Consumer affairs

by Robert McGarvey

The friendly skies are getting friendlier – at least they are getting cheerier because, as of mid February, more carriers will be serving beer, wine, and cocktails in coach. Southwest, for instance, says it will be pouring as of February 16. For now American Airlines is a holdout (it does pour for front cabin pax) but as it hears the cash registers merrily ringing at competitors it certainly will start pouring too.

Understand this: I cannot recall the last time I had an alcoholic beverage on a domestic flight – possibly never in this century. I am a Diet Coke or coffee guy at 30,000 feet. Yes. on international flights I usually will sip some bad wine with a meal but that really is only because I am bored and know I have lots more hours of not much in front of me.

Yet I am supportive of this carrier move to sell booze. For many people, a drink or two in the air has a calming effect. It certainly isn’t enough to get a person drunk.

That said, I know many flight attendants are in a frenzy about this resumption of alcohol service in the air. Lyn Montgomery, president of Transport Workers Union Local 556, the union of Southwest flight attendants, called the airline’s decision to resume alcohol sales “both unsafe and irresponsible” in a statement emailed to the Washington Post.

“We have adamantly and unequivocally informed management that resuming sales of alcohol while the mask mandate is in place has the great potential to increase customer noncompliance and misconduct issues,” Montgomery added.

I don’t dismiss her concerns – or similar concerns on the parts of tens of thousands of flight attendants who have faced a spike in astonishingly bad and violent behavior on the part of many passengers in the pandemic era.

I also know the FAA has reported that it has logged hundreds of cases of disruptive passengers who were fueled by too much alcohol.

But I just do not believe passengers on planes, certainly not in coach, will ever be served enough booze inflight to get blotto. There just is not that much service. And flight attendants are not allowed to serve an intoxicated passenger anyway.

So how did that passenger get drunk? In some cases passengers are and have been sneaking their own booze aboard. You can’t do that – it violates multiple rules. But, anecdotally, I hear of many, many cases of passengers smuggling booze aboard and getting away with it. I also rather doubt too many flight attendants will challenge a passenger: Is that smuggled vodka you are swilling? No, I just don’t hear that.

Even so, I don’t see smuggled booze as the problem. TSA limits on liquids mean quantities smuggled aboard can’t amount to much.

And I think a way to stifle the smuggling that does occur is to slap the most flagrant violators with the $11,000 fine that can be levied. That will grab headlines and it is a frightening thought – smuggle a miniature nip aboard and pay $11,000 for it.

That still leaves the biggest issue in passenger drunkenness unresolved and that’s the passengers who stumble aboard drunk.

How did they get in this blotto condition? Often it’s by downing a half dozen martinis at an airport bar.

There’s an easy fix for that: Every state has laws that impose penalties on licensed establishments that serve an intoxicated customer. Penalties range from fines to arrests for misdemeanors to suspension of the liquor license. In many states a licensed establishment can also be held legally liable for damages caused by a drunk patron after leaving the establishment. Just remind airport bars and restaurants of their legal exposure – and inflict fines and a few arrests – and they will straighten up. The FAA needs to speak up, as do local airport authorities. That is a big, brutal stick. Wave it and hit a few who ignore the threats.

The last step is reminding carrier gate staff that they can and should deny boarding to inebriated passengers. In the US, carriers do have the right to deny boarding to a drunk – and very occasionally they exercise that right. They need to do that more and, yes, local police typically are available to assist in convincing a drunk it’s time to go home and climb into bed, not to climb on a plane.

Meantime, Delta Air CEO Ed Bastian has written to the US Attorney General asking that the government initiate a federal do not fly list that would be shared among carriers. That is a wonderful idea. Even the fear of it may be enough to coax some pax into being more civil in the sky.

Bottomline: There are ways to reduce onboard violent drunkenness but will let passengers have a Bloody Mary on board. And they are not that hard to implement.

 NSF has become the new four letter within the financial industry.  While many institutions have grown dependent upon the $30 or so they charge a customer/member for an NSF, Washington DC is revving up to throw shame at FIs that impose those fees.

What’s a credit union to do?

A year ago we did a podcast with Joel Schwartz, founder of the then fledgling DoubleCheck, a company created to help consumers – and their FIs – better navigate NSFs. You are going to want to listen to that podcast – link here.

A lot has happened since that podcast. Washington DC has gotten more vocal about NSFs – you aren’t the only one having nightmares about the CFPB and Elizabeth Warren.

A lot of FIs – from Chase to B of A to many credit unions have slashed or eliminated NSF fees. You might think that this is curtains for Schwartz and DoubleCheck.

Think again.

There is the NSF and then there are the ripple effects such as late fees imposed by merchants and credit card companies. Often the late fees can add up to lots of money that inflicts still more damage and pain on a consumer struggling to stay afloat. That’s where DoubleCheck’s patented technology comes in. It gives an early warning to the consumer about late fees heading his/her way and it also offers alternatives (such as putting some charges on a credit card).

This is win-win. It’s good for the consumer and good for the FI (and it does not create bad press which doing nothing can).

You might think this will be a somber podcast, talking about bounced checks and fees and cranky politicians.  Be prepared instead to laugh. Schwartz knows what he is dealing with is serious stuff but he is a man who can see the lighter side too.

Listen up.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

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Find out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto

by Robert McGarvey

It’s only been one year that we have been required to wear masks inflight – the initial federal mandate took effect February 1, 2021. The present federal mandate runs until mid-March and there is no knowing if the White House will extend it. But know this: more and louder voices are getting raised that suggest the mask mandate will become a permanent fixture.

Impossible?

Sure, the mask protesters may want to believe this is an impossibility – doubtless they believe it would be a violation of some fictitious right they claim. But I am beginning to think masks just may prove to be an inflight staple, not much different from the seatbelt (which we also are required to wear and have been since the early 1970s).

Incidentally, even into the 1950s arguments were made that seatbelts weren’t just superfluous inflight but dangerous. This Smithsonian article tracks that debate but of course belts won out and we have been wearing them for 50 years, at least for takeoff, landing and when flying through turbulence. Few voices speak out against this practice now.

Now, what prompts me to suggest that masks may become staples too? First there are statements by Dr. Fauci dating back to late 2021, where he said masks may be here to stay. He added: “Even though you have a good filtration system [inflight], I still believe that masks are a prudent thing to do, and we should be doing it.”

Now more voices are echoing this idea.

Neil Sorahan, CFO at Ryanair, told the Times of London, that masks would be ‘with us for a while longer to come’ and were a ‘small price to pay.’

Sorahan, who seemed to think the mask requirements will persist into summer, drew an analogy to the treatment of liquids, post 9/1/1 when, suddenly, we were forced to carry miniatures (and who didn’t toss a larger container or three into TSA bins?).

Multiple anonymous sources are also quoted in that Times piece saying masks will be with us for some time.

Arguably, too, another analogy is to the ban on smoking inflight which took effect, in stages, in the 1980s and was a clear-cut ban on smoking on domestic flights by 1990. There was indeed resistance to that ban – many smokers covertly puffed in lavatories, even after smoke detectors were installed and even today vaping apparently is commonplace inflight. But, bottomline, non-smoking became the norm on airplanes and even smokers learned to deal with it (chewing tobacco anyone?).

Personally, too, I am drawn to the idea of masks as a permanent inflight feature. For years I have dreaded long flights in the winter months (“the cold and flu season”) because, seemingly inevitably, I came down with a nasty cold that in my mind at least I blamed on the flight and the many pax who were sniffling and coughing. Was I right in that blame? Who knows. But research funded by Boeing a half dozen years ago – pre Covid – found that indeed diseases did transmit inflight but you have to be rather close to the infected person.

If we are all wearing masks, transmission of colds and flu and other respiratory diseases just might decrease.

What about those who insist masks are useless inflight? They have a point. Especially as carriers add more food service and of course beverage service. Lift the mask to take a swallow of water or beer and, yes, you are exposed to the virus risks in passengers near you and they are at risk for your viruses.

Lift to nibble that stroopwafel and ditto.

That just is fact.

But I nonetheless plan to wear masks inflight, at least until I go through a large box of 3M N95 masks that presently sits on my desk and, yes, I have relegated my cloth masks to recycling even though I rather like many of the cloth masks I have because they are quite comfy. But cloth just hasn’t proven effective with Omicron and many carriers, meantime, have banned many kinds of cloth masks. So I have switched to the higher grade masks and have even gotten accustomed to wearing them.

N95 masks are not the cure-all but I will be wearing mine with no stop date in sight.

 To start the podcast we asked NCR executive Doug Brown the hard question: exactly what can mid-size and small credit unions do to stay alive in the face of relentless competition from fintechs who increasingly are gobbling up home mortgages, p2p payments and a lot more – and what can NCR do to help them.

The questions only got harder from there.

In the podcast Brown tells about how to beat fintechs by achieving better member engagement.

We also talk at length about BNPL, where credit unions may find a piece of this action, and questions to ponder about BNPL. Does it make even a tiny bit of sense to pay for a $100 gourmet sandwich in four easy payments – and by the time you’ve paid it off do you even remember what you ate.

In this podcast you will also hear crypto currency brought very much to earth.  Brown tells how NCR is planning to use crypto and blockchain to revolutionize international remittances and how cool is that?  This may also be a fast track to bringing many under- and unbanked into the credit union universe if crypto helps them move money to relatives and friends faster and at much reduced expense.

Blockchain, maybe it’s not just for geeks anymore.

Listen up.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

And like this podcast on whatever service you use to stream it. That matters.

Find out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto

by Robert McGarvey

It’s the fastest-growing marketing vehicle and well within the budget of every startup. The magic word? Influencers.

Continued at Startup Savant.

by Robert McGarvey

One number in the recent Expedia 2022 Travel Value Index, where some 5500 adults across eight countries offered up their thoughts and feelings about travel in this year, caught my eye: “Travelers are…keen to lean on loyalty programs, with two in five (40%) of respondents saying they plan to use loyalty points for at least part of a trip in 2022.”

Why isn’t that number 100%?

I have a six figure stash of Amex miles and my plan is to burn most of them this year. If I use them all, that’s fine because nowadays miles are a highly unstable currency. Some carriers don’t even publish rewards charts – mileage fees are instead dynamic, meaning the carrier charges what it believes the market will bear.

JoeSentMe has often featured broadside attacks on airline miles by Will Allen and Fred Abatemarco and others – and they are spot on. Miles, as Joe Brancatelli has commented, are for frequent flying suckers.

That’s all the truer today because it gets ever easier to accumulate miles. Cards that offer six figure mileage bonuses for enrolling are increasingly common and many of us now use cards at grocers, restaurants, department stores that shovel miles at us with every purchase.

If I need a fast 100,000 miles I’ll sign up for Capital One Venture X Rewards Card and, whoosh, there are the miles.

Or I could go in cheaper and get the Citi Premier Card ($95 annually) and get 60,000 miles.

Or the Delta SkyMiles Gold Amex Card (free in year one, then $99) and get 40,000 miles plus a bundle of Delta perks (free checked bag, priority boarding).

Miles are there to be grabbed when you want them.

Miles also kind of grow on trees – for instance Rakuten, the shopping service, even allows users to take their perks in Amex miles. I have 4000+ miles that I earned for doing what, I don’t recall, but they will transfer to Amex eventually. Install the program and when you surf to a site that’s a Rakuten participant, up pops a reminder about Rakuten and you are about to get more free miles.

It is damn near impossible to avoid accumulating miles, even in the pandemic era of little or no flying.

I keep earning miles even though I have consciously shifted significant spend to cash back cards – Amazon and Discover in particular – and I also do some spending on a Venmo card that is set up to reward me with Bitcoin so I now an an owner of a tiny fraction of a Bitcoin

Right there is the big wake up moment. I had been mentally stuck in a mindset where to earn miles I had to actually fly and the more miles I wanted, the more I had to fly – which often I did not actually enjoy doing. Talk about yesteryear’s headlines.

I hoarded miles because I remembered how hard I had worked to accumulate them.

Now miles just about jump out at me.

In the instant I realized that I also grasped that a wise man uses miles as they come in. The airlines are busy printing new miles that they sell, typically to credit card companies, and the more they print, the more devalued miles become. There really seems no end to that plunge.

Remember when it took 10 x-country round trips to accumulate 50,000 miles? And now I can double that just by signing up for the new Capital One elite card, which would take me about one minute to apply for. I know how fast it is because a few days ago I applied for an REI card that offers 5% back on many REI purchases (on top of the member’s 10% back) and most of my clothes shopping now is there. And if I make a purchase within 60 days I get a $100 REI gift card. Yep, more cashback.

That’s where my head presently is at – if only because I know I can always score miles if I need ’em. If you have ’em, use ’em because a refill is as easy as filling out a short form.

How great is that?

by Robert McGarvey

If Covid concerns don’t keep you away from that meeting that is on your calendar, will worries about crime and safety? That’s exactly the issue raised in a recent Hotel News Now piece that posited the moving of events, conferences and similar away from cities with crime problems.

Word of advice: if a city scares you, stay away. No need to explain. Just stay away.

But what we seem now to have is an emergent ghosting of mainstream cities, over stated worries about safety. Mind you, we are not talking about Camden NJ, East St. Louis, or Monroe LA, cities with crime rates that are stratospheric., Nope. This is cities that traditionally make the mix of candidate locations for many events.

Such as?

Reported HNN: “[Ben] Seidel [CEO of Real Hospitality Group] pointed to specific markets such as Chicago, San Francisco and Portland, Oregon, as places that struggle with high crime rates that could ultimately deter meeting planners.”

Seidel has a case: crime and fear of becoming a victim is a factor in location selection for events – but it has always been so. When I lived in Washington DC a half century ago it was definitely a no go zone for most meeting planners. So was New York in the 1980s.

So it is fact: too much crime will send planners looking elsewhere.

But then Seidel said this: “Portland is a beautiful [city], but if you’re a meeting planner now, holding a conference there with their crime rates is not going to appear on the radar screen.”

Uh, Portland? Portland, Oregon’s crime rate is moderate by any measure. Yes, it is 124% of the national average crime rate but that is small potatoes compared to, say, Birmingham AL where the crime rate is 251% of the national rate.

I really cannot see event planners – at least none that don’t guzzle the antifa koolaid – thinking Portland is a crime hotspot.

San Francisco? Sad to say Baghdad by the Bay has been sliding down the safety chart and now, according to Lee Ohanian, a senior fellow at the Hoover Institution, it is “nearly the most crime ridden city in the US.”

He writes: “San Franciscans face about a 1-in-16 chance each year of being a victim of property or violent crime, which makes the city more dangerous than 98 percent of US cities, both small and large. To put this in perspective, Compton, California, the infamous home of drug gang turf wars, and which today remains more dangerous than 90 percent of all US cities, is almost twice as safe as San Francisco.”

So, yep, some event planners definitely have crossed San Francisco off their list.

What about Chicago? I’ll give Seidel that one too. It is more dangerous than 91% of US cities – and that’s a top 10 list a meeting planner doesn’t want to put an event in. Its central location means it still scores high in attractiveness to planners but they also are eyeing the headline murders that frequently rock the city.

But there are many more cities that will get a pass from many event planners today. Other must avoids according to the stats are Detroit, St. Louis, Baltimore, and New Orleans. But not so fast. I have to say I have been to New Orleans perhaps 10 times in this century, never was a crime victim, never saw a crime., will happily return. It’s a city with a great and unique vibe.

Which pinpoints an issue with any blanket statement that such and such a town is “too dangerous” – it depends upon “for whom,” that is, what group is involved and what’s its appetite for risk.

Of the cities so far mentioned in this article I have been to Baltimore once this century – no problems; Chicago five times and liked it a lot, also did a lot of walking, no problems; and San Francisco, dozens of times, no issues and often I stayed on the margin of the Tenderloin, San Francisco’s high crime mecca. The Tenderloin is cheap and conveniently located and that’s why I like it.

Would I recommend you stay in the Tenderloin? That would be up to you.

Would I recommend a group meet in San Francisco? It depends upon the group. There are some groups that would be repelled by San Francisco and for them there is Las Vegas or Orlando (and I am a fan of Las Vegas, even though I have neither gambled or seen a show in many trips there this century).

But there are other groups that will love how urban San Francisco is.

Know your group and you will know what towns work it it and what don’t.

And do remember, more than crime shapes a city’s suitability for an event. Personally I cannot imagine going to an event in Palm Beach, say, and that has little to do with the city’s iffy safety rating. You can guess why.

No, I don’t envy event planners their work. There just are lots of issues they need to weigh. And safety/crime is just one of them.

 Can AI – artificial intelligence – be harnessed to build and strength member relations, indeed to know what this member is likely to do right now?

That is the guiding belief at Senso, a Canada based AI company that now is expanding into the US market with a specific focus on credit unions.

It is no secret. The credit union share of the home mortgage market has steadily eroded, as nimble fintechs grab more business. Smart AI just may give credit unions an edge in recapturing marketshare.

The Senso promise is intriguing. When an institution has the right data it can predict with significant accuracy when a member is about to shift from being a home looker to a buyer.

The answer is in the data, says Saroop Bharwani, Senso’s founder/CEO.

Right now the Senso focus is on home mortgages but, he says, the same tools will work on car loans, credit card balance transfers and more.

Here is how Senso describes its approach: “Senso creates connected and contextual lending experiences, powered by predictive intelligence.

We enable enterprise customers to identify and engage borrowers with personalized proactive experiences.

We empower consumers with rich insights & experiences to help them make smart decisions through their home finance journey.”

Integration of Senso tools – which are available white labeled – is comparatively quick and easy through the leading online banking platforms. 

Right now, the primary Senso aim is at institutions with a billion in assets – but if a smaller institution is using an online banking platform that Senso already has integration tools for, the company wants to talk, says Bharwani.

Listen up.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

And like this podcast on whatever service you use to stream it. That matters.

Find out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto

by Robert McGarvey

Everywhere we turn the buzz now loudly proclaims that travel – leisure travel – is back and, sure. there is muttering that the rebound of business travel is just around the bend but I don’t believe that and doubt that many of the people predicting it do either. But they want to believe it because our travel economy’s health remains fragile.

Eyes now are on leisure travel and four initials BNPL as the potential cure for what ails travel. Buy Now, Pay Later. Many in the travel industry are now busy buffing BNPL offerings, to entice consumers into more leisure travel. Amadeus research underlines the potential payoff to an industry struggling for survival. Per Amadeus:

• 68% said BNPL would encourage them to spend more than usual on summer travel
• 49% said they would be more likely to buy airline ancillary services if BNPL was offered

Here’s a moral – maybe also a pragmatic – question: is it good to put leisure travel on credit? That is, to pay it off over time. Is that a smart consumer tactic?

A simpler question: Isn’t BNPL just credit, as in cards, with a catchier 2022 name? Nope. There is a significant difference. Put $5,000 on a credit card funding a Spanish vacation and you can pay anywhere from $5000 back to multiples of that depending upon the interest rate charged on your card and how much you pay back, how fast.

BankRate has a for instance where $5000 is put on a credit card with 18.9% interest. The minimum monthly payment is 4% of the balance owed, $200 to start. Pay only that and, take a guess, how long will it take to repay that $5000?

11.4 years (137 months). Total payments will be $8109.

Ouch.

Where BNPL differs is that, typically, a monthly payment is specified in the origination paperwork and, in many cases, payback is timed for a couple years.

Gen Z and younger Millennials are said to be wild about BNPL which, suddenly, has become the hot trend in consumer payments. Part of the fuel is that these groups are anti credit card. They also know the horror stories of people paying back a purchase for 10+ years! They want to eschew conventional credit and BNPL, some believe, is their ticket to buying what they want now, paying for it over a specified period, with specified monthly instalments.

There isn’t much new about BNPL. It’s if anything a throwback to 1950s layaway purchases although in that case the customer did not take possession of the item until it was paid off. With BNPL 2022 style the consumer walks out of the store – or the travel agency – with the purchase.

Also new today is that modern technology allows for nearly instant credit decisions. Note that, with many BNPL providers, the decision is not FICO based. Many of the buyers have lower FICO scores anyway so that wouldn’t work. So the issuers frequently look at cash flow in a checking account – is there an extra $100 floating around most months? If yes, then ok the BNPL deal with a $100 monthly payment.

Which brings us back to BNPL and travel today. And the worries thicken. Per Amadeus, “For travel merchants the real [BNPL] opportunity is the product upsell. If the traveler has flexible credit they can potentially afford to make a higher value purchase, or to add more ancillary services.”

Why travel to Hawaii when, for maybe double the money, you can go to the Maldives or the Seychelles and how much cooler are those destinations?

Sure, the debts mount but so?

Actually Amadeus offers an insightful gloss on that so: “Offering this type of payment method isn’t without risk. Travel companies need to consider any risk to their brand that could result from a BNPL partner offering credit aggressively to travelers that are already highly indebted. At Amadeus we are consulting with our customers to assist them with BNPL strategies that prioritize responsible lending.”

Consumers, too, need to watch their own backs. Maybe, technically, BNPL does not involve credit but it clearly involves debt and too much debt is not a good thing.

Am I inalterably opposed to BNPL? No. I see it serving very good purposes in specific cases. In fact I have used a version of it on multiple occasions, getting what amounts to an interest free loan from Apple when I bought a new iPhone or iPad. From Google I got an interest free loan to buy a Pixel phone. In these cases, I had the cash on hand but couldn’t resist stretching out the payments and why not, it was free.

But using BNPL for travel? Color me financially conservative but I just cannot wrap my head around the idea of financing a vacation. This just is an idea I find creepy.

And nudging people into more expensive vacations is integral to the recovery of the travel sector?

Now I am worried.

Are you?

 

by Robert McGarvey

The name is pronounced CU Soul and know that the CUSO’s focus under CEO Jonathan Taylor is indeed on soulful solutions to member problems.

You almost want to cue up “Soul Man” and break out in song.  

But these are very serious, thoughtful and – yes – quirky solutions that are getting cooked up at the Albuquerque-based CUSO, formed in 2019 and owned by four credit unions located in New Mexico, Washington DC and Guam. They range in size from well over $1 billion to around $30 millon.

The owners did not create CU Sol to provide cookie cutter products.

Nope.

These are products that are unique and they also are laser focused.  

Consider CU SAFE: “CU SAFE is an indirect lending solution created by CU Sol that supports survivors of domestic violence. Its mission is to provide a hand up for survivors of domestic violence in providing both credit and financial counselling as well as lending options by pairing organizations that support survivors of domestic violence with partnering credit unions,”spells out a press release.  

Another product is Accelewage which starts with the building block that each day an employee works he/she has earned money. Now what if that employee needs a fast $300 – perhaps for an emergency car repair – but doesn’t have available credit?  He could go to a payday lender.

But isn’t the better choice simply to make the employee a cash advance against accrued earnings?

Taylor sees Accelewage rolling out initially to credit unions themselves where many employees live paycheck to paycheck.

But then the tool can also be offered to business members too and that could be a powerful persuader in getting new business accounts.

Taylor also has a range of ideas about innovative insurance products to be offered through the CUSO.

Nowadays the talk is how CUSOs have to be highly focused – and, yes, original – to survive.  CU Soul is definitely both

Listen up.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

And like this podcast on whatever service you use to stream it. That matters.

Find out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto