Archive for the Money Category

Caveat Emptor – Orbitz style

Posted in Meanderings, Money on November 17, 2008 by weirleader

There aren’t many days I wish I was a big-time columnist. I mean, I enjoy writing and really wish I found it easier to make more time to update my blog (especially lately), but I don’t generally feel disappointed that my career and interests have taken me in a direction other than a literary one.

That being the case, the times that I do feel that lack tend to be when I wish I could share knowledge with the world and so I am going to do my pathetically small part to bemoan the sad state of affairs with regards to shady advertising and small print.

I’m reminded of a time many years ago when I was employed by OfficeMax (I try not to think of it often), and one of our mandates was to sell, sell, sell extended warranties on all electronics. “If it has a power cable”, then we were supposed to offer one of these warranties. It didn’t matter if it was a pencil sharpener that likely would last 20 years, we were supposed to convince the customer that it’s really wisest to purchase a warranty — all in the name of helping the customer, of course. It couldn’t possibly be that the store wanted to make money in this exchange!

Lest I get bitter, I’ll move on to my current topic of frustration. This one is, I think, more egregious. At least with the warranty you know that if the product breaks you’ll get to replace it. But in the case of Orbitz, the trickery lies in the fine print of their “Travel Insurance” (I’m sure they’re not alone in offering this, but multiple culprits don’t excuse the fact). I usually don’t opt for the travel insurance, but decided to look into it because I know that my family’s current situation is shaky. They’re coming out for Christmas but, if the house sells, the situation might arise that we no longer need the tickets. What to do? If you wait much closer to Christmas you won’t be able to get a good deal on tickets — but if you purchase now you could be out the money on tickets you have no need of (unless you’re willing to pay the airline double the money on refundable tickets — another ridiculous concept). Anyhow, I looked into the details and found that Orbitz will gladly take your money knowing full well that they probably won’t have to pay out even if you do need to cancel.

I’m making up numbers here, but I’d estimate that travel insurance pays out for about 2% of all the people that think they might need it (if that). What does it pay for? Last minute problem outside your control? Nope — not most of ’em. It pays for life-threatening illness, acts of God (i.e., Hurricane Katrina), airline disaster; but it seems to me that an airline should already be prepared to compensate travelers in these circumstances.  If an airline’s workers go on strike, is that really my problem?  Do I need to buy insurance for that?  I was under the impression that airline tickets were like a contract…  if they don’t fulfill their end of the bargain then I ought to at least receive my money back.  Is it up to ME to insure THEM?

It’s more interesting to look at what it doesn’t pay for. Does it pay for the fact that my family might not need these tickets a month from now because our house might sell? Nope. Does it pay for the fact that a family member bought a flight to go see a specialist only to have that specialist call at the last minute and cancel? Nope. Does it pay for the fact that a crisis at work requires revising travel plans? Nope. In other words, it doesn’t pay for the minutiae of life… it only pays for ridiculously uncommon issues that should already be covered.

I understand that companies need to make money, but it really gets under my skin when they practice deception and diversion, bury the details in the fine print, and in general take advantage of the ignorant consumer. You wanna take advantage of the greedy consumer? Go ahead. Sell Apple products at a huge markup to people that worship the Apple image… sell Harley Davidson’s to promote an image, even if the workmanship is no longer what it once was… but don’t sell something to people who think they might need it and then whip out the fine print telling them how you sold them a different, lesser product — how you don’t need to follow through on your implied commitment because they fell for your gimmick.

Shame on you, Orbitz. Google sure as shooting isn’t perfect, but you could stand to focus on their mantra for a bit: Don’t be evil.

The Dow of Money Sense

Posted in Deep And Profound Brain Things, Mathematics, Money with tags , , , , , on April 21, 2008 by weirleader

As a former (small-time) investor and math teacher, I’ve long been frustrated with the news’ approach to reporting ups and downs, highs and lows in the market.  My favorite type of report states that “The Dow was up today on rumors that ____________________.”  Come on!  You’re telling me that the only thing that contributed to this massively complex market today was a single rumor?  No one in their right mind believes that, certainly not whoever wrote the article…  yet they feel compelled to put a reason to the day’s events.  And I really believe a lot of people out there take the report at face value.

What was merely a pet peeve, however, became much more serious after I read this paper by Arthur Lupia, et al. at the University of Michigan (hat tip, once again, to Freakonomics).  I don’t want to steal his thunder too much – you should read for yourself – but suffice it to say that the status quo is really just fostering ignorance and poor investing sense.  I consider myself good with numbers, but this interpretation of events eluded me.  Reading it, however, explains a lot about how an economy can appear so good and perform so badly at the same time; it’s all about where you focus your attention.

Whether or not the media is swayed by the solid suggestions, I’m pretty sure I’ll be able to at least better interpret this kind of financial data in the future.  That’s a start…

More by Prof. Lupia here.