I switched to an iPhone recently, which involved moving my phone number to AT&T.  Despite some of the commentary I hear about them often, I really have not found the service to be too bad and I suspect that it's somewhat of a regional thing.  Everybody I know in New York truly hates AT&T.  Where I live in LA it's really not a problem.  Where I play in Utah, AT&T seems to be the strongest of the networks (not that any of them are all that great up in the mountains).

But back to AT&T.  I ordered the phone through the Apple Store on June 24th.  It shipped out of China on the 29th.  I received it on the 2nd, and due to the fact that I was pretty busy, I didn't activate until sometime on the mornng of Friday the 3rd.

Yet when I received my first bill, covering the 3rd of July through the 2nd of August, it also included a "prorated amount" to cover usage from June 29 through July 2nd.  $5.33 for voice, $4 for data.  $9.33 in total service charges for a period during which the phone was in transit from China to me, in the hands of FedEx. And I could prove it because I had both the FedEx tracking number and the evidence of when the phone was actually activated.

I called AT&T's billing complaints and asked them why I should have been billed for a period when the phone was not even activated.  I got a vague excuse about Apple sometimes "inadvertently" activating the phones when they left the factory, but nothing really satisfactory.  But it didn't matter.  The individual I was speaking with immediately offered to reverse all the charges and also offered me an immediate $30 credit which was applied against the $36 fee for establishing the service and transferring my old number.

It was neat, quick and simple.  Almost a $40 credit and a big "sorry" for having caused such a proble.  It was exactly the kind of thing one could hope for and exactly what returning money to customers never is.

Either AT&T gives their agents a degree of latitude that is unknown anywhere in the industry, or there's something else going on.  I've been around consumer electronics and computers long enough that I'm fairly certain something else is going on.

So here's my version of what's going on.  AT&T knows that whenever you buy an iPhone (maybe all phones!) and establish a new account online, there is a few days lag between the account being set up, the phone being shipped and you actually being able to use the thing.  They routinely bill you for those three to four days of non-use.  If you look at your bill carefully, which most people don't, and you make the effort to call them, they'll not only make you whole but compensate you a bit more, so you don't complain too loudly.  The agent doesn't need to escalate, get special permission or do anything else that usually comes with refunding money because it's a known "feature" of the way they do things and there's a set procedure for dealing with it that's designed to avoid the negative press.

Overall, AT&T makes money off this because few of us notice and fewer still bother to follow up.  The occasional $40 credits are more than covered  by the people who just go ahead and pay the extra ten bucks.

Two lessons from this:

1. All phone companies are scum.
2. Read your bills carefull and complain right away.  That's what toll-free numbers are for.  The more people complain and the more refunds given, the less worthwhile it is for these companies to play these games.

Finally, why is it that in a day of automatic delivery tracking and online activation, it is even legal for them to bill you for a service they know you are not yet using?

-btc

Got an interesting email today, from a colleague who is passing on a "hot opportunity."  It reeks of all the reasons the real estate business is still in trouble, and shows that a lot of people still just don't get it.  While stuff like this is floating about, there is no bottom.

Hello Fellow xxxxxxxx xxxxxx and Friends,

I am working with a broker out of Long Beach, Mxxx Rxxxxxx, who has access to thousands of bank owned single family residences only in Los Angeles and Orange Counties. These houses will be shown in pools of about 500. Buyers may pick and choose the houses that interest them from among the list. The minimum purchase is 5 houses.

A long term business colleague of Mxxx's has assembled a collection of SFRs from a variety of banks not wishing to compromise their ability to sell houses closer to market, but in need of unloading houses substantially more quickly than through sales to individual homeowners. We are assisting them in marketing the houses.

These are available at deep discounts from the mortgage value -- estimated to be in the 25-35% range. The banks are highly motivated to sell due to the temporary California foreclosure moratorium as they are worried that they will be forced to retain too many toxic mortgage on balance sheet as a result.

Mark's colleagues who have compiled these assets are very strict to avoid any circumvention. Therefore, there can be no deviating from the following steps:

1. FIRST, proof of funds are presented (letter from a banker and/or 2 months complete bank statements) demonstrating fiscal strength to participate. Liquid assets of approximately $1.0mm are suggested at a minimum for approval.
2. SECOND, potential bulk buyer signs a non-circumvent agreement in front of a notary. This form will *not *be provided until step 1 is completed.
3. THIRD, the buyer will be provided the list and given 2-3 days to make selections (if any ...there is no obligation). This list will *not *be provided until step 2 is completed. **
4. FOURTH, buyer signs an Intent to Purchase agreement and a Fee agreement.
5. FIFTH, all cash escrow closes in about one week
6. SIXTH, The purchaser has certain rights to return or trade any house after a period of due diligence.

Best Regards, Sxxxx

Ugh.  How many ways are these shysters living in the past and what does it say about the real estate market.

Let's start with the medium.  As Marshall McLuhan noted, the medium is the message.  In this case the medium is an unsolicited email sent to a list with thousands of people on it.  The sender would argue that the recipients' backgrounds make them an appropriate marketing target and he may be right to some degree.  But you know what?  You don't approach people with million dollar investment deals by anonymous email, no matter how exclusive you think the group is.

We all may remember the sad fiasco that was Casey Serin.  And of particular note was that he thought real, legitimate business deals would actually come through in unsolicited email he received from various individuals he met as various real estate events and God knows where else.  Those email "opportunities" led him to a wild goose chase after guaranteed 50-100% returns in a Utah real-estate fund (the promoter has since been indicted for fraud) and a sizable investment in a classic pump-and-dump penny stock called GoldSpring (OTCBB:GSPG).

No reputable investment promoter uses the medium that appeals to Casey Serin as a marketing tool.  None.  For a few brief moments at the top of the housing insanity, a few people might have used this to pull in the last of the suckers.  But we're back to reality.  The choice to attempt to approach clients this way reeks of either desperation or stupidity.  Either way, I'm not interested.

But let's continue and look at the message. 

I am working with a broker out of Long Beach, Mxxx Rxxxxxx...

A long term business colleague of Mxxx's has assembled...

We are assisting them in marketing the houses...

In other words, you're not the principal, and neither is your broker friend.  Even your broker friend's colleague isn't a principal to the transaction, he's just packaging and marketing stuff for somebody else.  You're a couple of hangers-on, hoping to spread the word and collect a few bucks in commission.  Which may be why you don't concern yourself with such things as the fact that advertising by spam pretty much poisons any possibility of any of the recipients ever taking you seriously.

These are available at deep discounts from the mortgage value -- estimated to be in the 25-35% range...

Estimated?  To be in a range?  No offense dude, but the banks know exactly what the mortgage value was on each and every one of those houses.  No need to estimate.  You should be able to give me median, mean and distribution, both of the mortgage values, the discount to the value, the current appraised prices and the discount from appraisal.  The banks have all this info.  The fact that you choose to reveal so little suggests to me that you have reason not to want to reveal it too early.  Like any shyster, you need to rope people in slowly, get them with the big numbers first, if you're lucky, everybody will get really excited and forget to dig into the details once they've jumped through all the hoops.

But since we're estimating, I'll do some estimating of my own.  Back of the napkin calculations are a hobby of mine. We have a pretty good idea of what mortgages have defaulted, and a pretty good idea of the terms of those mortgages.  Maybe not in specific, but certainly in aggregate. The "We are Here" slide is still quite accurate as to what's out there.  We know that the characteristics of the past 18 months of foreclosures is mostly properties bought at the peak with no money down and crazy teaser rates that reset after 2-3 years.  The "mortgage value" for most of those houses is approximately the same as the purchase price and in some cases more.  So saying "25-35% below morgtage value" is pretty much the same as saying "25-35% below peak market value."

With property values down 25-25% off the peak, and in some new developments, down 50-60%, this doesn't sound like all that great a deal.

Which is probably why you're being very vague on the details and hiding behind a wall of secrecy.

there can be no deviating from the following steps

May I remind you of the phrase buyers' market? I know you want to sound all important and stuff, but you and your buddy Mxxx and his colleagues whoever they may be seem to have missed out on the fact that at this point in time there are tens of thousands of unoccupied foreclosed houses all around Los Angeles county.  Unless you're offering an amazing deal, nobody has any reason to put up with any of your stupid rules.

As to your concerns about circumvention, well, if you want to earn money, you're going to have to provide value.  Merely having a brokers license and a list of properties doesn't cut it anymore.  If there's real value added to what you're doing and the way you're doing it, nobody will have a reason to circumvent you.  If the properties are really all that special and exclusive to you, it wouldn't even be an issue because I would need to go through you.  But let's be real, the properties aren't exclusive, they aren't special, and I could probably buy them myself for less than the commission you'd charge.  If that wasn't the case, you wouldn't be so worried about your potential customers deciding that they really don't need you in on the deal.

FIRST through SIXTH

Wow, those are pretty tight rules there.

• Only those with a million bucks or more need apply.  Sounds exclusive.
• You've got to agree to all sorts of things in advance, before you even know the content of the deal.  Sounds even more exclusive and special.
• You get a list of options with no opportunity for due-diligence in advance and must close for cash within a week.  People must think this is really hot to get in on a deal like this!
• You have to do the deal fast, and get only limited options for redress if the stuff you bought ends up not quite meeting your expectations.  Sounds like the superheated market of three years ago.

Not!

You want money these days?  Due diligence happens up front.  And you're the one who get scrutinized, not the customer.

I know that there are many fund managers who are able to be very exclusive about who they take on as clients.  These are guys with established track records, established client lists and pretty much all of them will pop up in a Google search if I decide to try to find out something about them.  They sure as hell aren't sending out bulk emails to recruit clients.  With their experience has come the rolodex of potential investors to be contacted directly and discreetly, using a carefully-prepared offering statement that doesn't hide behind all sorts of hoops that you must jump through just to know something of the details.

But... where have I heard about somebody who traded on his exclusivity?  Who demanded that the client reveal all, that the client put up with no transparency whatsoever, that the client, in many cases, not even know how the transactions worked? Where have I heard of a guy who demanded that you make your decision within days because the opportunity was exclusive, was going to go away, was something you'd regret walking away from?  Somebody who told you you could do your due diligence later.  After all, what could happen?

Yeah, sounds like Madoff.  In fact, sounds like any scam.  Make your people feel special (why do I suspect that if I showed up with less than a million bucks they'd find an excuse to let me in anyway, just like Madoff?), Throw up some big and impressive-sounding numbers, make the client jump through some hoops to prove to him how exclusive the thing really is, and then hope that after going through all that, he gets so excited he decides to jump in with both feet and forgets about that pesky due-diligence thing.  After all, it says he'd have the right to get out later, doesn't it?

So what does it say about the real estate market?  It says that there are still some people out there who think they can make this kind of thing fly.  So long as they are out there, the prices aren't getting dropped to where they need to be to really clear the market.  These guys, their partners and the banks they represent continue to hope against all hope that they can unload their properties for the prices they want rather than for the prices that will clear the market and maybe even make a few bucks of commission along the way.  While that hope is alive, the market still has room to drop.

-btc