The Conundrum of Whether to Buy Extended Warranties

By: Andre Kaiser 

Think back to the last time you bought something that came with a warranty. Maybe you bought a TV or computer, or perhaps it was a blender or refrigerator. Do you remember any extended warranty offer that came along with that purchase? Did you find yourself teetering on the fence of choice, not sure if you should pay for the extended warranty or not? If you can’t remember such an experience, chances are you’ll be faced with this decision sooner rather than later. When you are making that decision, hopefully you’ll remember these tips and tricks to know if an extended warranty is right for you.

Why You Might Feel Pressured to Buy

Let’s start off by figuring out why extended warranties are regularly offered on purchases of consumer electronics and appliances. In a study on the topic, Robert S. Smith of the University of Maryland estimated that about 1 in 3 Americans buy extended warranties each year. The total spent on extended warranties each year in the United States is approximately $1.6 billion. While this is a fraction of the total amount spent on consumer goods, companies that sell extended warranties make about 50% of their profits each year from selling extended warranties. No wonder we sometimes fell pressured into buying extended warranties!

How to Take Control

Now, lets figure out if it is worth paying extra for that extended warranty. The following steps will help you make the decision that is right for you.

Step 1: Take a step back, take a deep breath, and take everything you are hearing with a grain of salt. The salesman is more likely than not telling you all the reasons why you “need” this extended warranty. But you are an educated consumer, you have read this blog, and you know there are two sides to every story.

Step 2: Ask yourself, “Do I really need the warranty?” Significant amounts of research suggest that most products don’t actually fail within the warranty or even extended warranty periods. This is what the seller is banking on when they sell you an extended warranty. Do your research, though; the Internet gives consumers easy access to product reviews. Use that resource, but keep in mind that complainers are often more vocal than satisfied buyers. A list of common consumer goods and their average repair rate can be found here. A few more factors to consider include:

  • Price of the Product: After spending so much on a warranty and service fees (discussed below), it might be logical to just buy a new one. One rule of thumb is to be cautions about buying an extended warranty on a product costing less than $200. Another suggestion is the “20% Rule”, that you should not pay more than 20% of the price of the product on an extended warranty.
  • How You Plan to Use It: Will you use the product a infrequently or hundreds of times per day? Is it a portable good or one that will never leave your desk or kitchen? For example, a laptop is probably more at risk to break than a desktop computer.
  • Start a “Fix-It Fund”: Set aside the money you would have spent on all your extended warranties in a separate account. If you can control yourself to only withdraw from this account when you need to pay for a repair, this is a great way to hold on to your money. Chances are you’ll be better off spending less and gaining interest than shelling out the dough for every extended warranty you are offered.

Step 3: Ask to see the extended warranty. Don’t rely on what you are being told—take 5 minutes to see what the extended warranty actually covers. You might be surprised at what you find. Here are some things to look for:

  • Start Date: Many consumer goods already come with a manufacturer warranty, which starts at the time of purchase. If you buy an extended warranty for 2 years but that extended warranty also starts at the time of purchase, you would have an overlap year of double warranties that you don’t need.
  • Parts and Issues: Extended warranties may not cover certain parts or issues you might have. For example, you might only be covered for certain internal parts, and not be covered for an internal battery or accidental/cosmetic damage to a screen. Alternatively an extended warranty could cover more than the manufacturer warranty.
  • Service Fees: Often there is a service/labor fee or deductible that you’ll have to pay to actually get a part fixed or replaced. This could range from $10 to $99 depending on the product. Compare the price of a repair without the warranty with the warranty plus the service fee.

Step 4: Consider your own risk tolerance and creation. If not having a warranty will keep you up at night or make you afraid to ever use the product, do what you need to stay sane. Similarly, if you have bad-luck, clumsy genes, or careless kids, an extended warranty might make more sense.

But Wait, Before You Buy or Walk Away…

It never hurts to negotiate. Always try to see if you can get the price or coverage you want, or negotiate other terms that are important to you. Also, shop around and see what other sellers’ extended warranties cover on similar products—you just might find a better deal. Finally, you might be able to get a free extended warranty from other sources, like your credit card. For more info on this, look for my other blog posts.

Extended Warranties for Less

By: Andre Kaiser 

Choosing whether or not to buy an extended warranty on your new appliance or electronic device can sometimes be a tough choice. It is nice to have the safety blanket that an extended warranty seems to offer, but the cost is often a deterrent. But what if you could get an extended warranty without paying for it? If you like the words “free” and “cheap” as much as I do, then keep reading.

Credit Cards Provide Free Extended Warranties

If you are like 72% of Americans, chances are you have a credit card. Is your card a Visa, MasterCard, Discover, or American Express? If so, you’re in luck! All four of these credit card companies offer free extended warranty coverage in some form or another for a variety of consumer goods purchased with their card. After you’re done doing your happy dance or fist pump, don’t go running off just yet, there are some things you need to know about how this process works.

First, make sure your card actually does provide an extended warranty. All American Express, Discover, and MasterCard cardholders have extended warranty benefits. However, only Visa Signature cardholders get the Visa extended warranty perks. Additionally, World Card MasterCard holders have better benefits than holders of Standard, Gold, and Platinum Cards. Before calling your credit card company, make sure you can show with a statement or some document that you actually purchased the product with their card. For example, if you have a Discover and a Visa and you bought your computer with the Visa, you won’t be able to get Discover to extend the warranty of the computer if it breaks.

Second, don’t putz around. All four companies require you to contact them by phone within a certain period of time in order to file a claim. MasterCard and American Express both require you to contact them within 30 days of the defect arising. Discover and Visa allow 45 and 60 days, respectively, for you to contact them.

Third, save your receipts and the original manufacturer’s warranty. To make a claim with your credit card company you will be required to provide both of these documents. You will probably also need to have an estimate from the manufacturer on how much the repair will cost. In most situations this will require contacting the manufacturer, not the store you bought it from.

Fourth, recognize that not all cards offer the same benefits. CardHub.com has rated the four cards on each of their policies and benefits related to extended warranties as follows from best to worst: American Express, Discover, MasterCard, and Visa. CreditCards.com also has a good chart that compares all the exclusions and other terms by card.

Finally, don’t go rouge—follow the process your card company gives you. Credit card companies aren’t going to just toss out cash willy-nilly. Be sure to submit all the documents they require within the time requirements. But if you do follow the process and qualify for coverage, you’ll either get a check or a credit to your account to cover repair costs. Alternatively you might be required to front the cost of the repair, and then your credit card company should reimburse you. Also, depending on the product, you might be asked to mail it in to your credit card company and have to go without it for a few weeks while it is repaired, a slight inconvenience for getting a free repair.

Contact the Store and Manufacturer

Even if you didn’t buy an extended warranty, it never hurts to ask customer service what they can do for you. I’ve heard plenty of stories about Costco taking back broken TVs and computers after the warranty expired and giving the customer a new one. I once took my old mouse into the Apple store asking if they had a way to clean the scroll ball because it wasn’t working, and they just gave me the newer mouse model for free. This doesn’t always work, but I say it’s always worth asking because both stores and manufacturers want to keep their customers happy. You might just catch a break.

Add a Rider to Your Homeowners Insurance

Many homeowner insurance policies allow you to add a rider to cover certain items like a computer, camera, or other equipment. A typical rider of this sort might add about $10 to your policy and cover an item up to $1,000. Just like any extended warranty, some insurance policies are going to be more generous than others. So, be sure to check the fine print for what your policy specifically covers. For example, some policies only cover a computer while others cover a computer and its peripherals such as an attached printer, speakers, and even things like the data or software on your computer.

Online Reviewers Sued for Defamation? How to Protect Yourself

By: Braden Johnson 

The carpet cleaner you hired was late, rude, and left the carpets dirtier than before he arrived. So you find his company’s Facebook page and write a few lines saying what a poor job he did for you. A few months later, you get a letter in the mail. You are being sued by the carpet cleaner for defamation! Is this possible? In today’s social-media driven world, it is.

Technology has given consumers unparalleled opportunities to gather and share information about businesses. With just a few clicks, consumers can share their opinions with millions of people. Businesses are also aware of the power of social media; in fact, many businesses actively seek good reviews and take action to silence bad ones. Suing a consumer for defamation can serve as a powerful way to silence a bad review.

A carpet and rug cleaning business recently sued seven people for defamation after they posted negative reviews about the businesses on a popular consumer review website. According to the owner, the negative reviews brought a 30 percent drop in sales, and he was forced to lay off dozens of people. A lawyer in California, a plastic surgeon in Chicago, and a contractor in Virginia have all filed similar suits.

Although these stories may scare consumers, the companies who bring these lawsuits face many difficulties. First, social-media sites like Facebook, Yelp, and Twitter are protected from many types of lawsuit by federal law. The Communications Decency Act of 1996 protects online service providers from being sued for the actions of their users. So the companies cannot sue the consumer review websites that display the bad reviews, only the person who posted the review. But this invites the second problem: because reviewers are not generally required to post under their real name, companies often don’t know whom to sue. To find the identity of the reviewer, the company must get a court order which requires the website to identify the person. Most consumer review websites fight these requests forcefully.

Even if a company can obtain the identity of the reviewer, defamation lawsuits are difficult to win. The reviewer can escape liability by proving that the review was true, or based on personal opinion. So a review stating that the carpet cleaner was late is not defamation if it is true. And a review claiming that the carpet cleaner is the worst you’ve ever used is not defamation if it is your personal opinion. This shows why defamation suits against consumers typically fail.

There are several ways to protect yourself from a defamation lawsuit without losing your right to voice your opinion. First, only write reviews for companies and products you have actually used. Reviews based on anything less than personal knowledge are far more vulnerable to a defamation claim. Second, don’t exaggerate. Focus on the facts, not just getting revenge on a company. Third, if your complaint is very serious, consider submitting it through another entity. You can reach out to your state attorney general’s office, the Consumer Financial Protection Bureau, or your local office of the Better Business Bureau.  These organizations can insulate consumers from defamation lawsuits if they are used effectively.

Government agencies and the BBB typically investigate and substantiate claims before they publish them. Therefore, it is almost impossible for a reviewer who submits a complaint through these entities to be sued for defamation. Additionally, these entities sometimes offer mediation or arbitration services to help reach an amicable resolution for the consumer. Companies face pressure to respond to a complaint from the BBB, because the company’s BBB rating is at risk if they don’t resolve the problem. Government agencies have even more power. They can make legally binding requests for information, and can bring a lawsuit on behalf of any consumer who was wronged.

As long as consumers use good judgment, and follow the tips outlined above, it is unlikely that they will ever be sued for defamation. But the danger of these suits serves as a great reminder to consumers: be fair and composed in your company reviews, or else they may come back to haunt you.

How Much Are You Paying in Credit Card Fees?

By: James Wilson

In the last few decades, remarkable expansion in the use of consumer credit has allowed individuals from every income bracket the opportunity to purchase goods and services that one would otherwise not have access to. Not only do individuals and families use credit cards for emergency purposes, but often these plastic cards are swiped to purchase groceries, movie tickets, ski lift passes, and many more items. One of the largest card issuers in the United States reported that for the latest fiscal year, they had $4.1 Billion in card net income, with $131 Billion in credit card loans as of December 31, 2014—and this is just ONE of many card issuers in the United States. There are substantial benefits to having access to credit, but it is important for you to understand what you are paying for that access.

The most common fee that individuals think of is the “interest” rate they pay on their card. What most people do not understand is how that interest is actually calculated. For example, do you know if your balance is compounded daily or monthly? Do you know whether interest is calculated on the average daily balance or adjusted balance? Fortunately, a detailed understanding of complicated formulas is not necessary for you to understand what you really need to know. Thanks to legislation like the Credit CARD Act of 2009 and others, a lot of important information is at your fingertips.

Credit card issuers are required to disclose a summary of important figures at the top of all promotional material. The box, where these figures are located, is often referred to as the Schumer Box. Inside this box you will find key numbers including the following:

  • Annual Percentage Rate: This is the yearly rate of interest on your credit card. Keep in mind that if you carry a balance from month to month, the effective rate of interest you actually pay is usually a couple of points higher.
  • Other APRs: A card issuer may have different percentage rates for different types of transactions, such as balance transfers, cash advances, and more. These other APRs will often be different than the standard APR for your card. Most importantly, if you are late on payments, a “Late Payment APR” may be significantly higher than the APR you normally pay.
  • Finance Charges: Some cards may have minimum fees you must pay every period for service fees and related charges. It is not hard to find cards that have very low, or no, finance charges.
  • Annual Fee: Depending on the issuer or benefits associated with your card, you may be responsible to pay an annual fee.
  • Late Payment Fee: If you are late on a payment, you may be required to pay an additional charge between $15-$50, or more, for being late. This also may trigger the Late Payment APR percentage described above.

Before you sign up for a new card, you should consider these numbers, what you plan to use the card for, and how these numbers might change in the future. You should always consider the difference between an introductory APR, and the ongoing APR. Just because you have an introductory APR of 0% for six months, does not actually mean the card will be cheaper in the long run.

For an extremely simplified example, let’s say you sign up for a card with an introductory APR of 0% for six months, and 23.99% after that (not unheard of). If you sign up for the card and carry a $1,000 balance month to month, you will pay approximately $268 in interest over the first 18 months. Alternatively, if you carry the same $1,000 balance on a card with a fixed APR of 10.99% (also not unheard of), you will save nearly $100 in interest expense over the same period. Factor in that most households have several thousand dollars in credit card debt, and the saving quickly grows.

The CARD Act went one step further to require card issuer to provide the number of months and total cost to you it would take to pay off the balance making only minimum payments. You should be able to locate this information on your statement or online account associated with your credit card. To save you added time, most issuers with online accounts also allow you to input the number of months you want to pay the balance off by and then provide you with how much you have to pay a month to achieve that goal.

Ultimately, it is up to you to understand how much more in interest and fees you may end up paying to effectively budget the total cost of that next vacation. Review your credit card agreement and go online and discover the features your card issuer provides. Signing up for the right credit card and budgeting effectively may make that vacation a little more affordable.

Phishing Attempts: How to Protect Yourself

By: Glenn Sellers 

One of the more common scams targeting consumers today is a phishing scam. Despite their notoriety however, many people are unfamiliar with what they are. Phishing is an attempt to gain your personal or sensitive information via deception on a virtual interface. This article will let you know how to spot them and how to stay safe from an attack.

To spot a phishing attempt, it is first important to recognize the variety of forms they can take. The following is a list of the various forms of phishing:

  • A classic phishing attempt is just a plain and untailored attempt to get information. The “Nigerian Prince” scam is one of these. They are relatively crude and their success rate has been decreasing in recent years as consumers wise up. They often take the form of an e-mail.
  • Spear phishing is an individualized attempt to gain access to your information. An e-mail or web page is tailored to your specifics, such as your bank account, address, or other information in order to seem more believable.
  • Clone phishing is when a specific web page or e-mail is duplicated to appear like the real thing. Often, link manipulation will be used and a “mirror page” will be set up in order to deceive the consumer.
  • A mal-ware based phishing attempt refers to scams where malicious software is snuck into a user’s PC or Mac and information is relayed via the software. There needs to be some sort of introduction to get the mal-ware into your computer, which can take many forms.
  • Key-loggers track keyboard input. Whenever you go to a web page to enter account information, a password, or other sensitive information, the keystrokes will be tracked and relayed to hackers. These are often done on public computers or through mal-ware.
  • Man in the middle phishing attempts involve a compromised data access point, ranging from cell towers to Wifi routers. All data that passes through the compromised point is filtered and analyzed for useful sensitive information.

Now that you have an idea about the types of phishing attempts, here is some helpful information regarding how to spot and protect yourself against them:

  • Use “https sites” or other forms of encryption. There are abundant resources out there to help get you started with this.
  • Be wary of any suspicious links, especially in your email. This is the primary way that malware gets onto your computer. Anytime you open a link or download something, make sure you know and trust the site it’s coming from. If an unknown source tries to upload an .exe, .zip, or other atypical file to your computer, delete it before opening.
  • Think twice before providing any confidential information, including passwords, SSN, and anything else that may be useful for hackers to access your sensitive information. This can range from checking account information to all the way to seemingly innocuous information like your mother’s maiden name or your elementary school.
  • Use a spam filter in your e-mail. You may filter out useful e-mails periodically, but you can always view your spam folder and mark these as “not spam.” The majority of filtered e-mail will be junk mail or phishing attempts anyway.
  • Always check the URL of a site. A common way for hackers to initiate a clone phishing attempt is with a “mirror page” that looks identical to a legitimate web page, with the only difference being the URL is off.
  • If in doubt, contact the institution in question via phone before filling out a form
  • Avoid public computers and unsecured WiFi entirely when accessing important accounts like online banking or an e-mail account containing sensitive information.

Written Requests To Debt Collectors: What you need to know

By: Andrew Marchant 

Earlier Blogs on this site have discussed some of the basics regarding your rights against debt collectors.  The Fair Debt Collection Practices Act, a law that applies to all 50 states, allows you to make certain requests/demands to the debt collector.  The law also requires the debt collector comply with certain of those requests.  Some requests you can make include: that a debt collector reduce or stop contact with you; that the debt collector limit methods, times and locations of contact with you; and that the debt collector verify the debt.  You also have the right to dispute the debt.  All of these requests have one major thing in common – they must be in writing.

In this blog we take a look into basic mechanics of making written requests to the debt collector.

All letters can be fairly straight forward, and some information should be in almost every request letter you send to the debt collector:   

  • Identify your name and your address.  This can just be in the top left corner of the letter – similar to what you would find in most letters you’ve sent to businesses (or in letters you’ve received from businesses). Be sure you date the letter.  This helps you prove when you sent the letter out, and roughly when the debt collector should have received the letter.
  • Include information about your debt.  Things like the account number (if available) and any information the debt collector gave you about the debt should be included.  This will help the debt collector correctly identify the debt collection matter.  
  • If you can, sign your name at the bottom of the letter, which helps to prove you actually intended to make the request and that it was you who actually made the request.

The Consumer Financial Protection Bureau (CFPB) has a great website with examples of “action letters” that you can download and personalize.  These “action letters” contain form language for things like disputing the amount of the debt, requesting information on the original creditor, and restrictions on the ways the debt collector can contact you.

If you do not choose to use the samples form the CFPB website, always be sure you are direct in what you are requesting of the debt collector.  Also be clear with the request.  For example, if you are requesting that you only be contacted via mail, be sure you give an accurate address.  Or if you are telling the debt collector what times they can call you, be sure you note whether the hours are A.M. or P.M.  Specifically, with letters requesting information about the debt, at a minimum be sure to ask (1) Why the debt collector thinks you owe the debt, and to whom it is owed;  (2)  How much was the original debt, how much is owed now, and why there is any difference in the two amounts;  (3)  Details about the debt collector’s authority to collect the debt.

For all letters you send, make a copy of the letter for your records if possible.  That way, if the debt collector violates your request, you can easily reference the letter if you need to.  Also, that letter could be used as evidence against the debt collector in the event you end up in court with the debt collector over its violation of your request (and by extension its violation of the law).

If you are sure to be direct, clear, and accurate in your letter the debt collector is bound by law to honor certain requests.  If the debt collector does not, he can be liable to you and to the government.

The Pros and Cons of Prepaid Cards

By: Charles Clark 

Increasingly, consumers are leaving traditional banking avenues and moving towards alternative sources of money management such as prepaid cards. According to Nilson, “the top 50 largest US Banks and credit union issuers of general purpose prepaid card accounted for $118.09 billion in spending at merchants in 2013.” Additionally, the Mercator Advisory group found that from 2008 to 2012 the amount of money loaded on to general-purpose, reloadable debit cards tripled, rising to $76.7 billion. Mercator estimates that number will rise to $168.4 billion this year.

While prepaid cards seem to be here to stay, there are surprisingly few legal protections available to consumers who use prepaid cards. The Consumer Financial Protection Bureau (“CFPB”) has introduced a proposal that would extend greater protection to consumers who use prepaid cards; however, until new rules are passed (a long and uncertain process) consumers are left to fend for themselves. While there are many dangers associated with using prepaid cards, there can be a number of benefits as well. Below I summarize a few of those benefits and dangers.

Benefits

  • Alternatives to Banks: Prepaid cards present an alternative for consumers who do not have a traditional bank account. Consumers may not use a traditional bank account due to preference, poor credit, or a number of other reasons. Using prepaid cards, consumers without a bank account can do things that require a credit card. Examples include renting a car or booking a hotel room. Additionally, many prepaid cards include account numbers that allow for direct deposit of paychecks.
  • Helps to Manage Money: For consumers without a traditional bank account, paying bills can be a stressful and expensive process that includes paying for and sending out money orders. Prepaid cards can create cost savings by allowing consumers to pay for utility or other bills using their reloadable, prepaid cards.
  • Helps to Develop Budgeting Skills: Finally, prepaid cards allow consumers to develop smart budgeting skills. Loading a specific amount of money onto a prepaid card allows consumers to stick to their budgets and learn where they might be overspending. Additionally, consumers with children can use prepaid cards to start developing their kids’ budgeting habits early. Developing wise budgeting habits is key to financial stability.

Dangers

  • Excessive Fees: Some prepaid card issuers take advantage of consumers by charging fees for seemingly everything. There are examples of prepaid cards that will charge a fee for loading money, withdrawing money, or even to check your card balance. To make sure your prepaid card does not nickel-and-dime you, it is important to do your research before deciding on which prepaid card to use.
  • Limited Consumer Protections: As mentioned before, there are very limited legal protections for users of prepaid cards. The CFPB has proposed potential rules, but as of now consumers using prepaid cards do not have the traditional protections afforded to consumers using traditional banks.
  • Potential Overdraft Fees: Some prepaid cards have a credit feature that allows consumers to spend more than is loaded onto the card. This can result in high overdraft fees, such as those that once plagued the debit card world. Before settling on a prepaid card, consumers must determine whether the card has credit features and charges high overdraft fees.
  • No Loss or Theft Protection: Some prepaid cards will not pay back consumers who have funds stolen or loss due to an error. This can result in innocent consumers losing hard-earned cash by no fault of their own.  Again, one must read the terms applicable to the card — as all cards are not the same.
  • Potential Lack of Insurance: Almost all checking accounts at banks are federally insured up to $250,000. This means if a consumer’s bank ever fails or loses the consumer’s money, the consumer will be protected. Prepaid cards do not come with the same type of protections.

While prepaid cards can offer many benefits to consumers, there are significant dangers that consumers must be aware of. As always, before using a prepaid card do your research and determine which card gives you the best protections. You can find a great resource for finding consumer friendly prepaid cards here.

Payroll Cards: Paying Fees to Earn Money

By: Charles Clark 

Over the past several years, there has been a growing trend towards paying American workers with payroll cards. Payroll cards are pre-paid cards issued by employers to employees that can be used at an A.T.M. to withdraw wages. In 2012, approximately 4.5 million American workers received their wages on payroll cards, and the numbers continue to grow. Using payroll cards does have certain benefits because it gives workers without traditional bank accounts a way to withdraw their wages; however, the fee structure associated with many pre-paid cards hurt American workers in a big way.

Generally, the use of payroll cards involves a number of fees that quickly add up to take a significant chunk of workers’ wages. For many hourly workers, these fees eat up valuable wages that leave them making less than the minimum wage. When every dollar counts, these fees can leave workers light in the wallet when paying for necessities such as groceries, transportation, or rent. Payroll card fees typically include a fee for withdrawing cash, a fee for receiving a paper statement, and a fee for losing a card. In one example, a McDonalds employee in Wisconsin was spending $40 to $50 a month on fees associated with his payroll card. In another example, a Taco Bell employee in St. Louis would withdraw all of her wages at the start of the month and keep them in a shoebox in her closet in order to avoid high fees associated with withdrawing wages.

When it comes to the use of payroll cards, American workers do have certain protections. Employees who have their wages transferred onto payroll cards are entitle to protection under the Electronic Fund Transfer Act. The Electronic Fund Transfer Act offers the following protections:

  • Fee Disclosure: payroll card users are entitled to receive upfront disclosures of any fees that will be associated with use of the payroll card. This allows workers to know exactly how much they will have to pay in fees before using their payroll cards.
  • Access to Account History: Payroll card issuers must provide either a periodic statement, or make available to the consumer the following: (1) the consumer’s account balance by telephone; (2) an electronic account, such as through a website, of the consumer’s transaction history covering at least the past 60 days; and (3) upon the consumer’s oral or written request, a written account of the consumer’s transaction history covering at least the past 60 days.
  • Limited Liability for Unauthorized Transfers: If there is an unauthorized withdrawal of funds from a payroll account, the consumer must notify the financial institution within two days in order to receive limited liability protection. The consumer will not be liable for the lesser of $50 or the amount of the unauthorized transfer.
  • Error Resolution Rights: Financial institutions must respond to complaints of account errors within 120 days.
  • Prohibition Against Mandating Payroll Cards: The strongest protection provided to workers is that employers cannot force their employees to receive wages on a payroll card. Employers must give employees the choice of having wages deposited at a particular financial institution or receiving wages by other means, such as by cash or check
  • Federal Enforcement: If an employer violates portions of the Electronic Fund Transfer Act the Consumer Financial Protection Bureau has authority to take action against that employer.

While the use of payroll cards will likely continue to rise, it is important that American workers know their rights. If workers find that a significant amount of their paycheck is going to payroll card fees they should consider telling their employer to pay their wages using other means. No worker should be forced to pay high fees in order to retrieve their hard-earned money.

Strategies for Getting the Cheapest Rides from Uber and Lyft

By: Otto Hanson 

The rising popularity of ride-sharing programs such as Uber and Lyft has reduced the cost of travel for many people without access to personal vehicles. Not only has the price of getting a taxi-like service come down, availability has also gone up. Getting an Uber or Lyft in most metropolitan areas is now significantly quicker, easier and more reliable than traditional taxi services. However, with these improvements come some potential drawbacks. Namely, Uber and Lyft have struggled to clearly educate consumers about how to keep costs down when using their services. This blog post offers some simple ways to help ensure you’re getting the least expensive ride available.

Picking the Right Service

For most common travelers, the differences between Uber and Lyft are negligible. Both companies offer a smartphone app that connects people in need of rides to people willing to give rides. Both apps certify their drivers to some minimum standards, and both process payments between passengers and drivers.

Uber has more pricing options than Lyft, but both offer substantially similar low-end pricing options. For example, the author of this blog has taken the same trip in Denver, CO more than a dozen times comparing Uber’s low-end option (uberX) to that of Lyft. While each trip varies by a few dollars depending on traffic, the average price of the trip is almost identical between the two services, with uberX being slightly cheaper overall.

If you’re looking for the least expensive way to get to your destination, you should typically choose uberX (for 4 or fewer passengers) or uberXL (for 5 or 6 passengers) in Uber.  Lyft generally gives you the cheapest option by default (the “Lyft” option). If you’ve got 5 or 6 passengers though, you may want to select Lyft Plus, which is more expensive than a normal Lyft, but less expensive than getting two Lyfts.

A note on tipping: Uber discourages tipping drivers, and claims that a 20% tip is baked into every fare.  Lyft, on the other hand, encourages passengers to tip by enabling them to tip through the Lyft app.  Actual Lyft fares, are actually cheaper than Uber fares for this reason.  However, the author finds that after tipping 20% on Lyft, the two service’s base fares are substantially similar.

While both services may be similarly priced under normal circumstances, the pricing between the two can vary dramatically during busy times, when companies might apply surge pricing.

Surge Pricing

Both Uber and Lyft increase prices when there are more passengers looking for rides than there are drivers willing to give rides. While this practice may seem predatory at first glance, it does increase the incentives for more drivers to get out on the road, making rides more readily available.

Times when you’re likely to see surge pricing take effect are after the ball drops on New Years or after the Super Bowl ends. For reasons outside the scope of this blog, many people are looking for rides at those times, while few people are interested in driving. While it should come as no surprise that surge pricing takes effect at these times, there are other, less predictable times when it comes into effect as well. Luckily, both companies try to give consumers fair notice before charging surge rates.

When Lyft is implementing surge pricing you’ll get a notification like the one below indicating that “+ X% will be added to your total for the driver.” In the example below, 200% will be added to what the fare would be absent surge pricing. If your fare would be $10 under normal circumstances, it will now be $30.

In Uber, surge pricing is a little bit clearer. First, you’ll get a warning indicating a multiple of the original fare. Once you accept that multiple, Uber makes you confirm again by typing the multiple into the blanks on the next screen.  In this example, if your normal fare would have been $10, it will now be $22.

The screen shots of the surge pricing indicators of Lyft and Uber were both taken at the same time on a Friday night in Denver, Colorado.  The difference between Lyft’s surge pricing indicator and that of Uber made Uber the clear winner on that night.

Summary

If you’re looking for the most affordable ride, start by selecting the least expensive options within Uber and Lyft. In Uber, that option is uberX, and in Lyft it is the default “Lyft” option. If surge pricing is in effect on one service, don’t accept a ride before checking the other service. Sometimes one service will charge double or triple rates while the other service is not increasing prices at all.

Staying Safe Using Insecure Marketplaces

By: Glenn Sellers 

The rise of online shopping has been a huge boon to consumers. Prices, availability, and selection have never been more favorable. Most shopping interfaces are relatively safe for consumers and require little thought in terms of whether to trust a retailer. Places like Amazon, eBay, and other major online marketplaces offer assurances that goods will conform to quality standards and act as financial mediators for when there are disputes. For example, if one buys a product on Amazon and it doesn’t meet standards or never gets shipped, the consumer has avenues available within Amazon to seek a remedy.

Some marketplaces don’t afford these luxuries though, namely ones where individuals buy, sell, and trade goods and services without a robust intermediary. Places like Craigslist and other “classifieds”-style interfaces can be a true haven for bargain hunting, but without the safeguards offered by more mainstream marketplaces, consumers are at serious risk. For those who need markets like this or simply prefer them, here’s some advice that can allow one to avoid scams:

  1. Shop locally. It may be tempting to cash in on a great deal and have it shipped across the country, but often these deals are too good to be true. Try to always see what you’re buying in person. Scams right now commonly involve long-distance transactions.

A common place where consumers deviate from this rule is renting. When people move far away, they often want to ensure they have a place to stay before getting there. There are plenty of consumers who have made a deposit on a room or apartment across the country, moved there, and had no problems. There are also scores of consumers who have had worse luck, finding the “lease” they signed was for a place that either the seller didn’t own, or didn’t exist at all. To avoid this, either travel to see the place before making a payment or have a friend in the area do it for you. If this isn’t possible, consider staying in an inexpensive motel or hotel while looking for a place to rent. This may be less than ideal, but it’s certainly far less expensive than losing hundreds or even thousands on a fake deposit.

  1. Pay with card or check. While the former may not have been an option years ago, the rise of mobile applications like Venmo have made it possible to pay anyone with a smart phone and a bank account via credit or debit. Regardless of whether you use card or check, if something goes wrong at least there will be an institution to help you out and possibly issue a refund. Absent theft or fraud, many institutions won’t be able to issue a refund, but it’s best to at least have some sort of record of the transaction. Paying with check is especially helpful in this manner, as you can call your bank and stop payment on the check if you notice the problem quickly enough.

For smaller transactions, it’s usually safe to pay with cash, and many legitimate sellers may even find it unusual or refuse anyone who wishes otherwise. A general rule of thumb is to think twice about any transaction in cash if you’re not okay with that sum of cash going up in thin air if something goes wrong.

  1. Don’t give out any more personal information than required. If a far away renter or car seller asks for your social security number, bank account number, or other sensitive information, refuse. This may seem intuitive, but many people mindlessly fill out forms every year, giving out this information without second thought. Stop and think whether you know you’re engaging in a secure transaction whenever filling out a long form.
  1. Make sure to get proper documentation before completing large transactions. For example, stolen cars have turned up for sale on the internet mere days after being stolen. If you’re buying a car or motorcycle, make sure the seller has the bill of sale and it’s in their name; you can ask for their driver’s license to ensure this. Be wary of any seller that refuses to authenticate their goods or services.