Don’t get blamed for debit card fraud

In today’s column, I used an example of a debit card fraud victim was held liable for $2,500 in losses. His bank said he failed to report the theft of his wallet in a timely manner (he waited three hours to get a break from work) and didn’t safeguard his personal information number. The bank had no evidence to show he’d been sloppy with his PIN, but just assumed he had been. How else could the thieves have stolen his money?

You might think this is an unusual case. Not exactly. The Ombudsman for Banking Services and Investments, which investigates complaints like this, came up with five similar cases from its files. You’ll find them below, along with tips on how to avoid getting into the same predicament.

It’s easy to be complacent, because credit card fraud doesn’t usually cost you money. There’s a $50 cap on liability, charged only in rare cases. Banks usually refund the amount stolen with a stolen credit card. But when dealing with debit card fraud, they take a harder line. You can lose everything in your bank account and more, depending on whether you have a line of credit attached to your card or not.

Like LeaseBusters for cell phones

I often write about the financial cost of signing long-term contracts for cell phones and trying to leave early. This prompted a reader, Bijan Shahrokhi, to start a new business. Here’s his story.

An article of yours about wireless providers forcing subscribers to stay in contracts by having large cell phone cancellation fees encouraged me to come up with a solution. That’s why I established a website that helps cell phone subscribers leave their contracts without paying cancellation fees.

I help them find individuals who’d like to take over their cell phone contracts. Once the ownership transfer is completed, the original subscriber is completely free of the contract without paying cancellation fees. And the new subscriber just got himself or herself a short-term cell phone contract without any payments for the SIM card, activation or a new handset.

We have already helped more than 100 people leave their cell phone contracts without paying cancellation fees in one month. Here is the link to my website.

Curious about this new business, I asked him if the phone companies ever got tough on the transfers. And if the new owner defaulted, would the phone company try to collect from the original owner? Here’s what he said.

Actually, the phone companies are in favour of it. There are many reasons why they would like this idea.

–We help the wireless provider replace an unhappy client with a happy client at no cost. The happy client will spend more money on the plan by using more minutes and features.

–The original subscriber is able to leave the contract on good terms, raising the possibility of his or her return to the provider in future for other services.

–Most importantly, now it is the job of the original subscriber to obtain a new client for the provider, saving the carrier a few hundred dollars on acquiring a new customer.

About extra fees, Rogers and Fido allow contract ownership transfers for free. Bell charges a one-time $20 transfer fee and Telus charges a one-time $25 transfer fee. Compare that with termination fees: minimum $100 to a maximum of $400 or even $720 (Telus).

Once the ownership transfer is done, the new subscriber is responsible for the contract and the original subscriber is completely out of the contract and has no responsibility whatsoever. In fact, even if the new person defaults, there is no liability for the original subscriber.

After one month, the feedback has been much more positive than we’d originally thought. We haven’t even had any reports of having major problems with transferring cell phone contracts.

LeaseBusters has been very successful in helping people with long-term car leases get out early without stiff penalties. It started in 1990 and is still going strong, despite competition from others. Let’s hope this cell phone version is equally helpful and profitable.

Strollers on a plane

My kids are older now, but I remember wheeling them in their strollers onto an airplane before putting them in their seats. Now Air Canada has changed its policy, requiring strollers of a certain size to be checked as baggage.

Here’s a letter from Bruno, who discovered this policy at the airport. He found nothing posted at the Air Canada website when he bought his ticket.

My girlfriend bought a one-way ticket from Toronto to Vancouver on Air Canada for herself and our seven-month-old son. I was not travelling with them that day. When checking in at the airport, we were told that all strollers 30 inches long couldn’t go onto the plane. This policy is not printed on the e-ticket or receipt.

It got worse when we were told by Air Canada that if my girlfriend wanted help getting to the gate carrying an infant plus two carry-ons (her purse and a bag for the baby stuff), she would have to go to the Greater Toronto Airport Authority desk and request a wheelchair. My girlfriend started to cry and a sympathetic Air Canada employee offered her and the baby a free ride on a wheelchair. We weren’t given any reasons for this policy and witnessed other parents having the same problem at the check-in area.

I sent this letter to Peter Fitzpatrick, a spokesman for Air Canada, who gave the rationale for checking large strollers at the airport instead of carrying them onto the plane.

Starting Sept. 4, we began implementing a new policy for carry-on and checked luggage as part of an overall campaign to streamline our processes and ensure better delivery of baggage. The main thrust of the changes is to more rigidly enforce our pre-existing, two-piece carry-on rule with the goal of ensuring the limited luggage space within the cabin is shared equally by all passengers and that boarding is done as efficiently as possible.

As you may know from travelling, one of the issues people often encounter upon boarding an aircraft is that the overhead bins fill quickly leaving no room for people arriving later to store their items. We are aiming to improve the situation by ensuring people only have limited carry-on, so there is enough space for all.

As part of these changes, we now count fully collapsible, umbrella-style strollers as one piece of the two-item carry-on allotment, where before they were waived. The same now applies to car seats. You will find this on our website,, under “Information and Services,” although I should note that we recently launched a new website format so we are updating this to provide more information.

Larger strollers will be deemed checked luggage to be checked at the check-in counter and will count as one piece of the two-piece checked-luggage allotment. Apart from space considerations on the aircraft, this is also a health and safety issue for our staff and a measure to accelerate aircraft loading. In the past, people have been able to drop off all types of strollers just before entering the plane and one of our ground handlers would take it and place it in the luggage hold. However, strollers are getting increasingly bulky and heavy. It is dangerous and time-consuming for our people who have to carry them down the narrow steps to the tarmac and then find room for them in the luggage hold.

Despite the new requirements, Air Canada continues to meet the needs of customers by offering a generous two-piece carry-on baggage allotment while remaining competitive with current industry practices. For example, a mother travelling with two children may still carry on up to six items, including a car seat or fully collapsible stroller. We believe that is more than adequate for a person’s travel needs.

Bruno thinks a small collapsible stroller isn’t safe for a small infant and I’m sure some parents agree. The whole exercise of travelling with little ones is already fraught with frustration because of flight delays and turbulence. This will only complicate things further.

While Air Canada isn’t great at communicating with passengers, I went to the website as Peter instructed and found very detailed information here. Parents, what do you think?

Investing for beginners

Take 60 people and teach them all they want to know about investing, from mutual funds to stocks to portfolio building, in three sessions of two hours apiece. Some want to know how to retire early and how to talk to their investment advisers without sounding stupid. And a few are keen to start trading options and get in on all the hot IPOs, such as Lululemon, without getting squeezed out by bigger clients.

That’s my class, Investing for Beginners, which kicked off this week at University of Toronto’s school of continuing studies. It’s a challenge with so many people and knowledge levels and so short a time to work together. So, I’m using this blog to expand on what I can tell them and what they can learn.

Does anyone know of a really terrific, easy to understand introductory book on investing? I recommended three, Investing for Canadians for Dummies, Rob Carrick’s consumer guide to banking and investing and Derek Foster’s The Lazy Investor. Love to get more picks.

Is it better to send beginners to websites, like InvestorED and Morningstar, rather than books? Maybe the Internet works better than books since it’s interactive. Which websites would others recommend?

Here are some points I made in the first class. Don’t feel pressured to invest in stocks or equity funds. Start with safe GICs or high-interest savings accounts and use the interest to invest in more risky stuff. It’s like setting up your own principal-protected note, without the high fees.

Mutual funds used to be easy to pick, but they’ve become a nightmare of consumer choice. If you can’t make any sense of what to buy, go to your bank and ask for help. They have certified financial planners on staff and they sell other mutual funds besides their own. There still may be high-pressure sales and conflicts of interest, but not as much as with commission-paid fund dealers.

Don’t believe predictions. No one can forecast where the economy and stock markets are going with any degree of accuracy. Don’t make any buy or sell decisions based on one day’s trading action and the prognostications from media commentators.

Costs matter, especially when it comes to mutual funds. Management expense ratios are high and not coming down as fund sizes balloon. Always check the MER and recognize how much goes to the investment adviser. Demand service for money paid. Wouldn’t it be great if you could see a dollar figure for the amount going to your adviser each year on your fund statements?

I once sent a couple for a portfolio review with Warren Mackenzie at Second Opinion Investor Services. They owned 47 mutual funds, when all you need is about 10 to be diversified. The average MER was 2.41 per cent and they were paying $22,148 a year to their adviser for this overdiversification. The worst thing was that with their $900,000 portfolio, they could have gone to an investment counsellor and paid less than 1 per cent a year. I checked with them later and they were still with the same adviser, but trying to restructure and slim down the portfolio.

Muutal funds are like clothes in your closet. If you keep buying new ones and don’t clear out the old ones, you end up with clutter. Some advisers encourage this bad behaviour by always asking you to buy something and never suggesting you sell anything.

What is it with fitness clubs?

There’s a law in Ontario that fitness clubs can’t sign up members for more than a year at a time. They get around the rules by charging a monthly amount and insisting that clients agree to automatic deductions from a bank account or credit card.

Then, after the year is up, some clubs keep deducting the monthly payments. And they make it really hard — almost impossible — for members to cancel.

Here’s an email from Bruno about a well-known fitness chain. He got so fed up he wrote to the landlord of the mall where the club is located, to see if it would take action:

I am very frustrated with a tenant in one of your malls and I felt I should bring this to your attention. In late January, I went into Premier Fitness at Yorkdale Mall and spoke to someone about cancelling my membership. I was told my membership would be cancelled as of February.

When March rolled around, I noticed that I was charged on my credit card for February and March. I went to Premier Fitness at Yorkdale, but they told me not to worry and everything would be fixed. When May rolled around, I noticed two more charges on my credit card. By now, they had charged me for four months without my authorization. My membership had expired in February and they toke it upon themselves to keep charging me.

The amount owed to me is $48, not a large amount, but it has been outstanding since February. As of Sept. 8, I have yet to receive anything. All I got were excuses: “The girl who does the refunds is off.” “The girl who does refunds was fired.” “We have a new person working and she is slow.” They kept giving me the runaround. I made several visits to the gym. I have also made several calls to them, but they would never call me back.

I am bringing this to your attention because they are your tenant and they represent Yorkdale Mall. I feel that they are not representing the mall in a good light. This experience has made me question what kind of retailers you permit in your centres and question whether I want to shop at an Oxford property in the future. This experience has left me questioning what kind of retailers/business you permit in your centres.

Even if I don’t get my money back, I just want just want to bring this to your attention. I am sure I am not the only one who has a negative experience with Premier Fitness. They currently have an “unsatisfactory record” with the Better Business Bureau of Midwestern Ontario, which processed 190 complaints about them in the past 36 months.

Let’s hear from readers. Have you had an experience like this? How did you get the fitness club to stop billing you? Tell others how you used your wits to stay financially fit.

The scourge of telemarketing

Last night, I got a phone call just as I came home from the grocery store, carrying in the first load of bags. It was a long-distance ring, a bad sign, since that’s often a signal for telemarketing calls.

Sure enough, it was someone from a wilderness federation who wanted to ask for money. It seemed I had given $15 to a door-to-door canvasser, out of sympathy, and now I was on their calling list.

I cut him off and said I was busy unpacking groceries. I’m not a big supporter of this charity, if it is indeed a charity. After the canvasser left, I’d checked the slip I was given and realized it wasn’t an official charitable receipt for tax purposes.

Canadians might get some relief from telemarketers when the CRTC finishes setting up its national do not call list. But don’t hold your breath. There are plenty of exemptions:

* Registered charities (calls made by them or on their behalf)
* Political parties
* Calls made for the purpose of public opinion surveys
* Newspapers of general circulation (for subscription solicitation)
* And businesses with whom you have an existing business relationship (for example, businesses from which you have purchased goods or services within last 18 months).

Now here’s a question, sparked by a complaint I received from Larry (reprinted below). What if your bank calls you to pitch expensive and useless insurance for a credit card? Does that fall under the exemption for an existing business relationship?

If so, you should hang up on the bank’s outsourced telemarketers since may get talked into paying too much. But if you’re as lucky as Larry, you’ll find a champion at the bank to help out.

And now for something completely different

Unlike most bloggers, I don’t write a lot about my personal life. But I’ll take a break today from my usual posts to talk about what’s going on.

In two weeks, I start teaching night classes at the University of Toronto’s school of continuing studies. It’s my fourth year and I’m doing two courses on investing. One is for absolute beginners and one is for those who want to become a better investor. They run Thursday evenings, 6 to 8 p.m., at the downtown campus. If you check the link, you can see I’ve become a poster child for the school. I even have my face on ads in Toronto subway platforms.

As a change of pace, I’m also leading book clubs at the U. of T. The first is about Chick Lit: Jane Austen to Bridget Jones. The second is about Mysteries: Why We Love Murder and Mayhem. As an avid reader, I often use books as inspiration for columns. Now I can talk about something else other than business and investing titles.

For my birthday this summer, I asked my family to give me an iPod. It took me forever to adapt this technology. I was always carrying around a CD player or even a tape player (since CDs skip when you run). Of course, I love the iPod and found it very easy to use. Now I’ve found a book that describes why we all walk around with white buds in our ears. Steven Levy, a Newsweek tech reporter who covers Apple, thinks the iPod (launched in fall 2001) is a perfect device for its time, allowing you to carry around your entire music collection in your pocket. Here’s an excerpt from the review:

Borrowing one of the definitive qualities of the iPod itself, The Perfect Thing shuffles the book format. Each chapter of this book was written to stand on its own, a deeply researched, wittily observed take on a different aspect of the iPod. The sequence of the chapters in the book has been shuffled in different copies, with only the opening and concluding sections excepted. “Shuffle” is a hallmark of the digital age — and The Perfect Thing, via sharp, insightful reporting, is the perfect guide to the deceptively diminutive gadget embodying our era.

In case you want to know, I have the iPod Nano (8 GB) that holds 1,000 songs and it’s far from filled up yet. Consumer Reports gives it high marks, except that it lacks an FM radio. That was another reason I delayed buying one, because I love CBC. But I download the editor’s choice podcast every day, so I can get a taste of the programs I missed.