Visit my Lycos auctions for digital cameras, smartmedia cards, cdrw drives and media.

Digital camera bargain I have a number of liquidators and surplus merchants that I contact for closeouts. It is difficult to update my web site because these items come and go. I currently have several digital cameras at prices well below any Internet site. These include a Toshiba PDR-M5 (refurbished with 90 day warranty) for $375, a new Fuji MX-2900 for $425. I have also tracked down the manufacturer of the hard to find Fuji NP-80 and NP-100 and Toshiba BT-2 rechargeable batteries for the PDR and MX series of cameras and have some in stock. The same manufacturer also makes the recharger and I am working on getting in an order of those, as well.

INSIDE THIS ISSUE

- payment services
- eliminating the gray market
- the TERRABYTE CD?
- secret email
- useful sites

The rumor that Citibank may close C2it is not true. It was purely a speculation on the part of the writer who did not confirm it with Citibank. C2it is one of the services that has contacted me for ideas on how to improve their service to the online community. They have some good ideas and plan to increase their service in a big way. I will include details when I am permitted to do so.

The online services war is heating up and the casualties are mounting. Payme, Payplace and Exchangepath are gone. A few things are becoming abundantly clear.

TANSTAAFL - no it's not a German table to dance on. It stands for "there ain't no such thing as a free lunch." We have all seen ads that proclaim "free dessert with purchase of lunch." We understand that the dessert isn't really free. The price is built into that of the lunch. Some sites offer free services up to a point. For example, AOL offers one month of free service. Some of the free Internet providers offer so many hours free. Though they originally advertised that they would be completely free, they had hoped to get revenue from the advertisers. They have now made the discovery that there is not enough revenue to provide servers, phone lines and customer service for an unlimited number of users for an unlimited amount of time. Since advertising covers some of the costs, they will provide some of the services for free. But if you are a "power user" and need more than a limited amount of service, expect to pay for it. Credit card companies charge a fee every time a credit card is used. Why should you expect Paypal, Moneyzap, Billpoint or anyone else to accept a payment from YOUR customer, send it to YOUR account and pay YOUR fees for you? It's amazing that Paypal even gives $100 of free use each month to non-business members and that Moneyzap gives $1000 a month.

I am growing increasingly tired of the posts I see and the emails I get from folks complaining that these limits are "not enough." Why should anyone expect someone else to pay their way? If you are doing more than $12,000 a year in credit card billing, you are a business. Why should Moneyzap treat you any differently?

But I'll make you a deal. I'll do your credit card processing for free as long as you send me an unlimited supply of your merchandise for free. Fair is fair.

Again, I repeat that my problems with Paypal have never been the fees themselves. It was the way they went about collecting the fees and the arrogant way in which they treat their customers. If you need any further evidence of the contempt in which Paypal holds their customers, just read my debate with Paypal's rep on Auction Watch

In recent weeks a number of negative articles have appeared about them. With new and powerful competitors appearing on the scene (more on this later), Paypal is now at that crucial point where they must either begin acting like a professional company or watch their lead disappear as folks abandon them for more reputable competitors. It may take a while, but I predict that without a major change in Paypal's attitude, we will watch the usage dwindle. You can read these articles at My Paypal Page but here's a synopsis:

The Wall Street Journal reports that Paypal has an unsatisfactory rating with the Better Business Bureau. Salon Magazine reports that Paypal has garnered many complaints. They report one particular situation in which a Texas man named Stoney, who does about $200,000 a month with Paypal, had his entire account restricted for reports of fraudulent payments. Paypal did not tell him which payments were fraudulent and continued to accept additional payments into his account despite his protests. He contacted the police and the FBI who forced Paypal to hand over their records of "fraud." So far, the cardholders contacted are bewildered because they never reported any fraud or made any charge backs. Stoney sells investments in gold through a company called E-gold, in which no actual merchandise changes hands. When contacted, Paypal executives made a comment that E-gold is rife with fraud. E-gold responded that not only do they have far superior fraud prevention in place than Paypal, it was E-gold who warned Paypal about a number of security loopholes in Paypal's processing. Stoney has launched a $400,000 lawsuit against Paypal and E-gold may be considering suit for Paypal's statements.

Competition

There are a number of legitimate financial institutions who are or soon will be appearing in the electronic payment service market. They have many advantages over Paypal.

Name brand recognition. These are some of the biggest names in finance. These services are backed by companies that have proven track records and known stability. Despite its size in terms of number of users, Paypal is a johnny-come-lately, run by folks who act as if they had never managed a company before. They merged with X.com, tried to set up X.com as a free banking service, then tried to charge for the service and then shut X.com down. Their original CEO either quit or was forced out. Not a very good record of stability.

Established, nation-wide customer service departments. Not just a bunch of trainees who often haven't read Paypal's terms of the day.

Federally regulated. Because these are existing financial institutions, there are already laws in place regarding how accounts must be handled. None of this nonsense of freezing established accounts of reputable sellers because one unknown buyer used a stolen card or made a charge back. For those Paypal apologists who still believe Paypal is correct in doing this, not one person yet has answered my question: if this is correct procedure, then why doesn't a single bank, brokerage firm, mutual fund, etc already do this? Why is Paypal the only one to come up with this "brilliant" idea?

FDIC insured. Many folks think money in Paypal accounts is insured. It is not. Presumably you are protected if someone hacks into your Paypal account and withdraws funds. Considering how few of Paypal's other promises are kept, what is the possibility that you will be able to rely on this? Your account is not insured if Paypal goes under. And though this is not likely to happen in the immediate future, consider this: Paypal has yet to show a profit. So far all they have done is burn millions of dollars of investors' money "buying" new accounts. What if they never do show a profit? What if the investment tap is turned off? Paypal is doing everything possible to convince folks to leave money in their accounts, including creating an unregulated, uninsured money market. In my opinion, this is a big Ponzi scheme which has the potential to unravel. Paypal has a float of a few days on the money. On Thursday, Paypal sends off the payments made the previous Monday. This works fine as long as the amount of payments keeps growing. But what happens if they don't? What if 7 million dollars is sent through the system on Monday, 6 on Tuesday and 5 on Wednesday? At some point, Paypal will be paying out more than it takes in. Can we expect more restricted accounts as Paypal looks for new sources of interest-free loans?

Fraud prevention. Despite all the steps they have taken, Paypal still seems to be lagging when it comes to fraud prevention. Sellers are still reporting having payments reversed 5 months later when Paypal suddenly realizes that a stolen credit card was used.

Safety. Most payment services, including Paypal, state in their terms that disputes must first be worked out between the buyer and seller. If a resolution is not found, the buyer must then report the problem to the service. But often the buyer does an end run around the service, goes straight to the credit card and makes a charge back. Sometimes the charge back is made falsely, where the merchandise was delivered and the buyer just sees an opportunity to cheat. Scamming sellers are also not unknown. But what can a service do if the seller has emptied his account and closed the bank account into which the funds were deposited? Some of these new services think they have a solution.

"If it were our decision," one representative told me, "we would be denying many of these charge backs. The service is not responsible for customer-vendor disputes."

I agree with this assessment because I see a payment service as analagous to using a credit card to purchase a money order and then using the money order to pay for merchandise. If there were a problem with the merchandise, you could not charge back the money order. The service simply sends an electronic "money order" to another party. Why couldn't the services establish this policy with the credit cards?

"Because it would lead to a different problem," another representative explained. "If the service was charging the credit card in order to provide funds with which to make a payment, the credit card companies would consider it a cash advance. Interest would be charged from day one, with no grace period. In order to avoid this, the services treat it as a purchase. This makes it subject to all the conditions of a purchase, including charge backs."

Both representatives pointed out that if the service was also the issuer of the credit card used to make the purchase, then the service would still have the final say on which charge backs were allowed.

One of the weaknesses of the Paypal system is that they have little control over their account holders. A scammer can easily open an online bank account with little money in it, use it to verify a Paypal account, scam folks for tens of thousands of dollars, withdraw the money and disappear. A buyer can order merchandise from several sellers, charge it all back and take off. Since it will be difficult to challenge, Paypal will simply recover the funds from the easiest target. The new competitors have other ideas.

Since they are well-known, established financial institutions, they have better sources of verifying their account holders' identities. They may make participation in the service conditional upon opening some kind of bank or mutual fund account with them. Since these accounts are regulated and insured, folks will not be as nervous and distrustful as they are of Paypal's offering. This will give the service more leverage to prevent users from doing an end run around the rules.

I believe that in the wake of all the horror stories, buyers and sellers have come to recognize that rules are there to protect them. If some are allowed to circumvent them, then no one is guaranteed safety. There is room for a service that can be trusted when it says, "Here are the rules. Follow them and you will be safe."

Do you like videos? Why rent when you can trade for free or own for about the same cost as renting? See our Video list

Eliminating the gray market

In previous issues I mentioned scam sites on the Internet. These are sites that offer hot items, like the latest digital cameras, at prices well below even dealer cost. Because of their lowball figures, they get listed at the top of all the search engines that look for the best deals. But your chances of actually getting those deals are next to non-existent. These companies operate by:

bait and switch: having gotten the "mark" to visit their site and place an order, they will claim to be out of stock on that particular item and suggest something else. Sometimes they will take the order and delay for weeks, hoping that by the time the mark realizes he is not getting his order, he will be so desperate that he will accept their counteroffer without doing much research.

hidden costs: one site kept telling me that they were out of stock while continuing to advertise the product. I contacted the search engine that listed them and let them know that their service was worthless if they allowed scammers to dominate their listings. They responded that they had contacted the merchant and the item was now in stock. I called back and began by saying, "I was just informed that you now have stock on the camera, so I want to complete the order I placed a month ago." Yes, I could have it at the advertised price, they assured me, with $69.95 shipping.

stolen goods: This is becoming so prevalent a problem, that some major manufacturers are now mentioning it on their web sites. Western Digital, among others, has several announcements on their site stating that all warrantees are void if the product is on their stolen shipment list. They even have a place where you can enter a serial number and get notification on whether your drive is under warranty. Even if the manufacturer of the specific item you bought does not have such a disclaimer, the fact is that they will check the serial number if your item needs repair. If it does turn out to be stolen, you will not only lose warranty service, you will probably have the item confiscated as well.

Used and refurbished goods: Some sites have been known to sell used and refurbished goods as new. While refurbished items usually work just as well as new, a customer paying for new should get new. The warranty on refurbished items is also generally shorter than for a new item.

Foreign market: Very often items manufactured for a foreign market are made differently than items manufactured for the U.S. Just because they look the same doesn't mean they are. Because of incentives that are offered for goods made for export and the currency exchange rate, the foreign item may cost less. Sometimes unscrupulous vendors misroute a foreign shipment and sell it in the United States. The item may not be of the same quality. It may not be UL listed and it may emit frequencies that interfere with other devices. It may not be set to work correctly with local voltage. Often there is no local warranty.

gray market: Manufacturers want to control the distribution and pricing of their goods. For this reason, they usually deal only with established master distributors, who then resell to distributors, who then resell to dealers. Even before the Internet and definitely more so since its use became so widespread, the trend has become to sell items at an incredibly low markup and increase profits through volume. So now the goal is to deal directly with the end user and eliminate the middle man. But unlike most dealers, master distributors don't have the time or the staff to handle problems. So while they try to push hundreds of cameras out the door at a $10 profit, they tell the customer to contact the manufacturer if there are any problems. Most complaints are the result of some minor problem that could have easily been remedied by a dealer taking the time to look into it or a customer who simply didn't understand an instruction. But now the manufacturer is receiving a much higher volume of returns, many of which are in perfect working order. (This is one of the reasons that I relaxed my long resistance to dealing in items that weren't new and began selling refurbished digital cameras.) Some manufacturers have begun telling the customer to contact the place of purchase.

Manufacturers have now started working to eliminate these problems. A few have begun requiring dealers to fill out applications to resell their products. These applications will have to be approved by the manufacturer. At some point, customers will be able to verify over the Internet whether the dealer they are purchasing from is an authorized reseller. Those who purchase from unauthorized dealers run the risk that they will be unable to get warranty repair service.

the terrabyte CD?

Today's storage uses a 2D method. The read heads or lasers only read the top and/or bottom surface of a disk. Back in the "olden days" when hard disk platters held much less, in order to get larger storage, the drive consisted of several platters and heads. If each platter held 5 megs per surface, you needed 4 platters and 8 read/write heads to get 40 megabytes. This made for larger, full height drives. As new technology figured out ways to get more storage in less space, drives went to smaller sizes and fewer platters. But there was a concept with the multi-platter drive that was not forgotten.

Suppose that even with a one platter device, there was a way to read not just the top and bottom surface, but the layers in between? Because many devices are now using lasers rather than read/write heads, this kind of technology has now become feasible. Suppose the platter was an inch thick but the laser was able to read at intervals of 1/16 inch, so it could read the 1/16 inch level, the 1/8 inch (2/16) level, the 3/16 inch level etc as if each level were another platter? It would be like having 16 platters instead of one.

There are now companies experimenting successfully with 3D storage. Some claim that it may be possible to record 100 layers on a CD. Since a CD can hold about 700 megabytes and a DVD over 7 gigabytes, we have the possibility of reliable, long-life removable media with over a terrabyte of storage and smart card storage for digital cameras capable of holding several gigabytes. According to these companies, this technology is not years away but months. Visit C-3d.net for more details.

Incidentally, this is one of the reasons that I personally don't recommend DVD drives for PCs. There are still several different standards and it seems that newer improved versions are still appearing. Would you want to be the proud owner of the "betamax" version once there are no longer any titles available for it? Whatever happened to DIVX (was that what it was called) where even though you owned the DVD and the player, you still had to pay a rental fee every time you watched it? I believe there are better things you can do with your PC than play movies and there aren't that many software titles out that require DVD. So a DVD drive in your PC is one item that can easily be passed up until the formats shake out and there is a really good reason to get one.

Secret Email

When I charged credit cards directly, one of the problems I ran into was how to get the information. Folks were understandably afraid to email me their CC info. They could call it into my 800 number, but this was a recording-only number and occasionally it was hard to understand the numbers they left or they would leave out one piece of the puzzle, such as the expiration date and then I would have to call them back.

Someone has come up with a solution to this sort of problem, a method to send an email containg a hidden encrypted message. Because the important message is actually hidden within a longer, innocuous email, a hacker or eavesdropper who reads your email won't even realize that it contains anything of importance. And you don't have to send secret 'keys' to encode or decode the messages.

Here's how it works:

Go to spammimic.com. Enter your short message. Hit encode. The software will turn your message into a paragraph that looks just like spam mail. "Dear Friend ; Especially for you - this red-hot announcement. This is a one time mailing there is no need to request removal if you won't want any more ." Use copy-and-paste to paste this message into your email and send it to the other party. The recipient has to go to spammimic.com and choose decode. He pastes in the message received and sees the original short message.

For the really security conscious, you can choose a phrase or keyword to bury within the encoded message. The recipient will be told to remove this phrase or keyword before choosing decode. Now even if your email is stolen and even if the thief knows about spammimic, the decode option won't work unless the thief also knows what to remove from the email.

Useful sites

nothingbutsoftware.com and softwareoutlet.com - a nice selection of software but the best thing about these two sites is that they constantly have giveaways where the rebate is 90-100% of the purchase price. I recently bought 1240 Windows games on 4 CDs for $10 with a 9.95 rebate. Okay, some of these games were old and some were silly but my kids have spent days just going through them all. That's a lot of activity for a nickel. Put yourself on the mailing list for their specials.

www.bigfoot.com - What if you have more than one email address, such as one at home and another at work? How can you make sure that emails reach you at whichever ID you choose to use? What if you want to change providers? Do you have to email all your friends and tell them to start using a different ID? With Bigfoot, the answer is NO. When you sign up for a Bigfoot ID, you get powerful email tools. Forwarding will send your emails to any other ID you choose. Distribution will send them to as many as five other IDs. Now all you have to do is get your friends to use your Bigfoot ID. You can change offices, email systems, Internet providers and Bigfoot will just keep forwarding and distributing your email without you having to notify your friends. I've had my ID for years. The service is FREE. Once you set up your account, you don't have to log in to Bigfoot again (unless you change providers). Now that I have my own domain, I don't need my bigfoot ID. But it will still work and it served me well for many years.

http://www.bfree.on.ca/HTML/index.htm - detailed, well explained HTML lessons online

www.megapixel.net - in-depth reviews of digital cameras.

www.epinions.com - product reviews written by regular folks who have bought and used them.

www.ureach.com - get a free toll-free number that accepts voice calls or faxes. It will notify you of new messages via email or pager. You can get your voice messages by phone or by logging on the website and faxes off the website. This number will also forward to up to three other phones lines. You can now give folks a toll free number to call you in an emergency. Use it to call home when you're out on the road.

I hope this letter contained useful information. Please email ccs@ygoodman.com with any comments.