The First "Duh of the Week" of 2013 is One for the Record Books

by Ron Daly 

Ever bite down on your tongue while you're eating a lemon? It's a double-whammy of pain. There's the acidic burn of the lemon juice and the "yow that smarts" of cutting your tongue with your teeth. The thought of it is enough to make you wince. 

It's one of those blunders that you could have avoided in a few different ways. For one, stop eating lemons, you weirdo. For two, chew more thoroughly. You've got no one to blame but yourself. 

The first "Duh of the Week" has a lot in common with this twofer of pain - it's something that could have been avoided and it's easily the stupidest combination of dumb ideas I've ever heard.

A Portland-area teen...

1. drove home drunk from New Year's Eve, then 
2. told everyone about it on Facebook.

What a dumb move. For starters, he drives home drunk (under-aged, mind you), hitting TWO PARKED CARS in the process. As if that wasn't enough of a bonehead move, he POSTED ABOUT IT ON FACEBOOK, complete with a little winky-face emoticon. 

If you have young people in your home, now's the time to have "the talk" with them.

• Sit them down. 
• Tell them you love them. 
• Explain that if they need a ride, you'll come get them, no matter the situation.
• Tell them they should never ride in a car with a drunk driver.
  
  And lastly...
• Gently remind them how hard you're going to kick their butt if they ever do something this idiotic. 

Drunk driving kills people, and when it doesn't, it can cause untold damage of another kind. The last thing your kids should ever want to do is drink and drive, and the second-to-last thing they should ever want to do is brag about it on a social network. 

Kudos to the thoughtful Facebook followers who informed the police and got him booked for his idiotic crime. Maybe now, he'll be sending a status update: 

"In jail :( Not as fun as I though it would be..."

Are your employees behaving resposibly on social media? Is the person in charge of your Facebook account making the right decisions?  How sure can you be about all that? Time to start that long-awaited social media policy, maybe? Maybe employees can use "the talk", too.

Comments always welcome. Happy 2013 to everyone!

The "Duh of the Week": I got my old camera...

by Ron Daly 

This week, Facebook bought Instagram, the photo-taking-and-filtering service that's now available for iOS and Android, for one billion dollars.

If you're a more visual learner, that's $1,000,000,000. For those of you who need a point of reference, that's half of the total value of Kodak's entire patent portfolio (according to this, anyway). The company that spent the 20th century making photography accessible to the masses is bankrupt; the nerds who created an app that makes pictures look like they did in the 60s and 70s just hit the mother load. 

Is it fair? Nope. It's business.

The "Duh of the Week" goes to everyone who says Instagram isn't worth the cool billion they just made. Because as a very wise person once said, "it's worth whatever you can get for it." Is it a decision Facebook will end up regretting? I don't think so, Facebook is almost entirely about sharing pictures with other users. Don't believe me? Facebook takes 100 million uploads every day,according to these figures...and those are a little dated.

But why wouldn't they buy a service that allows people to take, modify and post pictures on the go? They've never really had their own "camera app" (that I know of), so Instagram is just filling a hole. It's smart on Zuckerberg's part, how well the Instagram community will respond is another matter. 

For what it's worth? I've got my old Kodak 35mm here...any takers? 

 

"Duh of the Week" Award: Bad communication can be bad for your health

by Ron Daly 

That's right, we know you've been itching for its return...it's the DUH OF THE WEEK AWARD!

Cigarette makers learned recently that, starting September 2012, they would have to put pictures of the "effects of smoking" on cigarettes and tobacco products. These pictures are, to say the least, nasty looking. The point being that if the little black-and-white lettered warnings on cigarettes aren't enough to get you to quit, a picture of a stoma should do it. Maybe the legal forms attached to a loan should come with these as well...

This week's award goes to Ally. Read this story from the CU Collector website: 

Earlier this year, Linwood [Costin, the borrower] called Ally, formerly known as GMAC, to request skipping, or extending his truck payment for March. According to Teresa [Costin's Daughter] “He said when he called they told them they don’t usually skip a payment; they skip two,”, “He said, ‘That’s fine,’ and he sent the amount they told him to for interest.”...

...Unfortunately, unbeknownst to Linwood, Ally had already assigned his truck for repossession.

Teresa claims “He got very upset and asked what he needed to do to fix things,”

“The guy told him he needed to go to the closest Western Union and wire them $567.”

Reportedly, Linwood got off the phone and went to a Western Union office and wired the money due. Costins has receipts showing the made payments.

Teresa reports “He finished his shopping for that day, went home, and they came and took his vehicle anyways and has refused to return it,”

So upset was the gentleman from the story that he had a heart attack and was rushed to a nearby hospital. According to the article, doctors say the heart attack was probably due to stress, as Mr. Costin had no arterial blockage.

We've already heard of Bank of America seizing the wrong houses, but to date hadn't heard of anyone having a heart attack because of it. With so much business to tend to in collections and lending, it's not all that hard to imagine that mistakes like this happen...but please, please, PLEASE make sure you get the right person the first time, and if there's an issue, make sure you make up for it. 

To Ally's credit, they did return the truck with a full tank of gas and waived the next month's payment for Mr. Costin. We hope that Mr. Costin has a speedy and full recovery and that the folks at Ally fix up  their legal language to include a warning label of their own: 

 

DUH OF THE WEEK : A 59% APR - Can Anyone Do Better?

by Ron Daly 

We know, you've been dying to know when it would return. And here it is - the Duh of the Week.

There's been a lot of talk about the 59.9% APR on the First Premier Bancard. Aside from it's already startling APR, there's teh fees - $30 per year for the first year, $45 for each year after, monthly service fee of $6.50/year and $35 on any late payments. Yowza. 

But what's more amazing to me is the number of people that have applied for the card - some 700,000 - and the number of people that are carrying a revolving balance. 

From CNN: 

And yet the customers keep coming. The company said it serves nearly 3 million customers nationwide and receives anywhere from 200,000 to 300,000 applications a month.

There is a huge -- and growing -- need for cards serving customers with "less than perfect credit," Beacom said. However, he added, the company is now more cautious due to the Card Act, so it is only opening about 50,000 accounts a month.

Oh, good...they're only opening about 50,000 accounts a month. Phew, I was worried. 

So, 700,000 accounts at $300 account limit with right around half carrying a revolving balance. And 200-300 thousand new applications per month. Holy. Cow. 

So, ready for the "Duh of the Week" award? It doesn't go to First Premier. According to the CARD Act, they're not doing anything illegal. According to business, they're cleaning up. Is a 60% APR disgusting? Yeah. But there's *technically* nothing wrong here. 

Is the "Duh of the Week" going to the number of people applying for this card? No. You can't blame the people that feel like they have no alternatives because of poor credit. They'll latch onto anything that's presented as "an easy". 

The DotW award goes to the credit unions that aren't marketing a rate that's even a little better than this. Sure, you have to take risk into account, but maybe you could throw folks a card with a thirty percent APR? Even forty? Come on, people - this is supposed to be a part of our model. Let's come up with the kind of card that makes sharky rates like these obsolete. Even better, let's come up with the kind of public relations tactics that make our best practices and fair lending a piece of common knowledge. 

Duh of the Week: I-R-O-N-Y

by Ron Daly 

Irony. It's the soul of a good joke or a turn of phrase. It's hard to define, but the kind of irony we're talking about today is the kind that comes from expecting one thing and getting another...or maybe the same thing in a different way. 

See, the NCUA posted a fraud alert Tuesday of last week about a letter that had reached a credit union bearing the NCUA logo and bearing the signature of Michael Fryzel (read that fraud alert here). The alert told CUs to be on the lookout for similar letters bundled with a set of compact discs, and told them to disregard said letter and not to put the disks into any of the computers. 

Then, on Friday of last week, this came through (read the fraud alert update here). 

From the release:

As part of an an internal "system penetration" test, a credit union created a facsimile of an NCUA Fraud Alert. This was an unauthorized and improper use of the NCUA logo, and also included a falsified signature of then-Chairman Michael Fryzel. The bogus alert was forwarded to NCUA, prompting the issuance of the August 25 Fraud Alert. The false Fraud Alert appears to be confined to that credit union, and is not wide-spread.

D'oh! 

Turns out, the CU that got "frauded" was "frauding" itself. The false alert set off a real alert. Can you spell "irony"? 

I'm sure that in the future, whichever CU it was will be using some fake agency name and not the NCUA. Good to know, of course, that the NCUA is willing to post alerts and follow up on them (they even have an RSS feed of news, which is handy). Here's hoping our "Duh of the Week" award will be a reminder to all CUs to keep an eye on their fraud drills - and avoid irony. 

Duh of the Week: The Best Idea...EVER.

by Ron Daly 

Giveaways. Back in the day, giveaways were the thing to have. Free toaster with a $30 deposit? Remember that? The finance industry knew its market, people that were saving for niceties could get them for free by becoming an investor or a member. I've seen some creative ones recently that are a little less needs-based, like emergency car kits, radios, t-shirts, gift certificates...the list goes on.

But recently, we've been falling down. We need to step it up a little, enter the 21st century. Who wants a crummy toaster? Who wants toast, come to think of it? It's just bread that hurts your mouth. 

Let's talk this through. What do you give away in a state with a very high average rainfall, little sunshine, and a 9.2% unemployment rate...like Washington State, for example, that would make people happy and help them forget all their troubles?

Well, if you're anything like this Harley dealer, a gun. 

Yep, Eastside Harley-Davidson is giving away a gun with the purchase of a new Harley (click here for the news story). 

I'm not the President. I don't know what this country "needs". But I DO know one thing - we need to learn from these folks and get on that same boat. "Every member that joins gets a hand grenade and a ski mask", maybe? I'll tell you right now, that's a member enrollment campaign that's gonna win some awards. 

In all seriousness, no, I can't see where giving away a handgun and a Harley is wise. Maybe Eastside felt the same way? They had a fun video to go along with their promotion, but they've taken it off of YouTube. They posited that people who took advantage of the offer would still be subject to background checks, the same procedures they'd go through if they were buying a handgun from a gun store. Still, there's no lawyer in the world who's going to say that "free gun with purchase" is a good idea. Maybe they talked themselves out of it. 

Enjoy the DotW, Eastside. Check the mail for your complimentary copy of Have Gun, Will Travel (Sorry, had to work that joke in there somewhere.)

Duh of the Week: A Fox to Guard Your Chickens

by Ron Daly

We've given this award to a few crooks before. Nothing like this, though. 

Let's talk about Max Ray Vision, the computer hacking expert hired by - get this - the Departments of Defense and Energy, the US Air Force and NASA to test their system security. The man who was sent to prison in 2001 for leaving vulnerabilities in these systems was re-hired as a government informant upon his parole. In the time he worked for the feds, he stole thousands of account numbers and PINs and distributed them on an info-trading website. 

Let's go back over that. 

1) He works for the government and hacks their websites
2) He goes to jail for compromising government information
3) When he gets out of jail, the GOVERNMENT HIRES HIM AGAIN
4) HE STEALS MORE INFORMATION AND GOES BACK TO JAIL

Who on earth got the bright idea of putting this guy back to work on the government dime? Who couldn't see that putting the chickens under the watch of the fox wouldn't work? 

You might think, faithful reader, that we're about to award Mr. Vision the "Duh of the Week" for his two arrests and his Dick Tracy-esque name. No. The "Duh of the Week" - and a high pole position for the "Duh of the Year" - goes to the Government for hiring this guy twice. And being caught with their fly down...TWICE. 

Enjoy the award, recruiting personnel for the Departments of Defense, Energy and NASA, respectively. Hopefully nobody steals it - especially the person you hire to protect it.

Now, if you'll excuse me, I'm off to rent a DVD copy of "Catch Me If You Can". 

Duh of the Week: A PennyMac for your thoughts

by Ron Daly 

Once upon a time, there was a giant lending house called Countrywide. When the financial crisis struck down a number of lenders in 2008, Countrywide was one of the first to go. Having gone through two years of controversies, lawsuits and accusations by the SEC, Countrywide had to be absorbed by Bank of America. BofA has decided to dissolve the Countrywide brand altogether, as thousands lost their homes and their mortgages due to over-inflated appraisals and bad lending and payment policies. 

But the story doesn't end there. The former Number Two at Countrywide, Stanford Kurland, decided to open a new vulture firm - nicknamed "PennyMac"  [click here for the CU Journal story].

The business model, as it's explained in this Business Insider article, works as such: PennyMac buys bad loans from busted banks or the FDIC for next to nothing, follows up with the homeowner and asks if that homeowner wants to keep paying for the loan at a reduced rate, then makes double the price they paid for the loan in profit. 

Stop laughing, I'm not joking. 

Duh of the Week: Asleep at the Wheel

by Ron Daly

I could give this award to a number of people, but for some reason this was what ticked me off worse than anything.

President Obama took yesterday to meet with credit card industry leaders at the White House to start working on a credit card consumer bill of rights. A serious topic near and dear to credit unions and members alike which we talked about earlier this week. All was going pretty well, the discussion was said to be lively...and then this happened.

Click here to see "Larry Summers Falls Asleep...AGAIN" [YouTube]. 

Click here to read about it on ThinkProgress.org