How to avoid a vacation nightmare

The lesson here is twofold: First, don’t wire money to anyone you don’t know. Ever. If the deal turns out to be a scam, you’re not likely to get your money back. Second, book your vacations — no matter the duration — through reputable businesses

You need a vacation – no, deserve one.

But before you load up the kids and luggage into the station wagon, Clark Griswold, we’ve got some tips to make sure you don’t get scammed on the road this summer.
The insurance offer
If you choose to fly, you’ll likely have to decide on travel insurance. Discount travel websites such as Travelocity, Expedia, or Orbitz often offer this option when booking a flight. The plans generally cost about 6 percent of the total trip cost.
Travel insurance offers coverage for trip cancellations or delays, emergency medical or dental work, and lost baggage. But not all coverage is the same, and you don’t want to end up paying for a plan you don’t need. For example, if your current health insurance covers you abroad, there’s no reason to pay for the coverage provided with travel insurance, which, by the way, does not usually cover pre-existing medical conditions.
Also, while mishandled baggage is rare – the DOT says only three out of 1,000 passengers on U.S. airlines recently reported an incident of lost, damaged, delayed, or pilfered baggage – airlines are required to compensate passengers for lost luggage up to $3,000 in the U.S. and $1,500 worldwide. However, travel insurance may cover luggage lost elsewhere on your trip, such as the hotel.
The underlying message here is to read the fine print and know what you are getting with travel insurance. It might also pay to shop around on sites such as WorldNomads.com or insuremytrip.com.
The Craigslist ‘deal’
Cash is not always king. Here’s a cautionary tale explaining why.
A friend of ours (we’ll call her Tina) thought she had found the perfect rental for an all-girls weekend when she stumbled upon a Craigslist ad for a “fantastic” five-bedroom beach house in Rhode Island. Tina was familiar with the house having gone to school in the state and so deemed the ad’s photos and description credible.
Tina emailed Rodney (the alleged name of the person who posted the ad) and much to her excitement, the house was available for the weekend she wanted and, moreover, for a reasonable $600 two-night rate. All the pieces seemed to be falling into place for this great weekend with the girls.
Then, a red flag. After initially asking for a $200 refundable security deposit, Rodney upped it to $500 and said he’d take a PayPal or bank transfer. Perhaps enthralled with the thought of ocean views from a wraparound deck just 300 feet from the sea, Tina paid the deposit via bank transfer.
Rodney confirmed receipt of the money in a follow-up email to Tina, which ended: “I will look forward to read from you soon.” What? The conspicuous grammatical error (another red flag) made Tina nervous. Thinking she may have just been swindled out of $500, Tina researched the house online and found that it was being advertised by a local real estate company – the true agents for the rental who had the house booked for the entire summer.
Rodney’s deal, it turned out, was a sham. Rodney was a sham.
The lesson here is twofold: First, don’t wire money to anyone you don’t know. Ever. If the deal turns out to be a scam, you’re not likely to get your money back (Sorry, Tina).
Many credit card companies, however, offer fraud protection services. Second, book your vacations — no matter the duration — through reputable businesses. So, not Craigslist.
The hotel
The plane ride was hell – why do they always stick you next to that guy – but somehow you’ve finally arrived at the hotel. We’ll do a quick check-in and then grab some dinner, you say to your increasingly irritable spouse. But wait, what’s this? A resort fee? You didn’t see this on the reservation online.
“Drip pricing,” as the FTC calls it, is a type of bait-and-switch advertising where the price of a product or service goes up as a consumer progresses through the buying process. It’s ubiquitous in the travel industry – more on how this relates to plane tickets below – and poses a particular threat to the hotel guest.
In 2012, the FTC sent a letter to 22 hotel operators warning that such deceptive pricing tactics may be violating the law. The letter included consumer claims shared at a conference the FTC hosted earlier that year:
One common complaint consumers raised involved mandatory fees hotels charge for amenities such as newspapers, use of onsite exercise or pool facilities, or internet access, sometimes referred to as “resort fees.” … Several stated that they only learned of the fees after they arrived at the hotel, long after making a reservation at what they believed to be the total room price.
So, how can you protect yourself from these hidden fees? Simple: Ask questions. Before booking online or over the phone, find out what the price covers and what it excludes. And get the details in writing.
The FTC has additional tips on how to avoid the hazards of hoteling.
The ‘free’ trip
In short, it’s not free.
Even if you’re “lucky” enough to win a drawing after responding to a telemarketer, email, or flyer, you’ll eventually find that that advertised “free” trip is riddled with hidden fees. Or worse yet, the luxurious hotel you were promised turns out to be a ramshackle hut in a locale where the neighbors are none too friendly.
The ticket
While it may not affect travelers this summer, a cleverly titled bill called the Transparent Airfares Act of 2014 could potentially cloud online airfare prices for many summers to come.
The bill would deceptively drive down the upfront cost of a ticket by hiding federal taxes that would later be revealed to the consumer at checkout, and, consequently, bump up the price by about 20 percent. (Yes, it’s the same bait-and-switch advertising we talked about with hotels.) The bill has the backing of the airline industry and the bipartisan support of Congress, at least as of now.
The legislation would void a 2012 rule that required airlines to include all mandatory taxes and fees in the base price of the ticket; i.e., the prices you first see after clicking “search flights.”
Somehow, the lawmakers behind the Transparent Airfares Act say this what-you-see-is-what-you-get approach has actually lessened transparency.
“While the DOT had good intentions, the new rule effectively reduced transparency,” Peter DeFazio, a House Democrat from Oregon who was among those who introduced the bill, said in a statement. “Consumers haven’t been getting the whole picture of what an airline ticket pays for.”
Consumer groups, however, have made it clear that they oppose the legislation. Here’s a portion of a letter signed by such groups as Consumers Union and Travelers United, addressed to the U.S. House of Representatives:
This anti-consumer legislation serves no purpose, in our view, other than to mislead consumers about the real price of airfare – to the benefit of airlines, but at the expense of consumers. …We urge you to stand up against this anti-consumer move by the airlines…
An online petition on Change.org has rallied additional resistance, collecting more than 125,000 signatures against the bill. “If the full-fare advertising rule goes ‘buh-bye,’ you lose,” writes the page’s creator, Charles Leocha of Travelers United. “You’ll think airfares are cheaper than they are. You’ll have a harder time comparison-shopping.”
For more information on avoiding travel scams, click here




3 years ago

Never travel abroad without having a travel insurance policy.

This covers you for the loss of baggage or an important document such as a passport.

A medical emergency is also covered.

Will the ghost of Banco Espírito's problems come to haunt the markets?

Portugal’s largest listed bank is in trouble again. But markets are still flying high on cheap money


Usually markets have the memory of a well-trained gerbil, but last week something refreshed it. Banco Espírito Santo (BES), Portugal’s largest listed bank ran into some trouble. Since it is a bank and since it is in one of Europe’s peripheral countries, there were fears that the problems associated with previous bailouts were not over. There were some immediate repercussions. European markets dropped about 1.5%. A Spanish bank pulled its bond auction and the Greek government’s bond did not sell as well as hoped. But it was all over soon. Markets bounced back and forgot all about it. Perhaps they should have thought about it a bit more. The solvency of just one small bank in a small country is not important to the international financial system. But it represents something much larger.


The first issue is the bubble in some European bonds. For example, recently the yield on Irish bonds, a country that just exited a bailout and has a credit rating two levels above junk, is lower than the yield on US treasuries. Investors are basically ignoring any risks and putting money into anything that pays some yield. Portugal's bonds do not even have investment grade ratings, but pay only 3.46%, down from 6.04%. Portugal also just exited its international bailout two months ago without the protection of the EU line of credit. Its government debt to GDP ratio is one of the highest in the world at 130%. So a weak Portuguese bank set off some bad memories.


Fortunately Portugal itself was not exposed to the bank’s problems. BES was the only one of Portugal’s top banks that did not receive an injection of capital during the three-year bailout program. Portugal still has €6 billion of the €12 billion left from the program, but the Portuguese prime minister refused to put taxpayers on the hook for the bank’s problems. Portugal itself is actually doing much better. Its forecast growth of 1.2% is above the Euro-zone average and unemployment has dropped from a peak of 17.5% down to 14.3%.


The bank, BES, itself wasn't the problem either. It had €2.1 billion in reserves, above the regulatory minimum. The problem was what BES represents. BES is a part of a much larger family held firm. The bank is controlled by the firm, using a pyramid system of smaller and smaller companies toward the top of the pyramid that control larger companies near the bottom.


BES is controlled by Espírito Santo Financial Group, which holds a 25% stake in the bank. The bank was run by the head of the family Ricardo Espírito Santo Salgado. Mr. Salgado also ran the Espírito Santo Financial Group that had interests in a small bank in Panama, ES Bank (Panama) SA. Espírito Santo Financial Group was in turn controlled by a Luxemburg holding company, Espírito Santo International, through its main unit Rioforte Investments. Espírito Santo International holds other assets ranging from real estate and hotels in Portugal and Brazil in addition to its 49% stake in Espírito Santo Financial Group. There are other banks. Including Private Bank Espírito Santo, a Swiss bank and a smaller bank, BES Angola.


The Espírito Santo Empire has been around since 1869 when it opened as a currency exchange business. Mr. Salgado is the grandson of Ricardo Espírito Santo, who ran the bank and on the side served as financial advisor to António de Oliveira Salazar, Portugal’s dictator from 1932 to 1968.


For investors, the problem with the Espírito Santo family business is two fold. First, the various units are intertwined. They all lend to each other. There are not only loans, but many are guaranteed by other parts of the business. So a weakness in one part of the business quickly infects other parts. The second issue has to do with disclosure. Family businesses by their very nature tend to be private affairs. Outside investors are given the minimal amount of information required and no more. Nor are outside investors given any control.


So the troubles with BES started when disclosures of “serious accounting irregularities” and “an extremely negative” financial situation in Espírito Santo International surfaced earlier this year. Eventually Espírito Santo Financial Group, suspended trading in its shares and listed bonds. Finally on Saturday Espírito Santo International declared bankruptcy. In theory BES’s exposure to the rest of the family group is only € 1.1 billion, but it will take a long time to sort it out.


If EspíritoSanto businesses were unique it would end there, but it is not. Even in Spain one of the largest banks, the Santander group is family owned. Big family owned businesses with their own banks are common throughout Latin America and Asia. The regulators in developing countries are usually not as well funded or capable as their colleagues in Europe and the US. These conglomerates are also politically connected, with the power to rein in over zealous regulator attempting to examine aspects of the family business.


Worse, the tsunami of money unleashed by central banks has found its way into these banks. The banks have no doubt made some very interesting perhaps dubious loans to riskier family businesses.


Perhaps these issues could be covered up by rapid growth. But growth in Europe appears to have stalled. Italy with its enormous public debt, 133% of GDP, is forecast not to grow at all. Industrial production in the Eurozone slumped in May. The situation will not be made any better by the mess in Ukraine and the increased sanctions that are almost sure to follow.


Since last week markets have moved on. Neither lack of growth, questionable banks nor failed states and civil wars have dented the no fear attitude of markets still flying high on cheap money. But just because these problems can be ignored, does not mean that they are going away. They will just get worse waiting for that first rise in interest rates to get the attention they so richly deserve.


(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first-hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and speaks four languages.)  


Reliance Industries Q1 net profit up 13.7% to Rs5,957 crore

During the June quarter, the Mukesh Ambani-led company's net profit rose 13.7% to Rs5,957 crore while its turnover grew 7.2% to Rs1.08 lakh crore


Reliance Industries Ltd (RIL), India's largest private sector company, reported a 13.7% increase in its first quarter net profit on improved refining margins and higher prices.


For the quarter to end-June, RIL's net profit rose to Rs5,957 crore from Rs5,237 crore while its total turnover increased 7.2% to Rs1.08 lakh crore from Rs1.0 lakh crore same period a year ago.


Commenting on the results, Mukesh Ambani, chairman and managing director (CMD) of RIL said, “Despite weak regional refining margins and a planned turnaround in our refinery, RIL has delivered a record level of consolidated net profit this quarter. We have a great pipeline of new projects which will give Reliance an enduring competitive advantage. We are further expanding our retail business in existing markets, while exploring newer markets and channels.”


During the first quarter, RIL said its exports grew 16.8% to Rs66,600 crore, while gross refining margin (GRM) came at $8.7 per bbl, RIL said in a release.


As on 30 June 2014, RIL had a cash and cash equivalent of Rs81,559 crore in bank deposits, mutual funds, corporate deposits and government securities and bonds.


RIL shares closed Friday marginally down at Rs976.7 on the BSE, while the benchmark Sensex ended the week marginally higher at 25,641.


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