Bell wants to charge $2 for paper bills

March 31 2012 by Ellen Roseman

Companies save money by going to electronic billing. Too bad they don’t share the savings with their customers.

Telus switched to paperless billing in 2010, creating a big debate at my blog and at Moneyville. Royal Bank also went paperless, which I wrote about here.

Now Bell Canada has made its intentions clear. Internet customers must opt in to electronic billing by June 1 and stop receiving paper bills. Otherwise, they’ll have to pay $2 a month for mailed invoices.

Bell talks about being environmentally friendly and giving more timely access to billing information. But the big driver of this change — cutting corporate costs — is not mentioned.

Is paperless practical for all Canadians? I don’t think so, at least not yet.

Some Bell landline customers, even if they have home computers or smartphones, don’t feel comfortable monitoring their accounts online. It seems unfair to add $24 a year to their costs, especially if they’re older or on fixed incomes.

As for me, I pay more attention to bills I get in the mail. I open up the envelope and read the contents. I make sure to pay on time.

With electronic bills, there are more steps. First, I get an email, telling me to click a link. Then, I put in my user name and password. Then, I lcheck my statement on the screen. Then, I push print if I want a copy (assuming I have enough paper in my printer).

My advice: Ask Bell for concessions. Talk about your loyalty. Threaten to leave if you can’t get what you want. I know some people have already won the right to keep getting paper bills at no cost.

It’s a competitive market and some rival firms haven’t switched to e-billing. If Bell is smart, it will make accommodations to hold onto long-time customers.

Name the best personal finance books and resources

March 25 2012 by Ellen Roseman

I’m getting ready to teach my course at the University of Toronto, The Facts of Life about Your Finances. All I need is a reading list.

Here’s the problem: I can’t find many current books by Canadian authors that cover the landscape in an authoritative and engaging way.

I love The Wealthy Barber Returns by David Chilton, but it’s far from comprehensive. I think of it as a funny rant about credit and investing, told in Dave’s distinctive voice, with lots of personal anecdotes thrown in.

I also like The Millionaire Teacher by Andrew Hallam, but it has a narrow focus on low-cost investing with index funds. Ditto for Alison Griffiths’ new book, Count on Yourself.

I end up picking three books that complement each other:

397 Ways to Save Money by Kerry Taylor. In my view, saving money is the key to building your net worth. Most personal finance authors skim over this part of the equation, while Taylor dives into it in depth — and with great enthusiasm. (Check out her frugal living website, Squawkfox)

Never Too Late: Take Control of Your Retirement and Your Future by Gail Vaz-Oxlade. The R word (retirement) can be a turnoff, but Vaz-Oxlade’s passionate and colloquial writing style makes even younger readers sit up and take notice. I also like Gordon Pape’s book, Retirement’s Harsh New Realities, but it’s not for novices.

Your Money Milestones by Moshe Milevsky. He’s a finance professor who often takes a contrarian stance on money matters. I like the way he examines the major decisions you make during a lifetime. His upcoming book looks fascinating, but alas, it won’t be published in time for my course.

Books go out of date quickly, but luckily, we have a wealth of great online resources in Canada. Gail Vaz-Oxlade gets a huge response to her blog, where she writes about things like coupons and emergency funds.

Moneysense magazine puts all its articles online, which is really helpful. It also has a bunch of bloggers who will grab your attention.

Finally, I can’t avoid recommending Moneyville, my new home at the Toronto Star. You might enjoy visiting the blogs of some contributors, such as Boomer and Echo, Give Me Back My Five Bucks and Marc Saltzman’s Sync blog.

Where are the best places to go for personal finance tips, advice and strategies? Name your favourites. Tell me what I missed. Let’s expand the list.

Bank fees creeping up again

March 21 2012 by Ellen Roseman

When I started this blog five years ago, one of my first posts was on bank fees. Yes, banks were hitting you with more fees then and they’re still doing it now.

Your best defense is to shop around, says a background paper by the Canadian Bankers Association, adding that bank fees are low (about $16.20 a month per household) and not a big contributor to total bank revenues (only 5.6 per cent).

But things are changing for banks, I believe, forcing them to wring more revenue from consumer transactions. Low interest rates are squeezing their profit margins and new international rules will force them to hold more capital.

Bank shares won’t be yielding double-digit returns as in the past, says a Canadian Business cover story. That will hurt everyone who owns a balanced mutual fund in their retirement accounts

So, banks are asking retail customers to pay more for the services they use. They’re also cutting back on free services they offered in the past.

After I wrote about TD Canada Trust eliminating a free chequing account for older clients, I heard from many people who felt “nickeled and dimed” by service charges. Even some bank employees joined the chorus.

Here are a few examples (below) of things that upset people about bank fees. Please add any charges they missed.

Can you get a refund if a coupon deal disappoints?

March 18 2012 by Ellen Roseman

I often hear stories about online coupon deals that don’t live up to buyers’ expectations. How often do struggling businesses use deeply discounted vouchers, which are paid for in advance, to get an inflow of cash and shore up their finances?

I’ve written a few times about the Toronto butcher who continues to turn away coupon customers away since last spring. Two daily deal websites (Webpiggy and Buytopia) are no longer giving refunds, while Dealfind is still giving refunds.

I mentioned this case again here, along with a few others that have generated complaints. For more about those $85 Google Android tablets from Dealfind, check here.

In Ottawa, another butcher called Aubrey’s Meats had to suspend coupon redemptions until May 2012 because of financial troubles. It’s a similar story.

Groupon, Dealfind and Teambuy gave refunds, but Kahoot did not, according to Ottawa blogger Bob LeDrew and Open File Ottawa.

I think all deal websites should offer refunds if a product or service isn’t delivered in a timely way. A 30-day limit isn’t enough. Problems often take longer to appear.

Consumers hate being asked to pay in advance and waiting up to a year or two to get what they paid for. They shouldn’t be expected to finance a failing business.

Here’s my prediction: Online coupon vendors must reform their refund policies or face government intervention. This business won’t last unless it develops higher standards.

Do you think new rules are needed for group buying promotions? Have you had troubles trying to cash in any coupons you bought? Please pass along your experiences.

Direct Energy backs off and apologizes

March 16 2012 by Ellen Roseman

I was tied up yesterday and missed the announcement. But I knew DE would have to stop forcing customers to accept contract changes they didn’t want.

The protest was too loud. I’ve seen nothing like it since the revulsion against Rogers’ negative option marketing of cable TV channels in the 1990s.

Canadians aren’t as vocal about consumer abuses as Americans are. But they can be pushed only so far. When they’ve had enough, they scream.

Direct Energy said it made the decision to drop the new contract. I don’t believe it. I’m sure the Ontario and federal governments had a role in forcing DE to back off.

Ontario outlawed negative option sales in 2005. What good is a law if it’s not enforced?

Meanwhile, Ottawa just announced that financial institutions would have to stop providing new features (like credit card balance insurance) and making customers call to opt out.

Rob Comstock, senior vice-president, was on TV last night, talking about the service enhancements the company hoped would offset the cancellation charges.

This strategy of sugar coating a bitter pill almost worked — until the media got involved. We warned people to read those letters carefully to the end, since DE was hiding the truth.

The company obviously didn’t do any research on consumers’ reaction to negative option marketing. If it had, it wouldn’t have made such dumb mistakes in this misguided campaign.

DE is now run by British and U.S. executives who don’t understand the Canadian mentality. Even the PR spokeswoman is in Houston, Texas.

It’s a victory for consumers in Canada, who finally found their voices and rose up. This DE story will be used in business courses as a case study in what not to do.

I normally get lots of email, but I’ve never seen anything like this. I had about 1,000 Direct Energy emails and phone calls in the past week. I couldn’t keep up.

I still find it hard to believe that DE could write to 500,000 customers, giving them a tight deadline and only one phone number to call.

When people couldn’t get through to the company, they asked the media to help — and we told them to fight back.

Luckily, they did fight back. And DE was forced into a humiliating apology.

DE extends deadline to May 1

March 14 2012 by Ellen Roseman

After a storm of protest by its rental customers, Direct Energy said it would wait until May 1 (instead of April 2) to impose new contract terms on them.

This gives people more time to opt out, but doesn’t deal with the ethics of this campaign.

The British-owned company may be breaking Ontario’s law against negative option billing. I heard from several hundreds of readers today — much more than usual — about how they hated being pushed into a corner.

The company may think extending the deadline will relieve the pressure. This may be a misperception.

Many readers said they had written to the Ontario Premier. I hope the government steps in and makes a public statement about how DE is treating its loyal customers.

Direct Energy curbs competition with new contracts

March 13 2012 by Ellen Roseman

It’s disturbing to see companies make big changes to their contracts without getting customer consent. Direct Energy is the latest to try this tactic.

The British-owned firm is sending letters to customers who rent water heaters, thanking them for their loyalty and offering a few service enhancements. Many people don’t read beyond the first few paragraphs.

Then, comes the kicker. Direct Energy says customers have to accept new contracts unless they call to opt out by April 2.

The new contract stops clients from buying or renting water heaters from other suppliers unless they pay buyout fees of $200 to $1,000 or more. The current contract has no such fees.

Direct Energy wants to protect its declining market share from door-to-door competition. It also stands to profit from imposing inflated buyout fees on older tanks.

Customers who accept the new contract will get a 24-hour service guarantee and inflation protection on rates. But I don’t think that’s enough to offset the new exit charges.

I did a column last Saturday. Hugh Adami wrote a story in the Ottawa Citizen Pat Foran did a broadcast at CTV News.

Many people dislike having major contract changes forced on them without their express consent. Negative option billing is banned in Ontario. This seems to be skirting the line.

Also, the opt-out date is too close. Direct Energy’s letters were mailed out only last week. Shouldn’t it give customers at least 60 days’ notice to react?

I’ve decided to buy out my 12-year-old rented water heater. (The cost is only $131, less than a year’s worth of rental fees.) And when it stops working, I’ll purchase a new unit.

No more renting for me, I said in a follow-up column. If you’re looking for a reason to stop renting, which is convenient but costly, Direct Energy’s conduct has given you one.

Seize the opportunity to break free.

More advice my readers want to share

March 9 2012 by Ellen Roseman

I’m writing my fifth blog post in a week to celebrate my blog’s fifth anniversary.

It feels good to have lasted this long without accepting any ads or paid links. This is a place where readers can trade stories, facts and opinions and learn from each others’ experience.

Here’s another of my posts where I spread the word about marketplace traps, using cautionary tips from Star readers.

SR wants to tell everyone to get a home inspection before buying a property. His real estate agent insisted he do so — to his lasting benefit. Here’s his story.

I bought a condo/townhome on Lake Simcoe. Since it seemed in wonderful shape and less than 20 years old, I considered not having a home inspection, thus saving $400.

But my Coldwell Banker real estate agent, Pamela Park, was quite insistent. She said she was putting it in the offer. I would have to strike it out and initial it if I didn’t want the inspection.

So I decided to heed her advice. Am I ever fortunate I listened to her. (I also understand the seller’s agent said there had been very few inspections done on these resale condo homes over the years!)

The home inspector found the attic had been altered and some necessary trusses had been removed, thus changing the “structural integrity” (that is, the strength/support of the roof had been compromised).

I continued with my offer, but with a condition that the roof be put back to the original specifications and that a structural engineer sign off on it.

This was done by the seller at his cost (the original plans had to be reviewed and new wood had to be put in). And now I have some peace of mind.

Can you imagine what could have occurred with a heavy snowfall or when I went to sell it? This problem could have cost me $ thousands.

So, even if everything appears OK and there are multiple offers, don’t buy a property without putting a home inspection condition in in your contract. Caveat emptor!

Many people responded to my recent column about checking your bills for errors. They had chilling tales of companies overcharging them for years — and in some cases, undercharging for years and then sending a massive catch-up bill.

Greg Smith has a beef with Bell Canada (who doesn’t?). Here’s his story.

When we moved from Belleville to Barrie, Ont., we decided to bundle our phone and Internet services with Bell.

I checked with stores in both Belleville and Barrie and was assured that high speed internet was available at the address I was moving to (well within the city limits).

After nearly three months of no service, I was finally informed that service ended 100 miles away, but would be connected “sometime in the next two years.”

I asked for a refund and was told I was not eligible since I could have used dial-up.

Rogers was looking good, so I wrote to Bell (using the address on my account) and cancelled my service at the end of my contract period. The bills kept coming.

I kept calling. Eventually, I was told that I had to phone in and cancel. Writing is not considered a valid form of cancellation – and where had I found an address anyway?

I was then chased by Bell and threatened with all kinds of legal action and basically bullied into paying for three months of service I did not use.

When the nice telemarketers from Bell call, I politely decline, as I know they are not part of the scam. I do ask them if the offer includes three months of free services, though.

Never again.

Have you have wrestled with “bad bills” and managed to get them fixed and refunded?

If so, please let others know what worked in your fight to get attention.

So, how is your RRSP doing?

March 7 2012 by Ellen Roseman

RRSP returns not so great? Join the club. Many people are turned off RRSPs because their investments aren’t making money.

I often hear from people whose RRSP assets are the same today as 10 years ago, even though they’ve made annual contributions.

Some people tell me they’ve earned a modest return, but no more than if they had bought GICs instead of equity funds.

As public and private pensions slowly disappear, Canadians are thrown into the arms of a rapacious financial services industry. They have no choice but to save for retirement on their own. But they don’t like the choices offered.

That’s why I was happy to learn that the Saskatchewan Pension Plan was open to anyone in Canada who wanted to join. I mentioned in my column today that I’d gotten the information from Derek Foster’s new book, The Worried Boomer

Finally, you can save for retirement without worrying about self-interested salespeople selling you the flavour of the day funds.

Professional management doesn’t have to cost 2.5 to 3 per cent of your assets a year. You can cut the administration fees in half and get more consistent performance.

You need RRSP contribution room to make your $2,500 maximum annual contribution to the Saskatchewan Pension Plan (SPP). However, you can transfer up to $10,000 in cash a year from your existing RRSP assets. (That doesn’t require having contribution room.)

There’s one thing you need to know. While you can get your money out of an RRSP at any time, as long as you pay tax on the withdrawals, your SPP money stays in the plan until retirement time. Here’s what the rules are:

Do I have to wait until I’m 65 to retire?
You may retire from the Saskatchewan Pension Plan any time between the ages of 55 and the end of the year in which you turn 71.

Do I have to retire at 65?
No. You can continue contributing to your account until you retire from SPP, which can be delayed until the end of the year in which you turn 71.

If you go to the SPP’s website, it can answer most questions you have about investing.

And the plan’s rate of return? Not too shabby.

The Plan returned an average of 8.4% to members from 1986 to 2009. The ten year average is 5.45% and the five year average is 3.8%.

The highest return in our history was 21% while the lowest was -16.2%.

In 2011, most Canadian equity funds were down about 10 per cent. The SPP’s balanced fund was down too, but only 1.01 per cent. In January 2012, the balanced fund’s return was 2.16 per cent.

Saskatchewan is the birth place of medicare. It has a history of innovation and community spirit. Now it’s reaching out to retirement savers who want another option.

Check out the SPP if you’re looking for professional money management at a reasonable cost without a sales pitch. It’s a nice addition to the RRSP landscape.

Government won’t standardize mortgage penalties

March 5 2012 by Ellen Roseman

The Harper government promised to do something about the penalties charged to borrowers when they left a mortgage before maturity. It took two years to get the new rules, announced last Sunday afternoon. Peculiar timing.

I’d hoped to see changes in the way banks calculate the interest rate differential (IRD). They often pull a fictitious rate out of the air — a posted rate the customer never paid — to make the penalty larger. Alas, that sleight of hand wasn’t addressed.

The government will get mortgage lenders to adopt a code of conduct that requires more disclosure. This means they will tell you more about penalties and how to avoid them. But they won’t have to standardize the penalty calculations.

I call it protecting the lenders. They can continue their unfair practices, as long as they give you more information about what they’re doing.

Ideally, disclosure helps you shop around for lenders that calculate IRD charges fairly. But what choice do you have if they all play fast and loose?

There are still a few lenders that don’t use the Big Six banks’ formula for calculating penalties, says mortgage broker Steve Garganis.

They don’t make you pay for the ‘supposed’ original discount obtained…. If these smaller lenders can do it, while still offering a competitive rate (in most cases lower than what the banks offer), why can’t the BIG SIX banks do it?

The Financial Consumer Agency of Canada will work with lenders to monitor how they’re complying with the code. That could be more effective than passing a law that is never enforced.

It’s a win for consumers, says the Canadian Mortgage Trends blog:

And lastly (and here’s the best part in our view), lenders must post calculators on their public websites to help determine “reasonable” estimates of penalties. No more guestimators that spit out ballpark penalty quotes that are thousands of dollars off.

We don’t make a habit of celebrating government regulation, but this set of guidelines has been badly needed. Despite the lengthy implementation, the Finance Department and FCAC deserve a salute on this one.

To me, this is an improvement over the complete lack of regulation we had before. But I expect more than beefed up disclosure from a government that says it will protect consumers from abuse.