September 22, 2023

The Haggler: A Right Way to Be Wrong

Nonetheless, the Haggler is about to make the point again, this time — a first — courtesy of an institution of higher learning.

Q. In 2011, I transferred from LaGuardia Community College into Baruch College in Manhattan. Even though I have been a New York City resident my entire life, Baruch classified me as an out-of-stater and for the past two years has been charging me about 50 percent more for tuition than it should.

To its credit, the school caught the mistake and sent a letter telling me so. Officials explained that I’d be charged in-state rates going forward, but said nothing about a refund for the more than $7,000 in overcharges. So I visited the admissions office.

Why this was necessary is a mystery. The school had already concluded that I’m a longtime New Yorker, and it had proof in the form of my transcript from the Kew-Forest School in Queens. But I visited anyway, with my driver’s license and a car insurance document. A woman behind the counter expressed some doubt about whether I’d get a refund — something like, “Normally, if you paid, you don’t get the money back.”

Then I was instructed to file an appeal, with photocopies of my driver’s license and my voter registration card. I dutifully mailed that in recently, but I have the distinct impression that the school is using everything in its bureaucratic toolbox to hold on to my money.

Maybe the Haggler can expedite this process, if it is a process, as opposed to a dead end that only looks like a process.



A. Let us say at the outset that it’s possible that Baruch College would eventually have sent Mr. Levy a refund. It’s even possible that the school was going to send that refund soon. We’ll never know. Mr. Levy wrote to the Haggler the same day he mailed in his appeal.

But one can understand why he concluded that the school was, at minimum, reluctant to part with his $7,000. It had all the proof it needed to know that charging him out-of-state rates was wrong, and that proof — his high school transcript — seems more compelling than either a driver’s license or a voter registration card. Either of those can be obtained by just about anyone who has moved to New York State.

All right, not everyone. The state’s Board of Elections says that to qualify for a voter registration card, you must live at your present New York address for 30 days, not be in prison, or on parole for a felony conviction and not be adjudged mentally incompetent by a court. Given that Mr. Levy has a voter registration card, we can probably assume that he is not criminally insane. Or rather, that he is neither an ex-con nor insane.

But big deal. Many people are neither nuts, nor onetime criminals. In fact, some of the Haggler’s best friends are neither nuts, nor onetime criminals. The compelling proof of residency here is not Mr. Levy’s sanity or lack of a felony past. It’s his attendance at Kew-Forest, and one presumes that his performance at that institution helped persuade the admissions office at Baruch to admit him.

So why was Baruch hassling Mr. Levy for documentation that he really didn’t need to produce? The school’s position seems a classic example of “We screwed up. What are you going to do about it?” Highly annoying.

The Haggler contacted Christina Latouf, a spokeswoman for the college. She needed a day or two to figure out what had happened, and then she wrote something rather remarkable. In an e-mail, she said that the school not only took responsibility for stumbling blocks inserted between Mr. Levy and his refund, but also that changes would be made so that such errors don’t happen again. Those changes include working with the City University of New York — of which Baruch is part — to review out-of-state designations.

“Further, if a student’s initial documentation indicates they have always been a New York State resident, we will no longer request additional documentation,” Ms. Latouf wrote.

Do you hear that, dear readers? It is the sweet sound of modest reform, a noise as rare as the quack of the Scaly Sided Merganser. (It’s a very scarce duck, according to the Internet, and the Haggler has no idea if it quacks. But you get the point.) The pleasures of consumer interventions in this space usually come in single servings — like those pudding containers that you ate in grade school. But Baruch is actually going to change its system.

“At the heart of this case was an incorrect coding designation,” Ms. Latouf wrote, in conclusion. “While we have put some measures in place (such as the one that triggered our initial outreach to Matthew), we will build and utilize new technologies to put more safeguards in place, and train staff to assure coding is accurate.”

True, soothing and conciliatory words are cheap. But Baruch is off to a good start. Two days after the Haggler called, the school contacted Mr. Levy, and that same afternoon he e-mailed the Haggler a photograph of a document waiting for him at the bursar’s office: a check for $7,245.

E-mail: Keep it brief and family-friendly, include your hometown and go easy on the caps-lock key. Letters may be edited for clarity and length.

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U.S. Treasury Chief Talks of Growth in Europe

At the outset of a joint press interview with Mr. Lew, Mr. Van Rompuy stressed the difficult climate both economies face. “We continue to rebalance and rebuild our economic potential to ensure strong, sustainable and inclusive growth and jobs going forward,” Mr. Van Rompuy said. “It is a long and difficult process, but one we stick to with determination on both sides of the Atlantic.”

But ultimately both also gestured to the deep divisions in the U.S. and European approaches to the crisis, and to the divergent paths their economies have taken in its wake.

“Our economic recovery is gathering strength,” Mr. Lew said. “The U.S. economy has expanded for 14 consecutive quarters, and although the pace of job creation is not as fast as we would like, the private sector has added jobs for 37 straight months.”

In contrast, the euro zone continues to struggle with shrinking economies and rising unemployment, with Germany, France and Spain all contracting in the fourth quarter of 2012. That has made the challenge of fiscal consolidation yet harder.

The question that Mr. Lew came to Europe to raise is how to strengthen the European economy — for the Continent’s own sake, as well as for the good of the global economy. The Obama administration has an investment in Europe’s growth, U.S. officials have stressed repeatedly, because of the deep financial and trade ties between the countries.

“We have an immense stake in Europe’s health and stability,” Mr. Lew said. “I was particularly interested in our European partners’ plans to strengthen sources of demand at a time of rising unemployment.”

Mr. Lew has urged countries with stronger economies, like Germany, to slow their pace of fiscal consolidation in order to benefit the entire euro zone. But in the past few years, such advice has often fallen on deaf ears, given the political constraints in Europe and many officials’ deep belief in budget balance as a prerequisite to growth.

Mr. Van Rompuy mentioned the “vivid debate” over “fiscal policy and the pace of fiscal consolidation” in his remarks.

The trip is Mr. Lew’s first to Europe as Treasury secretary. Earlier this year, he visited Beijing in his first trip abroad in the post. Though he worked for a time in the State Department in the Obama administration, Mr. Lew is primarily known as a domestic budget expert.

In contrast, his predecessor, Timothy F. Geithner, was an international finance expert who had previously worked at the International Monetary Fund and as Treasury under secretary for international affairs.

The Treasury said Monday that Pierre Moscovici, the French finance minister, pulled out of a meeting and joint news conference with Mr. Lew that was scheduled for Tuesday. The French government is facing a scandal after its budget chief admitted holding secret offshore accounts.

Mr. Lew is also traveling to Frankfurt to meet with Mario Draghi of the European Central Bank, and to Berlin to meet with Wolfgang Schäuble, the German finance minister.

Earlier on Monday, Mr. Lew met with other European officials, including José Manuel Barroso, the president of the European Commission, executive arm of the European Union. A Treasury official said they, too, discussed the need for Europe to generate demand, as well as the situation in Cyprus, a cross-border banking union and a prospective free-trade agreement.

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Your Money: What Happens When You Dispute a Credit Card Charge

The card issuer generally takes your word against the merchant or service provider at the outset, restores the money to your bank account temporarily or issues a credit and then goes about its investigation. It essentially demands that the merchant or service provider who supposedly did you wrong prove that it did no wrong at all.

But if you have never wielded this power tool of consumerism, there are a few things you should know first. The cat and mouse game that goes on behind the scenes can be tilted much more — or much less — in your favor, depending on which charges you dispute and how you go about disputing them.

Chances are you will need to use the dispute process sooner or later. We live in a world where you often cannot use cash to buy cocktails on an airplane and any individual can attach a card reader to a smartphone and accept card payments from anyone else. Mistakes will inevitably be made.

Meanwhile, all sorts of online businesses depend on recurring subscription revenue to stay afloat. Mistakes will inevitably be made again. Oops, we somehow forgot to honor your request to cancel your subscription. Oops, we forgot again. Oh, but now it will take until the next billing cycle. Sorry!

You have had the legal right to correct these mistakes ever since 1975, when the Fair Credit Billing Act went into effect. The law dictates that there be a process by which you can question unauthorized charges, billing errors and transactions involving goods or services that you never received or that merchants did not deliver in the way they were supposed to.

This creates a number of problems for merchants. Plenty of people pretend that they never received products that were supposed to arrive by mail and then dispute the charge, hoping that their card company won’t be able to figure out that they are liars and thieves.

Even legitimate beefs or misunderstandings create a large number of problems. Visa processes over 50 billion transactions each year. While cardholders dispute just 0.037 percent of them, that adds up to over 18.5 million complaints. According to MasterCard, 0.05 percent of its transactions are subjects of dispute, so its card issuers will deal with almost as many complaints.

Several million of these disputes involve outright fraud, though none of the card networks would break out the exact percentages. Avivah Litan, an analyst at Gartner, figures about 20 percent of all disputes involve fraud.

The rest of them require a lot of manual labor. Every time someone initiates a dispute, the bank that issued the card has to look into it. That means someone has to contact the merchant and wait for a reply that may include a receipt or other documentation that arrives via fax machine or by some other Jurassic process.

Merchants must carve out time to respond to each dispute. They also pay one-time fees for the privilege and may end up paying higher overall fees to accept cards if a pattern of too-frequent disputes emerges. Or they just get cut off from accepting cards altogether, as American Express tried to do with online pornography sellers in 2000.

The true cost per dispute to the banks of all of this back and forth ranges wildly from $10 to $40, according to a 2010 estimate by the consultants at First Annapolis. Given that cost, according to Scott Reaser, a principal there, many banks will simply absorb the disputed charge on a consumer’s bill and never contact the merchant if it is below a certain threshold.

That number will differ for every bank, though it probably averages around $25. Some large retailers, it turns out, have similar strategies, according to a 2009 Government Accountability Office report. So even if the bank does contact a merchant about the dispute, the merchant itself may choose to give up and allow the customer to win the dispute without bothering to investigate the complaint. The report did not say what the threshold was, and the G.A.O. is not permitted to identify the retailers it spoke to.

It is tempting to come to the conclusion that you can get away with disputing any old thing under $25 and not have to worry about tangling with the merchant ever again. But given that frequent disputes can lead to higher costs down the road, some merchants vow to fight every single one.

Or they have consultants who make them fight as a condition of offering their assistance. That’s how Monica Eaton-Cardone, the co-founder of, works with her merchant clients to help them keep their dispute rates down and get out (or stay out) of trouble with the companies that control their ability to accept cards.

Twitter: @ronlieber

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Working for Less: At Well-Paying Law Firms, a Low-Paid Corner

Make no mistake: These are full-fledged lawyers, not paralegals, and they do the same work traditional legal associates do. But they earn less than half the pay of their counterparts — usually around $60,000 — and they know from the outset they will never make partner.

Some of the lawyers who have taken these new jobs are putting the best face on their reduced status. “To me there’s not much of a difference between what I’m doing now and what I would be doing in a partner-track job,” said Mark Thompson, 29, who accepted a non-partner-track post at Orrick, Herrington Sutcliffe when he could not find a traditional associate job. “I still feel like I’m doing pretty high-level work — writing briefs, visiting client sites, prepping witnesses for hearings.”

Asked whether he hopes someday to switch onto the partner track, given the higher pay for this same work, he is diplomatic. “I’m leaving all my possibilities open,” he said.

Lawyers like Mr. Thompson are part of a fundamental shift in the 50-year-old business model for big firms.

Besides making less, these associates work fewer hours and travel less than those on the grueling partner track, making these jobs more family-friendly. And this new system probably prevents jobs from going offshore.

But as has been the case in other industries, a two-tier system threatens to breed resentments among workers in both tiers, given disparities in pay and workload expectations. And as these programs expand to more and more firms, they will eliminate many of the lucrative partner-track positions for which law students suffer so much debt.

Mr. Thompson is one of 37 lawyers in Orrick’s new program, which is based in this small Rust Belt city an hour southwest of Pittsburgh. An international firm headquartered in San Francisco, Orrick is one of a handful of law firms, including WilmerHale and McDermott Will Emery, experimenting with ways to control escalating billing rates.

“For a long time the wind was at the back of these big law firms,” said William D. Henderson, a historian at Indiana University-Bloomington.

“They could grow, expand and raise rates, and clients just went along with absorbing the high overhead and lack of innovation. But eventually clients started to resist, especially when the economy soured.”

For decades, firms used essentially the same model: charging increasingly higher rates for relatively routine work done by junior associates, whose entry-level salaries in major markets have now been bid up to $160,000 (plus bonus, of course), a sum reported by the big law schools. Even under pressure to reduce rates, firms are reluctant to lower starting salaries unilaterally for fear of losing the best talent — and their reputations.

“Everyone acknowledges that $160,000 is too much, but they don’t want to back down because that signals they’re just a midmarket firm,” said Mr. Henderson. “It’s a big game of chicken.”

So now firms are copying some manufacturers — which have similarly inflexible pay because of union contracts — by creating a separate class of lower-paid workers.

At law firms, these positions are generally called “career associates” or “permanent associates.” They pay about $50,000 to $65,000, according to Michael D. Bell, a managing principal at Fronterion, which advises law firms on outsourcing.

These nonglamorous jobs are going to nonglamorous cities.

Orrick moved its back-office operations to a former metal-stamping factory here in 2002, and in late 2009 began hiring career associates. Costs of living are much cheaper in Wheeling than in San Francisco, Tokyo or its 21 other locations, saving $6 million to $10 million annually, according to Will A. Turani, Wheeling’s director of operations.

“It’s our version of outsourcing,” said Ralph Baxter, Orrick’s chief executive. “Except we’re staying within the United States.”

Similar centers have cropped up in other economically depressed locations. WilmerHale, a 12-office international firm, has “in-sourced” work to Dayton, Ohio.

“There’s a big, low-cost attorney market there,” said Scott Green, WilmerHale’s executive director. “That means we can offer our services more efficiently, at lower prices.”

What’s good for clients, of course, isn’t quite as good for those low-cost lawyers.

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You’re the Boss: A.R.C. Loans Gone But Hardly Forgotten

The Agenda

The Small Business Administration’s special stimulus-funded loan program, known as America’s Recovery Capital, may be gone, but the controversy surrounding it lingers. In March, the agency’s independent Inspector General released a report estimating that of the 4,559 A.R.C. loans made through January 2010, nearly half “were not originated and closed in compliance with S.B.A.’s policies and procedures, resulting in approximately $66.5 million in inappropriate loan approvals.” If those loans default, the report warns, the banks that made them should not expect to be fully repaid by the S.B.A.

The A.R.C. loan program was conceived as a lifeline for sound businesses navigating the ragged shoals of recession. Companies could borrow up to $35,000 to retire existing debt, defer payments on the new loan for a year, and then take five more years to repay the obligation — with no interest or fees charged to the borrower. (The government would pay those.) The S.B.A. estimated that it had enough money to fund about 10,000 loans, and some observers predicted the program would be fully subscribed within a few months.

But many bankers were wary from the outset, and within two months of the program’s inauguration, it became clear that lenders were not eager to participate. In part that was because all of the required underwriting work made the loans not very profitable, if not unprofitable. But bankers also worried that standards for determining eligibility were untenable — businesses had to be both, in the language of the law, “viable” yet “experiencing immediate financial hardship” — and that the government would try to wrangle out of its obligation to make good on defaulted debt. “While the loan is 100 percent guaranteed, it’s only 100 percent guaranteed if you follow all of the underwriting guidelines, and some of those guidelines are very fuzzy,” Bob Seiwert, of the American Bankers Association, told The Times in August 2009. “If you miss one, you put your whole loan at risk.”

By the time the program expired at the end of last September, only 8,869 loans for $287 million had been made, well short of the amount of money available for lending.

Now the bankers’ fears appear well-founded. The inspector general’s audit found that among what it called “material origination and closing deficiencies,” one in four loans went to borrowers who could not adequately show they were viable. One in 10 loans went to businesses that could not prove hardship — in some cases, the investigators found, “the financial information actually contradicted the claimed financial hardship.” And, the report noted pointedly, “the S.B.A. is released from liability on the guaranty, in whole or in part, if the lender fails to comply materially with any of the provisions of the regulations” or does not otherwise act “in a prudent manner.”

The S.B.A., responding to the audit, defended its lenders and insisted that the law gave the agency the flexibility to waive the procedures so long as “the intent of the provision was met” and making the loan “did not violate the law.” And because the inspector general did not give banks the opportunity to correct mistakes, the agency said, “the true extent of the deficiencies is not known.”

Regardless of whether the inspector general’s estimates of errors prove accurate — and mistakes in underwriting don’t necessarily lead to a default — the report shows just how fraught efforts to intervene and save small businesses from the jaws of recession can be. Bob Coleman, who publishes a newsletter for the S.B.A. lending industry, noted that the S.B.A. inspector general received additional funding to investigate regular 7(a) loans that were made with 90 percent guarantees and reduced fees that, like the A.R.C. loans, were also funded by the Recovery Act. “More audits like this one will continue,” he warned readers recently.

Meanwhile, the S.B.A. continues to try to burnish A.R.C.’s reputation. Recently the agency named tiny Peoples Bank of Mississippi of Mendenhall, Miss., one of its Lenders of the Year in the agency’s flagship general business, or 7(a), loan program. (There are two awards, one for large lenders and one for smaller institutions.) The award, according to the nomination guidelines, recognizes “lenders that have used S.B.A. loan programs to help the maximum number of small-business owners obtain financing that they need to grow their businesses.” Among the criteria for selection are growth in overall loan volume and reaching “underserved” (read: disadvantaged) borrowers.

Peoples Bank saw decent growth in the dollars it lent last year, but it was hardly among the biggest gainers, and at the end of the year ranked only 156th among 7(a) lenders. What distinguishes Peoples Bank from the rest of the pack, as alert Agenda readers may remember, is its prodigious  A.R.C. loan lending. By the time the program ended, Peoples had funded 292 loans — more than any other bank save giants Wells Fargo and JPMorgan Chase and West Coast regional powerhouse Zions First National Bank.

So far, said Dennis Ammann, Peoples president and chief executive, the portfolio seems to be holding up well. True, fewer than 40 borrowers have begun repaying their A.R.C. loans, but only two borrowers have shuttered. “The others seem to be doing well,” Mr. Ammann said. “They’re all current on this debt, if they’ve started making payments, or if they have other debt, they’re current on that.

“Most of these folks just needed that cash-flow help. That was the biggest thing.”

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Cisco Shuts Down Flip, Its Video Camera Unit

The Flip video camera, conceived by a few entrepreneurs in an office above Gump’s department store in San Francisco, went on sale in 2007, and quickly dominated the camcorder market. The start-up sold two million of the pocket-size, easy-to-use cameras in the first two years. Then, in 2009, the founders cashed out and sold to Cisco Systems, the computer networking giant, for $590 million.

On Tuesday, Cisco announced it was shutting down its Flip video camera division.

Even in the life cycle of the tech world, this is fast.

From the outset, the acquisition was an odd fit for Cisco, which is known for its enterprise networking services. To some analysts, the decision to shutter Flip was an admission by Cisco that it made a mistake.

“Cisco was swayed by the sexiness of selling to the consumer,” said Mo Koyfman, a principal at Spark Capital, a Boston venture capital firm. “They’re not wired to do it themselves, so they do it by acquisition. Flip was one of the most visible targets out there. But it’s really hard to turn an elephant into a horse. Cisco’s an elephant.”

But the rapid rise, and now demise, of Flip is also a vivid illustration of the ferocious metabolism of the consumer marketplace and of the smartphone’s power to destroy other gadgets.

“It was unusually fast,” said Brent Bracelin, an analyst with Pacific Crest Securities. “It’s a testament to the pace of innovation in consumer electronics and smartphone technology. More and more functionality is being integrated into smartphones.”

The rapid innovation of smartphones, he said, is “one of the most disruptive trends we’ve seen.”

As newer and faster technologies beget newer and faster technologies, consumers move on to the next big thing with alacrity. In four years, Flip has gone from start-up, to dominant camcorder maker, to defunct. It took I.B.M. about four years just to reach dominance with its PC in the early 1980s. The iPad is only one year old.

Just as the Flip was reaching its zenith, the smartphone was gaining traction among consumers. With its versatility in recording video and still images, as well as its ability to perform myriad other functions, the smartphone has since proved to be a far more desirable product than a single-function device like the Flip.

At the same time, the smartphone has crushed the market for GPS devices, put a serious dent in the point-and-shoot camera industry and threatens the existence of many other everyday devices — the wristwatch, the alarm clock and the portable music player.

For technology entrepreneurs, the Flip story may be a cautionary tale of another sort. Many entrepreneurs look at Facebook’s ability to rebuff suitors as a inspiration to stay independent. But Flip’s founders were paid more than half a billion dollars for their invention from one of the most deep-pocketed companies in Silicon Valley, offering an alternate lesson in the fine art of cashing out at the right time.

“There are a lot of young entrepreneurs who look at Flip as a huge success, and they should continue to,” said Jonathan Kaplan, a co-founder and former chief executive of the start-up that invented the Flip. “The demise of Flip has nothing to do with how great a product it is. Companies have to make decisions that sometimes people like you and I don’t always understand.”

Cisco said its decision to shut down the Flip division was part of an overall restructuring plan of its consumer business. “We are making key, targeted moves as we align operations in support of our network-centric platform strategy,” said John T. Chambers, Cisco’s chief executive, in a statement.

Cisco had made inroads into the consumer market over the last decade by purchasing Pure Digital Technologies, maker of the Flip, as well as Linksys, the home-network router manufacturer. Mr. Chambers embodied the exuberance for consumer products, saying he owned eight Flip devices.

The company declined to elaborate on its reasons for shutting the Flip division, but it has faced mounting pressure to shore up its profit margins. It remains the top-selling camcorder on Amazon today, and inspired many imitators. Existing camera heavyweights like Sony and Kodak rushed to release their own Flip-like camcorders, trying to chase Flip’s runaway sales.

Still, Flip’s luster began to fade, as a spate of smartphones with built-in cameras and editing applications hit the market. The unit, which sells cameras for $100 to $200, also struggled to match the rich margins of Cisco’s enterprise services, Mr. Bracelin said. In another sign of trouble, Mr. Kaplan, who became Cisco’s general manager of consumer products after Cisco acquired Pure Digital, left the company in February.

Several analysts saw the decision as an inevitable consequence of a mistake.

“I don’t think there’s an analyst on the planet who thought that Flip was a good acquisition,” said Alex Henderson, an analyst with Miller Tabak Company. “Cisco had this idea that they wanted to be in the consumer’s home network, but they had a grand vision that was not grounded in reality.”

Stephen Baker, an analyst with NPD Group, “Cisco was never really committed to the product.”

Although the company never disclosed specific numbers on Flip, analysts estimated it accounted for just a fraction of the Cisco’s overall business. Simon Leopold, an analyst with Morgan, Keegan Company, said Flip probably had about $400 million in annual revenue, compared with roughly $40 billion for Cisco over all.

Cisco said that the changes would result in 550 layoffs and a pretax charge of less than $300 million in the third and fourth quarter of the fiscal year.

Verne G. Kopytoff contributed reporting.

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