in the '80s -- 18 percent interest and a $20 annual fees," said David Robertson, publisher of the Nilson Report, which covers the industry. Customers who pay in full each month will have "to start picking up the slack, to start pulling their weight."

You mean they'll change business models to be more like American Express? What a terrible thing that would be, and I say that as one of those so-called "deadbeats" who pays in full every month. Like Kevin Drum, I don't buy any of the industry's sobbing, and if I did I'd have no sympathy for them anyway. I mean, come on, if people like me were so bad for their business, why did they never cut me off or change the terms of my credit? So, you know, cry me a river already. Maybe this will force them to innovate in ways that are actually beneficial to the customer.

05/21/09 | permalink | comments [0]

Injunction issued against auto warranty robocallers

Yes! Yes, yes, yes!

A federal judge has issued two temporary restraining orders designed to stop what officials describe as a wave of deceptive "robo-calls" warning people their auto warranties are expiring and offering to sell them new service plans.

[...]

The FTC filed suit against two companies and their executives on Thursday, asking a federal court in Chicago to halt a wave of as many as 1 billion automated, random, prerecorded calls and freeze the assets of the companies.

Officials say the calls have targeted consumers regardless of whether they have warranties or even own cars and ignore the Do Not Call registry. They say telemarketers have misrepresented service agreements consumers have to buy for warranties that come with the price of the car.

Sen. Charles Schumer, D-N.Y. had asked for an FTC investigation into what he described as the scam of "robo-dialer harassment."

"These calls are annoying, but worse, many Americans have been fleeced," he said.

U.S. District Judge John F. Grady issued the temporary restraining order against Transcontinental Warranty Inc. on Thursday and Voice Touch Inc. on Friday.

Grady's orders also applied to Transcontinental CEO and President Christopher Cowart, Voice Touch executives James and Maureen Dunne, Voice Touch business partner Network Foundations LLC and Network Foundations executive Damian Kohlfeld.

[...]

Besides ordering a halt to the automatic telephone sales calls, Grady's order froze the assets of the two companies. The FTC alleged in its complaints that the calls were part of a deceptive scheme and asked the court to assure the assets will not be lost in case they might be needed to repay consumers who have been victimized.

The temporary restraining orders are to remain in effect until May 29, when Grady scheduled a hearing on the FTC's request for a preliminary injunction.

Halle-freaking-lujah. May this put these bastards out of business once and for all.

The FTC isn't immediately seeking civil fines against the companies but may do so later, agency officials said.

I still think public execution would be a just outcome, but I'll take what I can get. Thanks to Kevin Drum for the pointer.

05/20/09 | permalink | comments [0]

Die, car warranty phone spammers! Die, die, die!

OK, maybe that's a tad bit harsh, but if this leads somewhere I do hope that public execution will be on the table.

Unsolicited calls to home and cell phones warning of a final notice and an expiring vehicle warranty are a nuisance and harassment and should be the subject of a federal investigation, a U.S. senator said Sunday.

More and more Americans are receiving calls with a computerized voice saying, "This is the final notice. The factory warranty on your vehicle is about to expire," or something similar, several times a day on their cell or land lines. The calls come even if a person has signed up for the national "do not call" registry.

Now, Sen. Charles Schumer of New York wants a federal investigation into the "robo-dialer harassment."

"Not only are these calls a nuisance, but they tie up land lines and can eat up a user's cell phone minutes, possibly leading to a higher cell phone bill due to overage charges," said Schumer, D-N.Y.

Meanwhile, officials in 40 states are investigating the companies behind the car-warranty calls.

I have gotten these calls on every phone I have, including my business line and my work BlackBerry, whose phone number I've never given out. They come in on all different numbers, so you can't even effectively block them. Apparently, these calls are used to sell extended auto warranties, which themselves are largely a ripoff. Why anyone would respond to this kind of sales pitch is beyond me, but then there are people in this world that buy pharmaceuticals via unsolicited emails, so I guess it takes all kinds.

Missouri authorities filed a lawsuit last month against one of the largest car-warranty companies, Wentzville, Mo.-based USfidelis, charging that company officials ignored a subpoena demanding that they answer questions about their business.

A spokeswoman for USfidelis, which has more than 1,000 employees, did not return a call seeking comment Sunday, but the company says on its Web site that it stopped making unsolicited marketing calls last year.

"Frankly, we've identified more effective ways of connecting with our customers," the Web site's "Frequently Asked Questions" section says.

Frankly, I'd think that sneaking up behind your customers and tasering them would be a more effective and less annoying way of connecting with them, but maybe that's just me. Go get 'em, Chuck.

05/12/09 | permalink | comments [6]

Not everybody isn't hiring

The downturn in the economy has created an opportunity for the Houston Police Department to bolster its ranks.

A year ago, the Houston Police Department could barely muster enough recruits to fill a 70-seat academy class. Now with 1,000 applicants in the pipeline, HPD is benefiting from the nation's [worsening] economy, and so are several other police agencies in the Houston region.

Since September, HPD has seen a steady uptick in applications, jumping from 280 to nearly 800 last month, according to police records. The Harris County Sheriff's Office also has seen a noticeable increase in the number of recruits taking the initial hiring test. The department usually draws about 50 people, but the number has doubled in the past few months, sheriff's officials said.

"I think a lot of people know that government jobs are a place where they can get pretty steady employment and the benefits are good," said Houston Police Chief Harold Hurtt.

The ample applicant pool is a major turnaround from a couple of years ago when many agencies struggled to find qualified recruits and had to compete with each other to attract potential officers. Last year, HPD began offering $12,000 bonuses to lure candidates to its academy.

Hurtt's goal to boost the city's police ranks by more than 1,000 officers by 2010 will likely be much easier to reach.

The story notes that other area law enforcement agencies, such as various Sheriff's offices, are seeing a boost in applicants as well. I imagine it's the same for other public service sectors, such as prison guards, teachers, and government. It's also probably good for military recruiting.

03/21/09 | permalink | comments [0]

Always government handouts

Texans for Public Justice have put together a really good report on government subsidies for WalMart here in Texas that I highly recommend. Stories like this constitute another reason why I tend not to get too bent out of shape over things like the driving deputies. That story is about a couple thousand dollars, and it generates a front page story in the newspaper and a ton of outrage and snark. This one is about millions of dollars being funneled from counties and cities to one of the largest and most profitable businesses in the world, and it will largely be ignored. I confess, I don't quite understand why that is. Be that as it may, read it and if you live in an area where your tax dollars are going to benefit WalMart's bottom line, you might consider giving some feedback about that to the elected officials who made it happen.

03/08/09 | permalink | comments [1]

OneSpot

It's always good when you see a story like this about a friend.

Venture capital investing has taken a nosedive, but deals are still getting done: Two Austin Internet startups will announce deals today totaling $7.5 million.

OneSpot, which has created a Web content aggregation service, has raised $4.5 million from Dallas-based Silver Creek Ventures, and 7 Billion People Inc., a Web analytics company, has received $3 million from SmithCo Investments of Austin.

[...]

Venture investing in Austin companies fell to $57.1 million in the fourth quarter, a 31 percent decline from the same quarter a year ago. Venture funding in Austin companies fell 48 percent for the year to $340.2 million, which was invested in 64 deals. That compares with $658.8 million put into 79 deals in 2007.

The 2008 figures were the lowest since 1998.

But for startups able to raise money, "an economic downturn can be a great time to build a company," OneSpot CEO Matt Cohen said.

"It's a fantastic opportunity, because your traditional big competitors aren't innovating, they're just trying to get by," he said. "That gives you a chance to get in and change the game."

Cohen founded OneSpot in 2005 after five years as an adviser and partner at Austin-based venture capital firm G-51 Capital. Before that, he spent a decade working in digital media, including launching the Houston Chronicle's Web site.

OneSpot's service provides Web publishers with links to fresh content that they can publish on their sites. It works by constantly monitoring hundreds of thousands of Web sites and delivering the most relevant content, which publishers use to supplement their own material.

OneSpot's flagship customer is The Wall Street Journal, which uses the service to find and link to stories on subjects including law and technology.

"Traditional content businesses are under a lot of pressure, and part of that is to do more with less," Cohen said. "OneSpot allows them to be much more efficient with their resources and offer more content to their readers."

OneSpot also has customers in other industries. Semiconductor services company Smith & Associates uses OneSpot to find content related to the electronics industry. Smith & Associates distributes the Web links to its customers by e-mail.

OneSpot, which has 10 employees, will use its new money from Silver Creek to expand sales and marketing, and is hiring across the board, Cohen said.

Matt was one of the first people I met when I moved to Houston in 1988. He and I were roommates for seven years. What's the point of having a blog if you can't give an old buddy a pat on the back? Way to go, Matt!

02/14/09 | permalink | comments [1]

Green landscaping

Just a bit from this story about hard times in the landscaping business that caught my eye:

Lately [John Catapano, who owns Houston's Western Horticultural Services, has] used more environmentally friendly products to help cut costs.

Two years ago, he began converting his 30 vehicles to biodiesel, saving him about 5 percent on his fuel costs. More than three years ago, he began to use organic instead of synthetic fertilizers. And he plants drought-resistant greenery.

"Going green does save money," he said.

Well, since the point of "going green" is to use less energy, and using energy costs money, that would be a true statement. Sure, you may have some up-front costs, depending on the method by which you choose to go green, and some investments will show a return faster than others, but basically this is saying "if you use less energy, you'll spend less money". I hope by now that should be obvious to everyone.

08/13/08 | permalink | comments [1]

Landfill power

Interesting.

Anheuser-Busch, the top U.S. beer seller, said today it will begin using landfill gas to help power its massive Houston brewery in a move designed to lower its soaring energy costs and keep beer prices from climbing higher.

The St. Louis-based brewer will use the landfill gas to help run boilers that today are fueled by natural gas.

When the landfill gas begins flowing into the plant later this year, about 70 percent of the brewery's energy needs will be met by renewable fuels, Anheuser-Busch officials said today during a Houston news conference announcing the initiative.

"It's going to help us keep beer affordable," said Doug Muhleman, group vice president of brewing operations and technology at Anheuser-Busch.

The beer maker will purchase the gas from Framingham, Mass-based energy firm Ameresco, which has a partnership with Houston landfill operator Allied Waste Services.

The Houston brewery, the company's second-largest behind its flagship plant in St. Louis, will receive the gas via a six-mile pipeline into the plant from Allied's McCarty Road landfill in east Houston. Still under construction, the pipeline will be completed later this year, the companies said.

Other landfill operators, including Houston's Waste Management, have launched similar efforts to harvest and sell methane gas created by decomposing organic material in trash dumps. In addition to providing alternative energy, the practice reduces emissions of methane, a greenhouse gas.

Well, it's good to know that our predeliction for landfills has a positive side to it. Kudos to Anheuser-Busch and to the landfill operators for taking advantage of this opportunity.

07/31/08 | permalink | comments [1]

The Steffy Plan

Credit where it's due: After his solution-free criticism of the Pickens Plan, Chron columnist Loren Steffy has come up with a plan of his own for energy.

My plan begins with the idea that energy is really about economics. The solutions, therefore, must make economic sense. That doesn't mean consumers won't have to pay more -- we will. And providers must be able to make reasonable returns.

Subsidies are fine to develop technology, but we can't sustain businesses that aren't profitable without them, which is why I'm skeptical of wind power.

Just as the federal enthusiasm for ethanol led to a wave of subsidies that helped feed higher food prices, we must be careful about picking winners before we understand the rules of the game.

Here, then, are the five broad elements of my plan:

1) Enact meaningful conservation programs from the home to the highways. [...]

2) Invest in infrastructure. [...]

3) Develop what works. [...]

4) Continue researching alternative fuels that show economic promise and fund it through federal grant programs and modest tax incentives for promising technology. [...]

5) Be prepared to pay for it.

All in all, not a bad effort. I don't share Steffy's skepticism of wind energy, which I believe will be a key component to any solution going forward, but I strongly agree with his emphases on conservation and investment in mass transit, both of which will show immediate and long-term gains. And I appreciate the continuation of the conversation. If the focus has shifted from "why do we need to do anything?" to "what's the best way to deal with this?" then we've made progress. Let's keep that going.

By the way, the Chron got some letters to the editor regarding Steffy's previous column, including one from the executive director of the American Wind Energy Association Washington. I'm reprinting that beneath the fold. I won't bother with the subsequent letter, which says little more than "AL GORE IS FAT!!111!!!", but I will say that if that's the best folks like that can do, it's easy to see who'll eventually win this battle. Click on for the AWEA response.