MONEY Customer Service

The Insulting Names That Businesses Call You Behind Your Back

150225_EM_WhatBusinessesCallYou
Lasse Kristensen—Shutterstock

Ever wonder how casinos, car dealerships, restaurants, pay TV providers, and online marketers refer to customers in private? The answers aren't pretty.

You may think you are a living, breathing, thinking, three-dimensional human being. To online marketers, however, you might just be classified as “waste.” That’s one of the revelations in a new report from the Annenberg School for Communication at the University of Pennsylvania.

“Many online marketers use algorithmic tools which automatically cluster people into groups with names like ‘target’ and ‘waste,'” the researchers explain. Those viewed as “targets” based on their personal data and online history are deemed worthy of retailer discounts and deals. On the other hand, because the majority of bankruptcies come as a result of medical expenses, “it is possible anyone visiting medical websites may be grouped into the ‘waste’ category and denied favorable offers.”

It’s insulting enough that your worthiness as a person and potential customer is being judged by some computer algorithm. And yet the words chosen for these groups we’re lumped into make this sifting process more impersonal and insulting still.

The study got us thinking about all the other disdainful, mocking, or otherwise insulting ways that companies have been known to refer to the paying customers and clients that, you know, keep these businesses in business. Even as you essentially pay the bills for these operations, you might be thought of as little more than …

Muppets
In 2012, the very public resignation of Greg Smith from Goldman Sachs revealed that the firm’s executives sometimes referred to clients as “muppets.” Apparently, in the U.K. the slang term is applied to someone who is ignorant or clueless and easily manipulated. In certain circles, an investor might also be dubbed an ostrich, pig, or sheep depending on if he, respectively, buries his head in the sand no matter what’s happening in the market, is overly greedy, or has no strategy and does whatever someone else tells him.

Bunnies, Grapes, Squirrels
Behind the scene at car dealerships, customers who are bad negotiators and easy for salespeople to push around and talk into deals are sometimes known as “bunnies” or “grapes,” presumably because they’re just waiting to be pounced on or squeezed, respectively. A “squirrel,” on the other hand, is a hated species of customer who hops from salesperson to salesperson with no sense of loyalty or thought to who should get the commission.

Dogs, Fish, Bait, Whales
These are all terms used in the world of gambling and casinos, and they generally refer to players who are losing or are likely to lose—to the house, but also to the shark sitting across the table. A “whale,” of course, is a high roller who bets big, and who therefore will probably lose big money at one time or another. For that matter, in the restaurant industry, “whales” are super-wealthy customers with so much money they don’t blink when running up bills into the tens of thousands at overpriced eateries where, for example, a Bud Light costs $11.

Campers, Rednecks
Also in the sphere of restaurants, these are two kinds of customers that seriously annoy the employees and owners. A group of “campers” camps out at their table for hours, eliminating the opportunity for a new party to run up a tab, while a “redneck” is another term for a cheapstake or stiff who doesn’t tip—perhaps because they’re not city folk and aren’t familiar with tipping etiquette.

The N Word
Some waitstaff not only refer to their customers using racial epithets, but they’re also dumb enough to put these derogatory terms in print on diners’ receipts. Examples have popped up in Pennsylvania, Texas, and Virginia, among other places. And yes, the incidents have resulted in lawsuits and people getting fired. On the flip side, some horrible restaurant customers have been known to leave insults (including the N word) instead of tips for their waiters.

Fat
Among the other popular, not particularly creative insults left on receipts is some variation of “fat”—“Fat Girls” and “Pink Fat Lady,” to name a couple specific examples.

The C Word
Yes, some angry Time Warner Cable customer service agent apparently went there, recently renaming a customer as “C*** Martinez” in a letter after she reported a problem with her service.

Assorted Expletives and Insults
The C word episode followed on the heels of multiple reports of agents at Comcast—Time Warner Cable’s equally hated pay TV competitor and would-be partner if the much-discussed merger ever takes place—renaming subscribers things like “A**hole,” “Whore,” “Dummy,” “Super B*tch,” and such. (Only whoever did the renaming at Comcast always used letters instead of asterisks.) There’s a good argument to be made that the absurd pricing and policies installed by pay TV providers are at the heart of why “customer service” agents so often hate subscribers, and why the feeling is mutual.

A Sad Person, a Hateful Mess
You’d think that New York Knicks owner James Dolan—a no-brainer to appear on a wide variety of Worst or Most Hated Owners in Sports in Sports roundups—would have developed a thick skin after years of criticism for astounding ineptness and mismanagement at the helm of one of sport’s most valuable franchises. But Dolan’s response to the recent criticism of one New Yorker who has been a fan of the team since 1952 shows otherwise.

“I am utterly embarrassed by your dealings with the Knicks,” the fan, Irving Bierman, wrote to Dolan, pleading with him to sell the team so that “fans can at least look forward to growing them in a positive direction.” Instead of taking the criticism constructively and thanking Bierman for watching the Knicks for 60+ years, Dolan responded via email by calling him “a sad person,” “a hateful mess,” “alcoholic maybe,” and likely “a negative force in everyone who comes in contact with you.” Dolan finished up the screed by telling Bierman to “start rooting for the Nets because the Knicks dont [sic] want you.”

While certainly extreme, Dolan’s message speaks to the disdain with which some sports owners and certain league executives seem to regard fans—who are supposed to root loyally and pay up for the product as a matter of blind faith, and never to question or criticize. For Dolan’s sake, let’s hope he never listens to sports talk radio. He probably wouldn’t like the ways that people refer to him.

TIME Companies

Prank Callers Are Calling Comcast Customers to Curse At Them

Cable Giant Comcast To Acquire Time Warner Cable
Joe Raedle—Getty Images A Comcast truck is seen parked at one of their centers on February 13, 2014 in Pompano Beach, Florida.

Why you shouldn't post about your customer service grievances publicly

Prank callers masquerading as Comcast representatives have reportedly found fresh victims on the company’s Twitter feed, phoning frustrated customers simply to insult them.

Consumer advocate Chris Elliott reports that two victims received a call from self-proclaimed customer service representatives shortly after they had posted complaints to @Comcastcares, one of the cable service provider’s official Twitter feeds.

“We are Comcast, and we can charge you whatever the f*** we want’,” one customer was told. The call was recorded, and included unprintable physical and sexual threats, according to Elliott’s eponymous blog

Comcast traced the call to Ontario, Canada, where the company does not maintain a call center. A company spokesperson definitively declared it a “hoax.”

This isn’t the first time a Comcast customer has been taunted with obscenities. Some customers had previously received bills where their names were replaced by insults such as “Whore” and “Dummy,” Arstechnica reports. Comcast traced the bills to a third-party call center and terminated its contract with the company.

Our tip to avoid this? Don’t post your contact details publicly — if you’re dealing with a customer service Twitter account, slide into their DMs instead.

Read next: This Will Change the Way You Use Your Visa Card Forever

Listen to the most important stories of the day.

TIME Companies

Comcast Calls Customer a ‘Super B*tch’ on Her Bill

Just a month after they called another customer 'A**hole Brown'

The ladies and gentlemen at Comcast are at it again: this time, they named an Illinois customer “Super B*tch” and addressed her bill to that nickname.

Mary Bauer, 63, told WGN Chicago that after consistent faulty service from Comcast that required 39 technician visits, she received a bill addressed to “Super B*tch Bauer” instead of her given name. “This is a disgrace to me,” Bauer told WGN. Why are they doing this to me? I pay my bills. I do not deserve this.”

The PR gaffe comes just a month after a different Comcast Customer Service representative changed Ricardo Brown’s name to “Asshole Brown” on his bill.

Comcast has said they are actively investigating both incidents.

[WGN]

TIME

Here’s the Surprising Reason Companies Can Get Away With Bad Service

And why you're willing to take it

If you stood on a long, slow-moving line in a coffee shop, only to be handed the wrong drink when you finally did order, you’d probably express some dissatisfaction. Maybe you’d gripe to your co-worker about the experience at lunch, post a snarky Yelp review or vent on Facebook.

But new research shows businesses have a secret weapon that can diffuse customer ire over bad service. If a company practices “corporate social responsibility” — that is, donating to good causes — customers actually feel bad if they complain.

Jeff Joireman, an associate professor of marketing at Washington State University, tested how people would respond if they had to wait a long time to order at a coffee shop, and were then handed the wrong drink. As you might expect, people were annoyed — unless they had been told beforehand that the business donated 15% of its profits to environmental causes.

“Customers anticipate feeling guilty if they were to spread negative word of mouth because they know the company is doing good works that the customer values,” he explains.

Joireman says this is because the company has built up “moral capital and… a reservoir of goodwill.” Customers know that complaining could hurt the cause or causes the company supports as well as its own business.

Some companies do this better than others. Joireman finds that this effect is stronger when companies donate to a range of causes rather than a single one, because it’s more likely that people will identify with at least one of the causes. Donating a decent chunk of profits, like 15%, is much more effective than donating a tiny, token amount like just 2%. And the impact is even bigger if the company lets its customers pick which one they want their portion of the donation to benefit.

It’s also likely that companies whose customer base contains a significant number of young adults will have better luck with this tactic, since other research has shown that millennials are more interested in corporate social responsibility overall.

And, in a roundabout way, this can even benefit consumers as well, Joireman says. If you experience bad service and get disgruntled, venting might make you feel better, but it also will probably make you stay angry longer. And the more mental energy you spend thinking about how you were wronged, the more likely you are to enter into your next transaction with that business expecting something negative.

“We call this the ‘hostile attribution bias,’” Joireman says. “The hostile attribution bias makes people more likely to see nefarious motives in ambiguous situations.”

And this attitude can be a self-fulfilling prophecy, he warns. “Research shows that the expectations we bring into a situation influence our treatment of another person, and that person will often simply confirm the expectation we had,” he says. In other words, you’ll be a little snippy to the barista, and then perceive that they’re less polite towards you. If you scowl at them, you’re more likely to get a scowl in return, thanks to an unconscious tendency people have to mirror or mimic the expressions of people with whom they interact.

“On the other hand, giving people the benefit of the doubt, and cutting them slack, can promote a more positive spiral which leads to much better outcomes,” Joireman says. “A smile can go a long way to starting the interaction off right. What we do with our bodies, in turn, also influences our mood; smiling makes us happier.”

At the end of the day, that’s something you can’t put a price on.

TIME

The 1 Weird Reason You’re Tipping More

TIME.com stock photos Money Dollar Bills
Elizabeth Renstrom for TIME

These tricks businesses use could make you more likely to tip

If you buy a cup of coffee or lunch and your server pulls out an iPad, pay attention: You could wind up leaving a higher tip without even realizing it.

When software research company Software Advice surveyed consumers who use iPads or similar devices to buy food and drink, it found that the use of iPads increases the amount many people tip when they pay. More than four in 10 consumers say being in close proximity to their server at the time of the transaction can prompt them to leave a tip when they otherwise might not have.

What’s more, nearly 30% of respondents say they would be more likely to tip if they had to tap a button that says “no tip,” a feature many establishments use.

“This is especially more prevalent at places like coffee shops or at food trucks where the person taking your card is standing right in front of you,” says Justin Guinn, retail market researcher at Software Advice. “People might feel awkward pressing a ‘no tip’ button with the server or cashier looking right at them, waiting for them to make a choice. There’s an undeniable guilty feeling,” he says.

Others also have observed this phenomenon in restaurants that use digital tipping, and even in taxi fleets that have been converted to accept credit cards via touch screens in the back seat.

“I think there’s some kind of a casino effect,” Manny Pena, owner of a New York City cafe. tells Bon Appetit magazine. “You don’t comprehend that it’s real money.”

And in some cases, establishments take advantage of the addition of iPads to tweak the standard tip — rather than offer customers a range with 15% at the midpoint, 15% or even 18% might be the starting point. Reflexively hitting the center option without thinking about it could lead to paying a few percentage points more.

When coffee giant Starbucks added the ability for a customer to leave a tip to their barista using the payment function on their mobile app, they included dollar amounts up to $2 — which adds up to a whopping 50% tip even if you’re paying $4 for your caffeine fix.

It could be guilt at work, or it could be the convenience of paying with a couple of taps, according to Guinn.

“Whether or not patrons are ‘feeling the pressure’ to tip more because the server is standing next to them certainly seems to be a factor in the amount they’re leaving,” he says. “However, since the iPad is streamlining the ordering and paying process overall, it could be the convenience of the iPad itself.”

 

 

MONEY Tech

How Comcast Plans to Boost Your Internet Bill With New Fees

Comcast building
Matt Rourke—AP

"People who use more should pay more, and people who use less should pay less," Executive VP David Cohen told investors in May.

Comcast COMCAST CORP. CMCSA 0.83% has begun testing data caps in certain markets and plans to make what it prefers to call “usage-based” billing standard policy across the country within the next five years.

Previously, in nearly all cases, Internet data was an unlimited flat-rate, all-you-can-eat buffet. Under its new plan, which Comcast has already rolled out in a number of test cities, the company will sell users a flat amount of data and then charge them overages. This will take a system where customers had cost certainty and replace it with the model that has served the cell-phone industry so well — one where subscribers pay more if they go over a set limit.

“People who use more should pay more, and people who use less should pay less,” Executive VP David Cohen told investors in May, BGR reported.

That sounds correct on the surface, and charging more for data over a certain amount may be a necessity in a world where so many of us are streaming video content over our broadband connections as part of our daily lives. But the cable companies, which are also Internet service providers (along with the phone company ISPs), have a poor track record when it comes to billing. Data caps may be logical, and Comcast, which is waiting federal approval of its $45 billion merger with Time Warner Cable TIME WARNER CABLE INC. TWC 0.95% may be going about things the right way, but consumers are right to be wary about what this means for their bill.

What is Comcast doing?

Comcast has been testing two different plan pricing strategies in an expanding number of markets (there are variations and differences depending upon the market). One potential plan offers set amounts of data starting at 300 GB for a fixed price, with additional data being sold in 50 GB blocks for $10. The second plan targets low-volume users and offers them 5 GB of data at a set price, but there is a twist. Customers enrolled in this plan, called the “Flexible Data Option,” receive a $5 credit if they use less than 5 GB in a month but pay $1 per extra GB they use.

With the larger plans, Comcast appears to be making every reasonable effort to allow customers to track where they stand when it comes to data usage. People on the 300 MB or bigger plans will receive an email to their primary Comcast user email address when they reach 90% and 100% of their monthly allotment. In some markets you can also arrange to be notified when you reach 50%, 60%, 70%, 80%, 110%, and 125% of your usage. It’s possible in some markets to set up notifications via text message, and the company will also make an automated phone call to its customers when they pass 100% for the second month in a row.

The company also provides an online usage meter where customers on all tiers can track how much data they have consumed.

For subscribers to these more expensive plans, Comcast appears to be making a reasonable effort to help people avoid overages. The same can’t be said for the Flexible Data customers who are specifically not currently included in the notification system. That means that the customers choosing the cheapest plan are the ones most likely to be blasted with costly, unexpected overages.

Comcast should opt for total transparency

Under these plans, Comcast can profit by charging reasonable overage fees to its higher-data customers on 300 GB and above plans and by hitting its lower-end users with prices per GB for overages that are five times higher. Comcast may need to do this as more customers use more data and strain increases on its infrastructure. But if capping data and adding overage charges is really about maintaining network integrity, the company should warn all customers when they are getting close to their allotment and require authorization to add more data for the month.

There’s a way to do this right, if it truly needs to be done at all, and it involves putting choice in the hand of the customer and not using a data cap to inflate people’s bills without their consent. Comcast can still charge more and better control its resources — which is good for the company — while ensuring that its subscribers retain control over their expenses and avoid monthly billing surprises.

MONEY bills

The AT&T Bill That Just Wouldn’t Die

AT&T store with pedestrians rushing on sidewalk below
Richard Drew—AP

A Chicago woman got more than she bargained for when she tried to change her phone-and-Internet service.

When you have a dispute over a bill with a company, sometimes it’s not enough to respond to a collections notice with evidence that the bill has been paid. Sadly, even if the collections firm appears to drop the matter it can still come up again, and again, and again. This is the tale of the bill that just wouldn’t die.

It’s often harder than it should be to close an account. A small remaining balance, sometimes invisible to consumers, can create a big hassle, leading to collections calls and damaged credit – even bills that are several years old for as little as $50 or $100 can really punish a credit score. That’s bad enough.

It’s hard to understand how simply changing service – rather than canceling service – could lead to that kind of red tape nightmare. But that’s exactly what happened to Cathy Nestor, who lives north of Chicago, when she dropped AT&T’s U-verse TV, phone and Internet bundle three years ago and went with only U-verse Internet service.

The trouble started with a $70-something balance remaining on her old bundled account with AT&T’s U-verse, which Nestor claims she paid back in 2011.

Since then, three different firms have tried to collect on the bill, and Nestor says she provided evidence it was paid each time. Still, by the time she wrote to me, she was on the verge of getting reported as delinquent to the credit bureaus.

AT&T, for its part, disagrees with Nestor’s version of events. The company says the old account was never settled (for reasons we’ll explain shortly) and claims her evidence is faulty. Nestor says that the various collection firms never successfully communicated that to her, or didn’t push back when she told them the bill was paid.

The Confusion Begins

When Nestor dropped her U-verse bundle in 2011 but kept high-speed Internet, AT&T gave her a new account and new account number. She says she paid her new bill, thinking it would include any leftover balance from her old U-verse account. It didn’t. But soon after, she realized the error and says she separately paid the old account bill balance of $72 on Nov. 23, 2011. As evidence, she provided me a copy of an electronic payment from her bank statement. (And we should note that she is currently considered an in-good-standing customer of AT&T’s Internet service — that is, on the new account.)

Then the fun began.

She says she got a letter requesting that the bill on the old account be paid. She says she wrote back with evidence that it had been paid, claiming AT&T must have lost the payment amid the account number confusion. About 18 months later, she got a letter from another collection agent demanding that the bill be paid. Again, she wrote with evidence of payment. Then in January 2013 (“Yes, this has been going on that long!”), she received a letter from yet another collections company, Afni Inc., based in Bloomington, Ill., demanding a $79 payment.

“This account has been placed with our agency for collections,” read the letter. “We are requesting your assistance in resolving this matter. We may report information about your account to credit bureaus.”

“I WILL NOT BE PAYING THIS COLLECTION ITEM,” she wrote to Afni, in all caps. (Nestor provided a copy of the exchange for my review). “AT&T has already been paid, and they have tried to sell this off once before. I have already proven to them they were paid. I do not know why they keep trying to collect this.” She concluded by threatening legal action.

Then, nothing. No acknowledgment of receipt. No, “We’re sorry, we’ll drop it,” notice. No new attempt to collect. Silence. It was tempting to think the matter was closed, but Nestor knows consumers should never assume any such thing.

“Just waiting for it to show up again, you know,” she wrote when she contacted me to complain about the repeated collections.

Unraveling the Mystery

I reached out to Afni, and the firm shed a little light on the situation. AT&T had not sold the debt, but was using Afni as a third-party firm to attempt collection.

“When Afni had this account, AT&T was the owner of it—we did not purchase it,” said Debra Ciskey, director of compliance at Afni. “This account was recalled from Afni by AT&T on Aug. 5, 2013, so we are no longer handling it on behalf of AT&T.”

When I asked Ciskey what “recalled” meant, she said Afni was simply instructed to stop attempting to collect on the debt on behalf of AT&T.

“I am sorry that I am unable to tell you what would have happened to the account after we returned it to AT&T,” she wrote.

Ciskey’s responses suggested Nestor’s fear her bill would become zombie debt was well-founded.

“Terrific. I’m guessing that means I still haven’t seen the end of this,” Nestor said, sarcastically. She was right.

Next, I contacted AT&T, and the firm said that Nestor did indeed still owe the money. Emily J. Edmonds, director of AT&T Corporate Communications, acknowledged the payment Nestor made in November 2011, but said it was applied only to her new Internet service account rather than her old bundled account. That left a $79 balance (Nestor and AT&T also disagree on the old account balance).

“This customer has had an outstanding balance on her former account since 2011 that was never paid, ultimately resulting in the bill being sent to collections,” Edmonds said in a statement. “Once we were notified that the customer claimed to be wrongly charged, we conducted a thorough account review and determined the outstanding balance was indeed still owed.”

She also said Nestor had only contacted AT&T directly once during the three-year dispute to complain.

There’s no way to know who’s right about the payment, unless of course Nestor provided proof that the $70-something check was applied to the old account or AT&T provided proof that it was applied to the new account (which should have led to an account surplus, or reduced bill, if logic serves). But we do know for sure that when the third and final collections firm tried to collect, she wrote back with evidence the disputed amount – or something close to it – was paid, and then Nestor heard nothing more.

Edmonds said she could not explain why Afni didn’t respond to Nestor’s letter with further evidence that the debt was owed, and referred that question to Afni.

Afni says a collector is not required to respond to a consumer disputing a debt if it simply ceases collection. “A response is required only if the agency is going to continue collection attempts,” Ciskey said.

And that is one reason some bills never die; it’s also how consumers come to be reported to credit bureaus as late. While Afni could not pursue the debt any further without continuing the dialog by “validating” the debt, that doesn’t stop AT&T from contracting a different collector, or selling the debt.

Margot Saunders, a debt collection law expert at the National Consumer Law Center, said that’s true. The Fair Debt Collection Practices Act requires any firm collecting a debt on behalf of a third party to “verify” the debt if a consumer objects to a collection notice – but only if the firm continues to attempt to collect. Second or third collections firms get to start the process over, and are currently not required by law to keep track of prior collection attempts by others.

Moving Forward

AT&T is now working directly with Nestor to resolve the dispute, so at least for now, she appears to have a happy ending. There is a lesson in her tale, however. She is an example of a concept I call the “exception bin.” Computers and databases are great at handling 99% of transactions. When things follow standard patterns, computers hum along and take care of everything. But once there’s something even a little unique about your situation, you land in the exception bin. And because corporations rely on computers so much, many run into trouble when dealing with items that land in the exception bin. Often, it can feel impossible to get out of it – even if you send letter upon letter providing evidence.

In Nestor’s case, it’s perfectly sensible that she thought she could just keep paying the bills AT&T sent her for U-verse and her account would be current. If you think like a computer, however, you can see how the firm’s computers might handle customers who downgrade from bundled service to a single service. Then, once her bill was handed over to collections, she became an exception that just wouldn’t die. Yes, AT&T used three different firms during a three-year stretch in an attempt to collect a $70-something debt from someone who otherwise seems to be a good customer. And yes, the firm could have seriously harmed her credit over a small bill that she thought she’d paid, that she provided evidence she’d paid, and for which she’d received no response (until the next collection attempt).

So what’s the lesson? In broad strokes, do whatever you can do to avoid the exception bin. Of course, that’s not always possible. Moves happen. Mid-contract cancellations happen. Early service upgrades or downgrades happen. And mistakes happen on both sides. But when they do, realize that your odds of getting caught in corporate red tape go up astronomically. In that case, you must be hyper-vigilant for signs that your exception will soon lead to headaches. Be proactive: Pay a bill, then call to make sure the payment is applied. When you cancel a service, get a letter confirming cancellation and a bill showing a $0 balance. Furthermore, check your credit scores and credit reports regularly for signs of trouble, and dispute any errors as soon as possible. You can get your credit reports for free once a year from each of the major credit reporting agencies, and you can get two credit scores for free from Credit.com along with an explanation of what they mean.

It may seem tedious, perhaps even unfair, but it’s a reality of navigating your way in the 21st Century.

More from Credit.com

This article originally appeared on Credit.com.

MONEY Tech

Best Buy Is Finally Making a Comeback

Best Buy employee with box
David Paul Morris—Bloomberg via Getty Images

The company appears to have found an in-store strategy.

On Thursday, Best Buy BEST BUY BBY 1.39% delighted fans and investors by reporting a blowout fiscal third quarter. The results, reported before the bell, were non-GAAP diluted EPS at $0.32 per share versus analyst expectations of $0.25 per share. And while total revenue growth was still sluggish at 0.6% over last year’s quarter, that figure also beat analyst expectations by coming in at $9.38 billion versus $9.11 billion.

More importantly, the company appears to have found an in-store strategy. Domestic comparable sales increased 2.4% ex reclassifications, signaling it’s finding a way to use its stores as an advantage against online retailers. And speaking of online retailers, Best Buy increased its domestic online revenue an outstanding 21.6% over the same quarter a year ago. Although online is still a small portion of the total revenue haul, it is encouraging to see Best Buy growing this segment instead of conceding this channel to other retailers.

Great quarter, but is it sustainable?

Over the last five years, Best Buy has had a tough time. The company found itself a victim of the macroeconomic environment and suffered during the recession. However, unlike other retailers, the company never recovered post-recession. The chart below will give you proper context of Best Buy’s struggles versus the greater S&P 500.

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Two issues for Best Buy

The company faces two problems: aggressive pricing competition and the discretionary nature of their products. Due to Best Buy’s large store footprint (read: costs), the company would find itself losing a pricing war to online retailers — mostly Amazon.com. The trend of shoppers coming into Best Buy stores to test products then buy them from online retailers was so prevalent it inspired its own name: showrooming. CEO Hubert Joly has instituted price-matching strategies and improvements to counteract this trend and it appears to be paying off.

The second issue is the discretionary nature of Best Buy’s products. Unlike a grocer or a discount retailer like Target, consumers generally can postpone electronics purchases until they are more comfortable about the overall economy and their personal finance situation. And although the recession is over, wage growth is still harder to come by. Many were left scarred by the recession and have closed their pocketbooks. In addition, the recession has been tough for technology savvy millennials that are a natural fit for Best Buy’s brand.

Are better times ahead?

However, more recently, price drops in oil and slowing healthcare inflation have given many Americans a stealth pay increase. The consumer confidence index is sharply up and generally portends more discretionary spending, which is good news for Best Buy going into its seasonally heavy fourth fiscal quarter.

There’s been a host of positive economic news — GDP grew at a 3.5%-plus annualized rate the past two quarters, there have been nine straight months of 200,000 jobs created, and an unemployment rate below 6% — that will eventually lead to more discretionary spending. And when that happens, a leaner, better-ran Best Buy will be in a position to benefit from it.

MONEY Tech

Why Amazon is Quietly Investing in a Massive Land Grab

Amazon.com employees work the shelves along the miles of aisles at an Amazon.com Fulfillment Center in Phoenix.
Ross D. Franklin—AP This Amazon.com Fulfillment Center in Phoenix has aisles that go on for miles.

Here's how Amazon is building its competitive advantage.

Correction: Appended, Nov. 6.

On the outskirts of almost every major city in America, Amazon.com AMAZON.COM INC. AMZN 1.45% is building massive but inconspicuous warehouses designed to dispatch goods in an increasingly real-time fashion.

The strategy is expensive, consuming billions of dollars in capital expenditures every year, but its audacious scale and execution could consolidate Amazon’s still-incipient stranglehold over the biggest retail market in the world.

The transformation of Amazon

It’s important for investors to appreciate that the Amazon of today is nothing like the Amazon of five years ago.

In 2009, it operated 18 fulfillment centers in a smattering of second-tier states such as Washington, Indiana, Kentucky, Kansas, and Delaware. Today, more than 60 of these mammoth facilities are scattered across the country in proximity to the nation’s major population centers.

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The expansion gives Amazon physical beachheads from which it can capture a growing share of retail sales on a city-by-city basis. Perhaps most importantly, it chips away at one of the principal deterrents to online shopping: immediacy.

Thanks to fulfillment centers built since 2012, Amazon offers same-day delivery to customers in 12 out of the 14 largest metropolitan areas, including New York City, Los Angeles, and Chicago. A full 31% of the American population can now order something from Amazon in the morning and get it delivered to their doorstep that evening.

“As we get closer and closer to customers with fulfillment, we have seen growth,” Chief Financial Officer Tom Szkutak said on a conference call last year.

The move also lays the groundwork for Amazon’s long-known desire to tap into the $600 billion-a-year grocery market, which is second only in size to the $650 billion market for general merchandise.

It’s initiated grocery delivery services in its hometown of Seattle as well as in San Francisco, Los Angeles, and New York City. And by its own admission, it is “branching out as fast as we can while being careful not to sacrifice the quality and convenience our customers expect.”

Finally, this burgeoning infrastructure will allow Amazon to capture share in the market for bulky, big-ticket items such as televisions, refrigerators, and laundry machines. In 2013, for instance, it opened facilities in Texas and Florida designed specifically to “pick, pack, and ship large items to customers, such as kayaks, televisions, and more.”

A land grab of unprecedented size

Taken together, the speed and scale at which Amazon is expanding its network of fulfillment centers represents a retail land grab unseen since Wal-Mart WAL-MART STORES INC. WMT 0.04% exploded onto the scene in the second half of the 20th century. And the stakes this time around are even greater.

Whereas Wal-Mart disrupted mom-and-pop retailers and general merchandisers, Amazon’s ambitions are without limit. It wants to be the “everything store,” and it’s laying waste to large swaths of the existing retail landscape in its pursuit of that objective.

Accurate, real-time salaries for thousands of careers.

Moreover, whereas the vulnerabilities of Wal-Mart and other big-box retailers were exposed by the emergence of e-commerce, it’s hard to imagine another paradigm shift anytime soon that will further reduce costs while simultaneously increasing convenience.

In short, by laying siege to local marketplaces with fulfillment centers, it isn’t unreasonable to conclude that Amazon is in the process of erecting an impenetrable moat that could last for generations.

MONEY identity theft

4 Reasons Why You Should Shop at Stores That Got Hacked

141020_EM_CCBreachStores
Mike Blake—Reuters

Almost half of all consumers surveyed are afraid to shop at retailers like Target. They shouldn't be.

Retailers are gearing up for the holiday shopping season, but one thing has some consumers spooked: According to a new survey by CreditCards.com, 45% of respondents say they are less likely to shop at stores that have suffered a data breach, such as Target, Home Depot, or Michaels. Almost 30% say they will “probably” avoid stores that have been hacked, and 16% claim they “definitely” will.

While it’s hard to believe that half of all shoppers will actually skip the sales at major retailers come holiday season, Target did suffer a 5.5% decline in transactions last year after its data breach.

But shoppers, you’re being silly. You don’t need to avoid stores that have been hacked. Here’s why.

1) If someone steals your credit or debit card number, you have very limited liability.

You’ve got at least one reason to thank Congress: The Fair Credit Billing Act and the Electronic Fund Transfer Act cap how much money you’ll lose if someone steals your credit or debit card. If someone steals your card number but not your actual card — which could happen during a data breach — you are not liable for any fraudulent transactions. Read: You won’t lose any money. Just be sure to report any fraudulent debit card charges within 60 days of receiving your statement.

The rules are a little different if someone steals your physical card. With credit cards, you still won’t need to pay anything if you report the loss before a thief uses the card. Otherwise, your liability is capped at $50. With debit cards, you’ll only pay up to $50 if you report the theft within two days, or up to $500 if you report the theft within 60 days of receiving your statement.

There’s another reason to prefer credit over debit. When someone makes fraudulent charges on your credit card, you can challenge the bill when you receive it. But when someone else uses your debit card, that money comes straight out of your account, so it could take a little bit longer to recover your funds.

And if you’re really afraid, just stash the plastic. CreditCards.com reports that 48% of shoppers say data breaches have made them more likely to spend cash.

2) Avoiding these stores won’t protect you from the scariest kinds of identity theft.

When someone steals your credit card number and spends your money, that’s considered “existing account fraud.” Banks and credit card companies have gotten pretty good at identifying abnormal spending patterns, so you’re likely to catch existing account fraud early, and your liability is limited.

But if someone steals your Social Security number, opens a new credit card in your name, provides a new billing address, and runs up big charges, it might take you a while to notice. That’s called “new account fraud,” and it’s a real headache.

To catch new account fraud, check your credit report three times a year. It’s not hard to do, and it’s free. Your report will show all your accounts and debts, as well as your payment history. Check to make sure all of the information is accurate and all of the accounts actually belong to you. (Go. Do it now. Did you catch a problem? Here’s what to do.) If you’re afraid that your social security number has already been stolen, you can put a free fraud alert on your credit file to let lenders know or freeze your credit so that no one else can open new accounts in your name.

But you don’t give out your Social Security number every time you swipe your credit card, don’t worry about going shopping.

3) Safer cards are on the way.

Are you sick of all these data breaches? So are businesses — after all, they’re the ones on the hook for fraud, not you. That’s why Visa and Mastercard are sending out new “chip-and-pin” cards. These cards have embedded microchips, which are more secure than magnetic stripes. If you’ve ever traveled abroad, you might remember what chip-and-pin technology looks like; Europeans have been using this system since the 1990s. While not foolproof, these cards are a great improvement. President Obama signed an executive order last week requiring that all government credit cards use chip-and-pin technology.

Practically speaking, chip-and-pin cards won’t do much more to help consumers at point-of-sale — remember, you have limited liability. But starting Oct. 1, 2015, the liability will shift to whichever business has the oldest technology. If credit card companies don’t update their cards, they will be liable for any fraud; if retailers don’t offer chip-and-pin terminals, they’ll be on the hook. So everyone has an incentive to make payment systems more secure, which is ultimately in consumers’ best interest.

4) Retailers that got hacked are working harder to win back your trust.

Guess which retailer is installing chip-and-pin technology in all of its stores and on all of its branded cards — Target!

Guess which retailer offered free credit monitoring to all its customers — Target!

Guess which retailer just started offering free shipping — Target!

Given that there have been 606 data breaches already this year, according to the Identity Theft Resource Center, you can probably expect more to come. But the retailers that have already been hacked are beefing up security and offering free identity theft protection services to consumers, so you’re probably safer there than everywhere else.

If that doesn’t put your mind at ease, here are some more steps you can take:

 

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