Some of
you know our new service 'Ask a
Question' where you can ask about
anything to do with credit, debt,
small business issues (at a stretch
you can even ask, say, Internet
questions and we will try to
respond. Here's a couple of recent
questions and answers.
Q.
Credit
Card Penalty Payment
I mailed a
credit card payment at least three days
in advance of it due date, but a late
payment fee still appeared on my bill. The
credit card company informed me that it does
not matter when I send the payment, but when
they get it. This leaves me at the mercy of
the post office, and at the discretion of
the truthfulness of the credit card company.
Is this legal? If not, what recourse do I
have?
Reply from Ed
This is a mute point. Credit card companies
say that they only acknowledge receipt of
the payment when it is entered on their
computer: which might take 2 or 3 days after
they receive the payment. Most credit card
statements say, "payment must reach us
by...". This is very clear: if you post your
payment first class one or two days previous
to the due date the credit card company has
your payment by the agreed date (nothing
more, nothing less). Penalty payments of
this type are simply not allowed (be that
by legislation or business ethics). No
penalty payment can be enforced as a result
of the administration capabilities of the
credit card company. Because of the nature
of the business (lending you money) they
just add it to your bill, as such
most customers accept the 'fine'.
The other contentious area of penalties is
the effect on the rate of interest - and to
further this problem, the penalty
will attract compound interest if you do not
discharge your account in full each month.
The burning question is what loss has the
credit card company sustained to merit
compound interest of a penalty?
If I received
such a penalty I would telephone the credit
card company, ask for a supervisor, and
inform them that you sent the payment first
class... and you have therefore abided
by the 'rules'. Let them respond. Should
they insist on the penalty payment
(unlikely), I would insist on withholding
payment until they saw sense and let a judge
decide the legality of such penalties in
this scenario: but I'm like that! You should
seek specific advice for your situation and
credit card company.
here, enter criteria, and choose card
supplier, then further information.
To view USA
credit card conditions go
here, choose card details.
Q.
Debt Recovery
Company Kept Our Money
Some time ago we
responded to a faxed advert for debt
recovery for two outstanding amounts. The
agency asked us to send money to take the
companies to court and now we've heard
nothing. They haven't responded to our
letters and phone calls don't get returned.
Can I check out the credibility of the debt
recovery agency as it seems we've been
ripped off by both two of our customers and
now an agency as well! I'd like to check if
they have actually put our customers
to court and is there an organisation we can
complain to about the agency? I've got the
local Trading Standards office number for
the area.
Reply from Ed
A Consumer
Credit Licence is required for debt
recovery involving consumer credit and
consumer hire agreements (HP and lease)
where the original balance does not
exceed £25,000 . There is no requirement to
have a licence for recovering trade debts
for a third party. The business that offered
the debt recovery services has no licence,
and therefore can only collect trade debts
(this is unusual as legitimate small size
debt collectors would not usually want to be
restricted to trade debts: which are
notoriously tougher to collect that consumer
debts).
The local
Trading Standards office is the first step:
the debt collectors may well be known to
them. Technically, no crime has been
committed at this stage: you are merely a
creditor of theirs if they collected from
your debtors. If the Trading Standards
investigate and find that in essence the
debt collector gets paid from the original
debtor but never passes the money to the
creditor, it's fair to assume that fraud
is being committed (not easy to prove as
cash flow is required for wages, expenses
etc). As to what the debt agency has done
with your debtor, it seems not a lot: see
what the Trading Standards come up with.
I would send a
letter to the original debtors explaining
that they should not pay anyone who does not
have a signed letter of authorization from
you stating that they act for you.
Ensure that any future debt agent has a
licence from the Office of Fair Trading.
Almost every debt agency offers 'no
collection, no fee', but this does not cover
court fees: if the agency ask you for money
to sue the debtor, you will have to pay
what they ask: however, the bigger the debt
agency the more likely you will not have to
pay up front fees. Faxed debt
recovery services have a very poor
reputation: leave them alone, many of these
fax's have mobile phone numbers, with the
name of the service as 'we WILL get paid
Associates' and a picture of something
threatening (have a great deal of thought
before setting such firms on your debtors).
This type of firm use the debt as a cover
for extortion of money through
legitimate transactions.
TOPIC 2
Working From
Home Help & Advice
Information for Employers
What most people want are jobs but there do
not seem to be enough decent jobs out there
for people to do at home. We have started a
new page to help employers become
an employer of
homeworkers. We have rounded up
information from some of the best places on
the web including the UK and the US.
Networking a PCC
Homeworking / Library networking your
PCs together. Our household has work PCs and
a PC for the children which are all
networked together. This has made file
transfer simple and best of all, we can all
surf the net on the same telephone
connection. One thing though, make sure that
the kids do not have access to your
files through their PC!
TOPIC 3
BOO! No Reason to be
Scared of the Net
With the collapse of boo.com we have the
usual plethora of doomsday articles and
jokes, for instance: 'Boo to Bust', and for
the joke - How do you make an Internet
investor cry? Creep up and say 'Boo'.
With all of the recent hype about the
dot.com business model, what are we likely
to see emerge? You first need to look at
some of the events surrounding
Lastminute.com and Boo.com: two of the
notorious upstarts.
Lastminute.com
DESCRIPTION: Groundbreaking, large, young,
fast growing, emerging technology, emerging
market, large overheads, and inexperienced
management…
BROKERS ADVICE AT FLOATATION: Keep away
(many said this - some very loudly). The
owners, Brent Hoberman and Martha Lane Fox,
can sell their stake on the market on the 14
September of this year - smart investors
should sell before this date or keep them in
frame.
Highly inflated share price on the back of
some very costly advance marketing: most
investors looked at the marketing and not
the company's prospectus that showed
profitability would not be obtained before
2002. Lastminute only allowed 35 shares per
investor: was this the company being fair to
all, or did they anticipated an immediate
fall in share value and the almost certain
losses per investor? The hike in the offer
price (to *380p from 190 - 230p) did produce
a 'war chest' of £130m in which to establish
a solid market. However, with the
competition now mobilising (including the
airlines themselves - the backbone of
Lastminute) it is only a matter of time
before the cash dries up: but don't discount
a merger with a strategic partner - like a
free ISP. The ISP has the subscriber base
and the daily web site access by those
subscribers to push Lastminute's services.
* price last Friday 141p (ouch!)
Boo.com
DESCRIPTION: Ditto Lastminute: but with
worse management, far too many decision
makers, gullible and weak investors
BROKERS ADVICE: Thankfully the company was
never floated, that said, Benetton (a big
investor) tried to float the business last
November - before the web site was
functioning!
Boo decided to use the latest technology to
run it's web site, unfortunately this meant
40% of Net users could not access the boo
web site with their home PC. As for Mac
users, forget it! Further, the high
technology ensured poor download times and
frozen screens from the day of launch: made
more disastrous by the £25m pre-launch
advertising costs. Bizarre as it seems, boo
planned it this way thinking that PC users
would very quickly obtain the hardware and
software required to view and use their
futuristic site, or that they would download
the required software before viewing:
arrogance beyond belief, or just plain
stupid? Boo's demise was not sudden and
plans to reshape the business started before
the collapse. It was decided to bring in
experienced management, however, when the
new management looked at the company from
the inside they got outside very quickly.
At one stage boo had a £80m 'war chest'! Boo
offered workers top salaries and incentives:
regular gifts, booze and food, and mobile
phones to abuse. Staff (more like 'the
family') worked in a 'friendly' atmosphere
(not surprising, as it is reported that as
the vacancies appeared friends filled them).
Hours were long and costs were extremely
high, but were either productive? I doubt
anyone knows as the goal posts were changed
so often the ability to assess and measure
performance could not have existed: without
measurement, costs have no meaning and the
efforts of staff essentially becomes
pointless due to a lack of clearly defined
aims.
Unbelievably, Francis Ford Coppola directed
boo's adverts! It also spent 75% of their
revenue on marketing (with the norm being
25%), but since the revenue was poor, 75%
probably equated to the intended spending
for the targeted position in the market. Boo
sold sports wear. Whatever marketing boo did
they were only going to get people to
purchase sports wear - nothing else: the
significance is that once you have visited
the site you have no reason to return,
unless you want sports wear.
Names like Adidas, Nike, Caterpillar and
Tommy Hilfiger would not allow boo to sell
their products, but Puma, Patagonia, Royal
Elastics and DNKY would allow them: boo
needed the first group more than the second.
It has also been muted that buying luxury
sports wear is a pleasure not to be wasted
by buying on-line (no designer bag when
leaving shop type of thing, you cannot
parade round a cyber mall).
To expect the three proprietors (all in
their twenties) to build, from scratch, a
world shattering web site says more about
the investors than the three in question.
Boo will be saved and very soon at that and
this will probably mean splitting the
business into two parts: retail and support.
Expect a much bigger range of product and'
of course, to be 'under new management'.
What Effect will Boo and Lastminute have
on the Internet?
The Internet is here to stay, but only the
sensible ventures will survive. There will
still be the odd £25m - £250m funding for
the new start up, but investors will be
looking for a more solid business model that
includes experienced management, sound
financial control and a constant revenue
stream that keeps apace with the company's
costs.
The Future is the Shopping Mall
With 99/100 web sites selling or providing
one product/service the choice of provider
is becoming wider and more time consuming
for the shopper. In practice this will make
products and services vulnerable: a complete
turnaround from recent thoughts. For some
time, the venture capitalists have been less
than keen to back information portals that
survive on advertising revenue and referral
fees. Oh boy! has that thinking now changed.
The portal has no reliance on trends,
fashion, and product or service, in fact it
is almost unaffected by economics: changing
a shopping mall advertiser is a mostly
simple and low cost action.
Now with the portal being able to offer a
vast range of related services and products
to a loyal subscriber base, the money, and
backing will flow back into such ventures.
There is no need for 300 clothes shops,
electrical retailers or business service
providers on the Internet high street. The
'empire building' on the Internet is about
to begin. Acquisitions of smaller web sites
by the big players will give the main
players sole industry representation, while
those that avoid acquisition will have to
shelter within the shopping mall.
The figures we never hear about are the
amount of web sites that have been renamed
as "our on-line brochure" from "our
company's virtual store". With the low
visitor rate at the majority of corporate
web sites it would be folly to expect an
increase in market share from this source:
it IS an on-line brochure (albeit, an
excellent brochure).
However, move the on-line brochure to a
shopping mall and you have the 'virtual
store' back again: as they say, 'it's not
rocket science'. Major brands in the high
street fair less well than their shopping
mall counterparts. The reasons are numerous,
but essentially the experience for the mall
shopper is total: more choice, time saving,
familiarity, comforting, and not least
trustworthy. Building visitor trust into the
Internet mall (portal) will help to ensure a
high-degree of trust in the product/service
of chosen partners. Trust is hard to gain,
but easily lost, it is essential that
suppliers and portal owners work together in
building a positive and fulfilling shopping
experience.
Marketing and Advertising on the Internet
Mall
The main reason for using an Internet mall
is the marketing benefits, or to be more
exact, the benefit of NOT having to market
your services. Your only concern is to have
sole industry representation (or at least no
direct competition), and a highly visible
location within the mall. Most advertisers
believe that it is more effective to have
your services advertised on the index (home)
page rather than sub-index pages: but
although home pages are seen more often the
visitors are more general. Sub-index's are
'sub-portals' and focus the visitor on the
theme of the page. A small business will
benefit from being within the mall as if it
had spent £5,000 - 10,000 of it's own money
every month on marketing. Further, those
sites chosen by the mall owners as partners
will grow in sales and branding far beyond
anything they could achieve in the real high
street or commercial world within a similar
time frame or cost.
Credit to Cash the Business Mall
Our aim at Credit to Cash is to provide the
user with a choice of effective business
services at a cost that ensures repeated
use, and encourages recommendation. We have
taken the time to listen to our users and
have moved with their needs. We will take on
partners who have vision, integrity and the
resources to sustain growth, without
compromising effectiveness or customer
service.be.
