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Unpaid internships, bank job cuts & confusing contracts: BUSINESS WEEK WRAP

Written By doni icha on Sabtu, 08 November 2014 | 22.39

Prepare yourselves for a shock. According to Canada's official watchdog for the telecom sector, the number of Canadians who made complaints about their phone, cable and Internet services actually went down this year.

It's the first time in seven years that that's happened. Canada's Commissioner for Complaints for Telecommunications Services said in its annual report Tuesday that there were 11,340 complaints to the office this year from customers upset about bogus charges, poor service or billing errors on their TV, phone or internet bills.

That's actually a decline of 17 per cent from last year's level and a sign, some say, that the industry's attempts to fix its broken image on the customer service front is bearing fruit. Ottawa enacted the Wireless Code this year, and the CCTS suggested the clarity that came with that law may have done a lot to clean up some of the more vexing industry complaints.

Smartphone Kill Switch

There were fewer complaints about telecom services this year, but one practice that seems to be getting worse is misleading contracts, the CCTS said. (Ben Margot/Associated Press)

"We are cautiously optimistic that the industry as a whole is becoming more focused on customer issues and on how it addresses customer problems," was how the commissioner put it.

Hard as it may be to believe, complaints overall were down — and by a lot. But the report did say there's one area that still bothers many Canadians.

Complaints about misleading contracts were up by almost 75 per cent, far and away more than any other category. That's an issue the Wireless Code specifically tried to tackle, so an increasing number of misleading contracts is something the industry — and consumers — would be well served to keep an eye on.

Work for free?

When you're central bank governor, choosing your words carefully is a life skill. And that's a lesson Stephen Poloz learned this week when he inadvertently waded into the debate about unpaid work.

In a series of comments in Ottawa, Canada's top central banker essentially said that his advice for any young person looking for work in this tough economy is to be willing to get experience on your resume at any cost — even if it's free work.

To some, that's just helpful advice. But to others, it is part of a systemic problem. Headlines were full this year of stories about unpaid internships exploiting students, with some estimates suggesting there's as many as 300,000 young people toiling away in "internships" across the country that accomplish little more than having them do menial jobs for no money, and letting companies cut back on labour costs.

India Uber Asia

Canadian taxi drivers say ride-sharing services like Uber put them at a disadvantage. (Rafiq Maqboo/Associated Press)

It's a complex issue, and one everyone seemed to have an opinion on this week. And while it seems likely that Poloz will think twice before sharing his views off the cuff in future, the subject of how to get young people working is probably a good discussion for Canadians to have. 

Scotiabank axes 1,500 jobs

When you're a bank raking in more than $6 billion in profit this year, the optics aren't good when your newly minted CEO comes out and announces you plan on firing 1,500 employees, 1,000 of them across Canada. It's a big, ugly number that's sure to dominate the news cycle

But that's exactly what Scotiabank CEO Brian Porter did this week, saying the bank would be streamlining its workforce as part of a cost-cutting plan that also includes writing down hundreds of millions of dollars.

The reaction was swift, and predictable, with critics panning the company's apparent heartlessness in their slavish devotion to the almighty dollar. But as Don Pittis wrote in one of our most-read stories this week, there's nothing particularly shocking about it.

Banks are in the business of making money, and there's nothing wrong with that. That's good for them, good for their shareholders, good for their employees — and good for Canada, Pittis wrote.

Scotiabank has long had a reputation for being one of the more international banks we have, with a track record of expanding into areas where it sees growth, like it did in Asia and Latin America decades ago. Sometimes those bets don't go well, but more often than not they do. Banks must manage their risk, so if they think it's a time to retrench a little before the next bout of expansion, that may prove to be best for everyone in the long run.

Visa and MasterCard cut rates

Speaking of being in the business of making money, the two biggest credit card companies on earth did something this week that they're not in the habit of doing: they promised to lower their fees.

Not the fees that consumers pay, but rather the fees paid by merchants. Every time they process a transaction for a retailer, the card companies take a fee of somewhere between one and three per cent of the purchase price. Those fees can add up, and retailers say since the explosion in so-called "premium" cards they've gotten worse.

hi-unpaid-intern-istock_000002000957small

Stephen Poloz accidentally waded into the debate over unpaid internships with some comments this week.

But the card companies say they're going to cap the average rate of fees at no more than 1.5 per cent for the next five years at least. Retailers say they're happy to pass those savings on to consumers in the form of lower prices, but there's a body of evidence from when this happened in other countries that suggests the savings will be negligible — and worse, the card companies will be likely to just jack up fees somewhere else to make up for it.

As one prominent bank analyst told us this week, "consumers bear the brunt of the change."

Road rage as cabbies flight to block uberX

There was another battle over fees in the news this week as a taxi driver lobby group launched a national campaign to get people to think twice before signing up with ridesharing services like Hailo, Uber and Lyft.

If you've never heard of them, all three let users pay for taxi rides via a smartphone app. With some, it's a taxi that shows up, and the prices are the same. With othera, notably uberX, it's not a conventional taxi cab — but it comes cheap enough that you might not care.

The cab companies say they're unsafe, and such services are just an accident waiting to happen from a passenger safety level. Uber, meanwhile, says their drivers are all bonded and insured, and the campaign is just sour grapes from an industry they describe as a cartel.

The services have proven popular with riders. But drivers remain on the fence. As one told the CBC's Sophia Harris this week, "It's not fair competition because we have to follow the regulations [but] they don't."

Other stuff

Be sure to check out our website often for more business news, and remember to follow us on Twitter here.

Here's some more of our stuff that you found especially popular this week:

Monday

Tuesday

Wednesday

Thursday

Friday


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Canada-China currency deal expected to sharply increase trade

Canada and China have signed a reciprocal currency deal that's expected to dramatically boost exports.

The hub will foster far easier trade between the Canadian dollar and the Chinese yuan, also known as the renminbi. It makes Canada the first country in the Americas to have a deal to trade in the renminbi.

The signing of the deal was announced in Beijing today by Premier Li Keqiang and Prime Minister Stephen Harper, who is on his third official visit to China.

"It's a great boon for the Canadian business community, both importers and exporters, because they can now do business in China with the currency and not have to go through multiple financial exchange transactions," Stewart Beck, president and CEO of the Asia Pacific Foundation of Canada, told CBC News.

"So the pundits are saying it could double maybe even triple the level of Canadian trade between Canada and China," he said.

Authorized by China's central bank, the deal will allow direct business between the Canadian dollar and the Chinese yuan, cutting out the middle man — in most cases, the U.S. dollar.

China Canada

Prime Minister Stephen Harper, left, is shown the way by Chinese Premier Li Keqiang as they arrive for a welcome ceremony held at the Great Hall of the People in Beijing on Saturday. (Ng Han Guan/Associated Press)

Canadian exporters forced to use the American currency to do business in China are faced with higher currency exchange costs and longer waits to close deals.

"It's something the prime minister has been talking about. He wants Canadian companies, particularly small- and medium-sized businesses, doing more and more work in China, selling goods and services there," said CBC's Catherine Cullen, reporting from Beijing.

Jason Henderson, head of global banking for HSBC Canada, calls the deal great news for Canada, given that China is the second largest economy in the world after the U.S.

If Canada is to maintain the standard of living that it enjoys today, he adds, it needs to tap into the Chinese market. The currency deal is the first step on that path.

Earlier today, Canada and China also signed more than 20 commercial deals valued at more than $1 billion.

The Prime Minister's Office said in a statement the deals "are a testament to the significant growth taking place in the bilateral commercial relationship."

"Several sectors stand to benefit from these agreements, including sustainable technologies, aerospace, transportation, construction, mining, energy, infrastructure, agri-food, and information and communications technologies sectors," the statement said.

It said trade between Canada and China supports more than 470,000 jobs in Canada a year, which was about 2.67 per cent of total Canadian jobs in 2013.


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Stephen Poloz, the unintended champion for Canada's jobless youth: Don Pittis

The furor set off by Bank of Canada governor Stephen Poloz this week may be the best thing to happen for the youth jobs issue in ages.

For the few who didn't notice, the governor of our central bank put his foot in it the other day, telling young people they should work for free.

Canada's latest jobs data from Statistics Canada Friday morning showed some improvement in the jobless rate for youth, but unemployment among young people is still nearly double that of everyone else.

Poor Stephen. You get the feeling he's not quite as media savvy as, say, his immediate predecessor. He likely didn't know what he was getting himself into. 

The backlash was terrific, with his off-the-cuff remarks characterized by many as turning a blind eye to current employment standards. 

Youth at job board

Unemployment among young people has been nearly double that of other Canadians. (Shutterstock)

"Employers in the private sector can't employ interns and pay them zero dollars," said Claire Seaborn from the Canadian Interns Association on CBC's Radio's Metro Morning.

Although there is a patchwork of provincial rules, generally, she says, internships are restricted to those within a specific education program.

Otherwise, employers and unemployed people just aren't allowed to agree that work will be done for free.

Good intentions

"That would essentially be contracting out of the minimum wage," says Seaborn. "Interns can't agree to be paid $3 an hour or zero dollars an hour. It's simply against our employment standard."

Despite the way it played in Peoria, Poloz's intentions were good.

What he is, quite validly, worried about is something that has often been called "generation jobless." And it is phenomenon well-known to have a long-term effect on an entire economy.

Here's how it works.

Imagine you finish your degree in law or commerce during a boom. As you graduate, employers are anxious to snatch up the fresh talent, hiring you young and malleable.

Lucky you, you get on the professional job ladder early and work your way up.

But if instead you complete the exact same qualification during an economic downturn, sometimes even the best graduates go begging.

Poor you, you get part-time work in retail, or worse, can't find a job at all. Even when the boom returns, your educational skills are stale and you are at the back of the line. 

Policy problems

If they were my kids, I'd give them the same advice Poloz offered. But then, I am not a high government official. And my saying it does not make it sound like policy. 

There are two obvious problems with encouraging free work as policy. One is that that even the smartest poor kids can't afford to work for free.

Job search

Youth unemployment is crucial issue, and not just for the youth scouring the job ads for opportunities. (Shutterstock)

The other is that a supply of free workers completely destroys the motivation for employers to actually hire young people and pay them. In a profit-motivated world, lots of free workers make the youth unemployment problem even worse.

In the past, government youth hiring programs gave kids from all backgrounds a leg up. But the current urge by governments to slash the public service means the bottom rung of entry-level jobs is drying up.

Apart from waiting for the economy to kick back into gear, the private sector solution is not obvious. 

Government handouts for companies to hire young people are in danger of turning into just one more form of corporate welfare as profit-seeking employers hire the people they would have hired anyway, and simply pay them with taxpayers' money.

I've reported in the past on the shortage of startup cash for young entrepreneurs.

But there are things governments can do. Employers are not currently pulling their weight when it comes to training the next wave of young people. They want their new workers to arrive fully formed. They each want someone else to do the training.

What about pre-trainees?

One technique might be for governments to make a rule that every employer hire some percentage of their workers as pre-trainees at minimum wage.

It would have no effect on workers who have skills or experience that commanded higher wages. And while employers would pay the cost, all would benefit equally.

The Poloz solution will not do as public policy.

But by his comments, our chief central banker has given the issue of youth unemployment a much higher profile than if he had spoken in platitudes. And as we begin a federal election year, he has done it at a perfect time.

As Poloz and today's jobless numbers remind us, youth unemployment is crucial issue, and not just for youth.

We should make federal parties realize it is the economic issue of our times.


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Canadian dollar, stocks move higher on strong jobs report

The Canadian dollar gained almost three-quarters of a cent against the U.S. dollar as the greenback weakened and oil moved higher.

A strong Canadian jobs report showing the economy created 43,100 new positions in October also helped push both the loonie and stocks higher.

The dollar rose 0.72 of a cent to close at 88.24 cents US on the better-than-expected jobs numbers.

The S&P/TSX composite index jumped 127.45 points to close at 14,690.83.

Resource stocks moved higher as commodities strengthened. Oil was up $1, trading at $78.91 US a barrel in New York, off the low of less than $77 it hit earlier this week.

That gave bargain hunters the confidence to pick up oil companies which have been beaten down in the past six weeks as oil prices plunged.

"Value investors are starting to pick up oil companies and realizing that there is probably more upside at this price than there is downside," said Kevin Headland, director of the portfolio advisory group at Manulife Asset Management.

Despite Friday's gains, the benchmark TSX has not rebounded from the recent equity sell-off to hit record levels like its U.S. peers have.

"Canada has not bounced back as strongly. There's still a lot of pressure on oil," said Headland.

And further weakness is projected for the Canadian dollar. Nomura predicted it could fall to 84 cents US by the spring of 2015.

Bank of Canada governor Stephen Poloz has stopped giving forward guidance on interest rates and appears content to let the loonie fall in an effort to boost exports.

U.S. stocks and the U.S. dollar were mixed Friday, despite an employment report that showed 214,000 jobs created.

The Dow Jones industrial average climbed 19.46 points to 17,573.93, the Nasdaq declined 5.94 points to 4,632.53 and the S&P 500 index was up 0.71 of a point to 2,031.92.

Economists had predicted 235,000 U.S. jobs would be created and investors were disappointed that the momentum of growth did not match expectations. The U.S. jobless rate also fell, dropping to 5.8 from 5.9 per cent.

In other corporate developments, Bloomberg reported that Canadian Pacific Railway could be interested in going after Norfolk Southern, the second-largest railway in the eastern U.S. CP made a pitch to U.S. carrier CSX in October but talks didn't result in a deal.


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Here's looking at you: How facial recognition technology is creeping into daily life

Calgary police became the first force in Canada to start using facial recognition software to match suspects against a mug shot database this week, but it likely won't be the last.

The use of facial recognition technology is growing not just in law enforcement and security fields but also in commerce.

"One of the reasons face [recognition] is so popular is that face images exist of almost everybody," said Kevin Bowyer, an expert on biometrics and computer vision and chair of the department of computer science and engineering at the University of Notre Dame.

"You've got your driver's licence photos, you've got your identity badges wherever you work, so you've got this legacy of images that are easily accessible for everyone."

phone-face

Some cellphone apps use face recognition instead of passwords to give users access to devices. (Carlos Barria /Reuters)

Chances are you've already encountered some form of this technology. Government agencies that issue driver's licences use it to verify that you are who your licence says you are. Banks use it when investigating debit card fraud.

Smartphone apps like FaceCrypt and FastAccessAnywhere use it to grant you access to your mobile devices. Social media sites like Instagram and Facebook employ it when tagging photos. Google uses it in search and tagging functions and police in Dubai have even incorporated it into its Google Glass eyewear.

Matching faces not so simple

The algorithms used to match images of faces vary and are largely proprietary but generally employ computational methods to analyze the pixel values in images and identify patterns and correspondences.

mug shots-facial recognition

Matching images to mug shots can be problematic when using CCTV or security camera footage, which rarely provides clear, front-facing head shots. (Tony Gentile/Reuters)

A lot of progress has been made in facial detection and matching in the last decade thanks to the millions of dollars pumped into the field by the U.S. government — primarily the Defence Department — said James Wayman, a facial recognition expert who helped allocate that funding and is a research administrator at San Jose University

But facial recognition software can still be stymied by many factors: a person's pose, lighting, facial expressions, aging, image resolution and obstructions like hats or even hair.

"Identification is a very messy process. It's as messy for computers as it is for humans," said Kelly Gates, author of Our Biometric Future: Facial Recognition Technology and the Culture of Surveillance and an associate professor of communication and science studies at University of Illinois, Urbana-Champaign.

"People look like each other, people look different over time …​ people can look very different depending on the lighting conditions, depending on the day.…

'You can never establish certainties; you can only establish probabilities of matches.'- Kelly Gates, author of Our Biometric Future

"You can never establish certainties; you can only establish probabilities of matches." 

To make a good match, you need images where people are looking straight into the camera and have similar facial expressions — ideally, a smile and not the neutral expression we've all been told to adopt on IDs and passport photos in the post-9/11 era.

"That rule is born out of this idea that you don't want to match across expressions," Bowyer said. "It turns out it would be better if everybody smiled because your smile is more distinctive than your neutral [expression]."

CCTV images often not useful

Facial recognition is only as strong as the algorithms and image banks driving it. When the U.S. National Institute of Standards and Technology tested the six leading suppliers of facial recognition software in 2013, it found the best-performing among them (NEC, the provider Calgary police are using) failed to recognize the most likely match in a database of 1.6 million mug shots about four per cent of the time. The worst-performing software missed it about 20 per cent of the time. For webcam images, the failure rates were roughly 11 per cent and 67 per cent, respectively.

CCTV-face recognition

Security cameras are usually mounted high up to prevent them from being vandalized, but this doesn't make for good quality images, says facial recognition expert Jim Wayman. (Soeren Stache/Pool/Reuters)

​The biggest obstacle to accurately matching faces is image quality. Many of the agencies that use facial recognition rely on CCTV and security cameras, but these produce images that are grainy, low-resolution and taken from above.

"The worst-possible direction to put a camera to try to recognize somebody's face is up," said Wayman.

He says he doubts that casinos, for example, ever really use the facial recognition software that is supposed to help them keep out problem gamblers and spot card cheats and VIP customers because their cameras are generally on the ceiling.

FBI adopts face recognition

Facebook, on the other hand, is full of high-resolution, front-facing pictures of faces, which is why it's more than 250 billion uploaded photos are a veritable gold mine for law enforcement.

The FBI has said it won't store social network photos in the database of 52 million photos that will be part of its new face recognition system, but groups like the Electronic Frontier Foundation have raised concerns that "there are no legal or even written FBI policy restrictions in place to prevent this from occurring."

iris-scan-biometric

Iris scans are another biometric tool used to identify individuals. They are used to screen travellers at some airports and will be part of the FBI's new identification database. India is using them to build a massive national identification system. (Mike Blake/Reuters)

The FBI has said that by 2015, its database will include at least 4.3 million "civil images" — those taken for non-criminal purposes.

"This means you could become a suspect in a criminal case merely because you applied for a job that required you to submit a photo with your background check," the EFF warned in an analysis of the program.

The FBI's Next Generation Identification system will also include fingerprints, palm prints, iris scans and information such as ethnicity and immigration status and be shared across agencies and police departments.

Automated passport checks

Facial recognition technology is also becoming a familiar site at airports. Australia, New Zealand, the U.K. and Germany are among the countries that use automated airport customs gates outfitted with cameras that snap your picture and match it against your passport — and potentially a watch list.

border-kiosk

A Qantas Airways flight attendant places her passport on a scanner as her face is photographed at an automated border control kiosk at Sydney Airport. (Tim Wimborne/Reuters)

Canadian border authorities have so far limited their use of biometric tools to iris scans, which are used to verify the identities of those who use CanPass or Nexus IDs to travel between the U.S. and Canada. New passports are equipped with a digital facial image that can be used in face recognition systems, and Passport Canada does use the technology to check applicants' photos against its database.

But while facial recognition might be able to detect passport fraud, it likely won't help authorities pick a known terror suspect out of a crowd at a busy airport. 

"How often do terrorists whose picture you have and are looking for really walk through airports? Not very often. A thousand times an hour some poor chump like me walks through the airport … so you get thousands upon thousands of false positives," said Wayman, who advises Australian customs authorities on their SmartGate facial recognition system.

Selling you stuff to your face

Security-related uses of facial recognition are to be expected, says Bowyer, but it's the commercial applications that have really picked up in recent years.

Retailers like Reebok and Tesco have used cheap webcam based facial detection software to monitor how customers react to store displays or to show them age- or gender-specific ads in real time. (Unlike face recognition, face detection doesn't try to make a match but estimates a person's gender, age and facial expression based on what their face looks like and what the software already knows about faces of a certain age, sex or mood.)

Smart TVs enable cable, video game and marketing companies to gauge audience reaction using face detection while online dating site Match.com will find you a mate who looks like your ex with the help of facial recognition​.

There's even a smartphone app called SceneTap that uses cameras and facial detection to tell you if a club or bar is busy and what the average age and gender ratios of the patrons are.

All this raises concerns not just of privacy —  the Alberta privacy commissioner has already announced she will review the Calgary police's use of face recognition technology — but also of autonomy, says Gates.

"Facial recognition plugs into a larger set of practices and problems around predictive analytics and the ways in which all of our online and offline experiences are constantly being modulated using data science and data analytics," she said.


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Canada's jobless rate drops to lowest point since 2008

Written By doni icha on Jumat, 07 November 2014 | 22.39

The Canadian economy added 43,000 jobs in October, pushing the jobless rate down to its lowest level since November 2008.

Statistics Canada said Friday that Canada has now produced 182,000 jobs in the past year. But two-thirds of those jobs have come in the past two months.

The strong monthly figure is much better than what most economists had been expecting — a slight pullback after a strong September figure. Instead, it was the first time there have been back-to-back monthly gains since the end of 2012.

The loonie gained almost a cent on the news, trading back above the 88 cent level after the news came out.

"Throughout this year, we've been trapped in an oscillating pattern of gains one month only to be followed by losses the very next month," Scotiabank said in a research note ahead of the release of the data.

Provincially, employment rose in Ontario, Manitoba, Nova Scotia and Prince Edward Island, while it declined in New Brunswick. Everywhere else, it was basically flat.

Private-sector workers and the ranks of the self-employed swelled, while there was a slight decline in the number of public-sector workers, the data agency said.

There were job gains in manufacturing, where 33,200 more people found work during the month. The survey said the natural resources sector shed 22,200 jobs in October.

The strong monthly figure "suggests that the economy may have shifted into a higher gear," Capital Economics said in a research note. "Stronger job creation over the past six months indicates a marked improvement."

While the overall unemployment rate dropped to an almost six-year low, young workers are still disproportionately unemployed. The jobless rate for those aged 15-24 declined to 12.6 per cent because more young workers stopped looking. But the figure is still almost twice as high as overall jobless rate.


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Yelp, Google and UrbanSpoon easy targets for fake reviews

That online review may recommend a restaurant in glowing prose, but should you eat up every word? Maybe not.

A months-long investigation by CBC's Marketplace shows how easy it is for companies to deceive consumers online. It uncovered an entire industry designed to help businesses mislead consumers, bolstering companies' online reputations with fake reviews and testimonials.

A good online reputation can have a huge impact on a company's revenue. When researchers at the Harvard Business School analyzed restaurant reviews and revenue in Seattle, they found that a one-star increase on the popular review site Yelp meant a five to nine per cent increase in revenue for independent restaurants.

"Some data now show that a good majority of people in North America believe and trust online reviews more than they trust their friends' opinions," Jeff Hancock, a professor who researches online deception at Cornell University in Ithaca, NY, told Marketplace co-host Erica Johnson.

And as the public's reliance on review sites has increased, so has the market for bolstering businesses online reputations.

Jeff Hancock

"I think it's going to become increasingly a big problem as more and more these high-end services – lawyers, dentist, doctors – come online with the reviews," says Jeff Hancock, a professor and researcher at Cornell University in Ithaca, NY. (CBC)

"I think it's really amazing how easy it is to purchase deception now on the internet," Hancock says.

(Watch the investigation, Faking It, on Friday, Nov. 7 at 8 p.m. ET / 8:30 p.m. NT on CBC Television to find out how you can separate review fact from fiction. Join the conversation on Twitter using the hashtag #reviews.)

Faking out the fakers

As many as 15 per cent of online reviews are fake, according to a 2012 study by IT researcher firm Gartner.

For its investigation, Marketplace created a grilled cheese food truck business called "Cheezed Off!" to test how easy it is for a company to artificially boost its reputation online. Cheezed Off! has all the hallmarks of a legitimate online business: A professional website, promotional YouTube video and social media presence.

The company also has glowing online testimonials on popular review sites like Yelp, Google Plus and UrbanSpoon:

  • "Cheezed Off! has mastered the art of creating the perfect grilled cheese sandwich. I love comfort food and could not pass up an opportunity to try this nostalgic meal from a food truck while in downtown Toronto. I ordered the classic sandwich and my boyfriend ordered the Hellzaoppin sandwich. Both of these were made quickly and tasted absolutely delicious. This food truck knows their way around a grilled cheese," one reviewer writes.
  • "Just tried Cheezed Off! for the first time and I have to say that I was very pleased.  The bread had a very crispy, satisfying crunch, the presentation was very appealing and the taste was, in a word, yummy!," another reads.
Online reviews

Research published by the Harvard Business School in 2011 found that a one-star increase on the popular review site Yelp meant a five to nine per cent increase in revenue for independent restaurants. (CBC)

The problem? Cheezed Off! doesn't actually exist.

The fake Cheezed Off! food truck was a product of clever photography and PhotoShop; its online reputation was purchased from a variety of businesses designed to help companies deceive consumers.

The Marketplace  investigation was inspired by a sting set up by the New York state Attorney General that concluded last year. In that operation, investigators posed as a fake yogurt shop and targeted companies that offered to write fake reviews to make the business more appealing to customers. The sting resulted in $350,000 U.S. in fines against 19 companies for false advertising and deceptive business practices.

Industry of deception

A wide variety of internet marketing companies, online reputation firms and freelance reviewers supply fake testimonials to popular review websites for a price.

Marketplace paid as little as $5 for testimonials to be written about its fake business and posted on big review sites Google Plus, Yelp and UrbanSpoon.

While leading review sites say they try to crack down on the practice, only one site detected and removed the fake reviews that Marketplace paid to have posted.

Yelp, the popular review site with 67 million reviews, detected two of three fake reviews posted about the fictitious Marketplace company.

UrbanSpoon and Google did not detect or remove fake reviews posted about Cheezed Off!.

In a statement, Google wrote: "While we take down thousands of false entries each month, there is a small subset of bad apples out there.

"We take verification very seriously and have several processes in place to authenticate businesses and remove false reviews, including a link next to each review allowing users to help flag suspicious reviews for us."

Fake review problem growing

Hancock says that most of the reviews online are legitimate, but the problem with fake reviews will continue to grow.

"I think it's going to become increasingly a big problem as more and more these high-end services – lawyers, dentists, doctors – come online with the reviews," Hancock says.

"That's not just having a bad meal at a restaurant. That could affect your life in a big way."

His advice? If you're going online for advice, sample widely.

"One of the best pieces of advice is to look for lots of different reviews and lots of reviews," he says.

"Just like you would never just ask one person what they thought of something, you don't want to rely on one or two reviews. It's hard to fake hundreds and hundreds of reviews even though they're so cheap."


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'Why would you even take the risk?' Taxi drivers question UberX safety

Cab companies have channelled their anger about a new competitor into a national movement. Seven taxi operators in cities across Canada have launched an advertising campaign to discredit cheaper rideshare services — namely UberX — that threaten to drive them out of business.

The campaign will jump-start this Saturday with a plea to Canadians in the Globe and Mail and La Presse newspapers.

An open letter warns readers to "think" before they take the rideshare route and to be aware of "the risks of using an unregulated service. Is the car safe? Is the driver fully trained?"

The letter also applauds the safety, security and value of the regulated taxi industry where, it states, drivers have proper insurance and certification, and their cars meet all safety requirements.

"I wouldn't get into a plane knowing that there was an amateur pilot that was flying this. I wouldn't get into a train if it wasn't a regulated system … so why would you even take that risk and go into an unregulated vehicle?" asks Carolyn Bauer, spokeswoman for the newly formed Canadian Taxicab Companies group.

'Why would you even take that risk and go into an unregulated vehicle?'—Carolyn Bauer, Canadian Taxicab Companies group

In a news release, she states people using unregulated rideshare services are "literally risking life and limb."

The UberX factor

The campaign doesn't target UberX by name, but it's widely considered to be the biggest threat to Canada's taxi industry. The rideshare service, the latest incarnation by the U.S.-based taxi alternative company, Uber, already operates in Toronto and Ottawa, and just last week started its engines in Montreal.

UberX uses a smartphone app to connect passengers with drivers who are not licensed cabbies. Those drivers can escape the overhead and licensing costs of the established industry and offer lower fares.

But Uber says its service is safe and reliable. The company states that participating drivers must pass both stringent background and motor vehicle record checks, and that the company carries extra auto insurance on top of a driver's own coverage.

"In the absence of any regulation on ridesharing, we've been very diligent about making sure we have safety in place," said Ian Black, general manager with Uber Toronto.

But often when UberX drives into town, cab companies and many local politicians are quick to condemn the unregulated service; in Montreal, Mayor Denis Coderre declared it "illegal."

'We have to follow the regulations, they don't.'—Cabbie Vestas Absa Mwakyeledzi

Fears of UberX coming to Vancouver already have provincial politicians prepping for battle. It has also prompted the city's four taxi companies to file a lawsuit this week to try to block the service from setting up shop there. Uber fired back in a statement, calling the lawsuit "a prime example of the Vancouver taxi industry's singular goal: protecting its own cartel."

Taxi drivers are also on the offensive. Ottawa cabbie Vestas Absa Mwakyeledzi fears the encroaching competition will jeopardize his ability to support his family. "There's a lot of people that make a living at this [whose lives] are at stake and the company, Uber, is not really fair competition for us," he said.

Consumers will decide

But UberX fan and business professor Joshua Gans says that no matter what the critics charge, market forces will decide the service's fate. 

news-taxi-driver-110614_lead_media_image_1

Ottawa cabbie Vestas Absa Mwakyeledzi fears the encroaching competition will jeopardize his ability to support his family. (CBC)

"One big interest group, consumers, tends to like it. And if they become devotees of Uber or any other similar service, that's going to have some political weight," said Gans who teaches at Toronto's Rotman School of Management.

According to Uber, Canadians are already flocking to UberX, which, it says, typically costs 30 per cent less than a traditional taxi ride. The company said that since it launched the service this past September in Toronto, it has attracted tens of thousands of users in the city.

Gans tried UberX in the U.S. and said he felt safe thanks to its customer review system: "The thing that keeps a check on safety for Uber is they've got a very strict ratings system. Basically, I get to rate every driver. I don't get to do that with cabs."

But in its efforts to fight off the UberX factor, the Canadian Taxicab Companies group is soliciting customer comment. Its national campaign includes a new website, Taxitruths.ca, which encourages customers to provide feedback: "We want to serve the public. We serve it so wonderfully every day, but if there's things that we need to change, we'd love to hear from you so that we can make those changes," said Bauer.

She said the group also plans to launch a national app for Canadians to hail a taxi.

But Mwakyeledzi, the taxi driver, fears UberX will eventually win out, as long as the service has the key competitive advantage: lower prices owing to less overhead.

"It's not fair competition because we have to follow the regulations, they don't. And that's really the key point. We don't mind the competition, but let's be fair."


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Stephen Poloz, unintended champion of jobless youth: Don Pittis

The furor set off by Bank of Canada governor Stephen Poloz this week may be the best thing to happen for the youth jobs issue in ages.

For the few who didn't notice, the governor of our central bank put his foot in it the other day, telling young people they should work for free.

Canada's latest jobs data from Statistics Canada Friday morning showed some improvement in the jobless rate for youth, but unemployment among young people is still nearly double that of everyone else.

Poor Stephen. You get the feeling he's not quite as media savvy as, say, his immediate predecessor. He likely didn't know what he was getting himself into. 

The backlash was terrific, with his off-the-cuff remarks characterized by many as turning a blind eye to current employment standards. 

Youth at job board

Unemployment among young people has been nearly double that of other Canadians. (Shutterstock)

"Employers in the private sector can't employ interns and pay them zero dollars," said Claire Seaborn from the Canadian Interns Association on CBC's Radio's Metro Morning.

Although there is a patchwork of provincial rules, generally, she says, internships are restricted to those within a specific education program.

Otherwise, employers and unemployed people just aren't allowed to agree that work will be done for free.

Good intentions

"That would essentially be contracting out of the minimum wage," says Seaborn. "Interns can't agree to be paid $3 an hour or zero dollars an hour. It's simply against our employment standard."

Despite the way it played in Peoria, Poloz's intentions were good.

What he is, quite validly, worried about is something that has often been called "generation jobless." And it is phenomenon well-known to have a long-term effect on an entire economy.

Here's how it works.

Imagine you finish your degree in law or commerce during a boom. As you graduate, employers are anxious to snatch up the fresh talent, hiring you young and malleable.

Lucky you, you get on the professional job ladder early and work your way up.

But if instead you complete the exact same qualification during an economic downturn, sometimes even the best graduates go begging.

Poor you, you get part-time work in retail, or worse, can't find a job at all. Even when the boom returns, your educational skills are stale and you are at the back of the line. 

Policy problems

If they were my kids, I'd give them the same advice Poloz offered. But then, I am not a high government official. And my saying it does not make it sound like policy. 

There are two obvious problems with encouraging free work as policy. One is that that even the smartest poor kids can't afford to work for free.

Job search

Youth unemployment is crucial issue, and not just for the youth scouring the job ads for opportunities. (Shutterstock)

The other is that a supply of free workers completely destroys the motivation for employers to actually hire young people and pay them. In a profit-motivated world, lots of free workers make the youth unemployment problem even worse.

In the past, government youth hiring programs gave kids from all backgrounds a leg up. But the current urge by governments to slash the public service means the bottom rung of entry-level jobs is drying up.

Apart from waiting for the economy to kick back into gear, the private sector solution is not obvious. 

Government handouts for companies to hire young people are in danger of turning into just one more form of corporate welfare as profit-seeking employers hire the people they would have hired anyway, and simply pay them with taxpayers' money.

I've reported in the past on the shortage of startup cash for young entrepreneurs.

But there are things governments can do. Employers are not currently pulling their weight when it comes to training the next wave of young people. They want their new workers to arrive fully formed. They each want someone else to do the training.

What about pre-trainees?

One technique might be for governments to make a rule that every employer hire some percentage of their workers as pre-trainees at minimum wage.

It would have no effect on workers who have skills or experience that commanded higher wages. And while employers would pay the cost, all would benefit equally.

The Poloz solution will not do as public policy.

But by his comments, our chief central banker has given the issue of youth unemployment a much higher profile than if he had spoken in platitudes. And as we begin a federal election year, he has done it at a perfect time.

As Poloz and today's jobless numbers remind us, youth unemployment is crucial issue, and not just for youth.

We should make federal parties realize it is the economic issue of our times.


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Historic Detroit bankruptcy ruling today

The largest public bankruptcy in U.S. history is reaching a climax.

A judge set to decide Friday whether to approve Detroit's plan to emerge from Chapter 9 with buckets of debt emptied and $1.7 billion (all figures U.S.) pledged to improve the quality of life in the struggling city.

Judge Steven Rhodes promised to announce his decision early Friday afternoon in a downtown courtroom. His task: to declare whether the plan is fair to creditors and feasible for the years ahead, the key standard under bankruptcy law.

All major critics have been silenced, particularly two bond insurers who dropped their opposition in exchange for cash, real estate and long-term leases on some city assets. General retirees voted in favour of a 4.5-per-cent cut in pensions and the elimination of annual cost-of-living payments. Detroit also is shedding $7 billion in debt.

'We'll be on a little bit of a diet for a while'

"I think we've met all the conditions we need to meet, but he's the final voice," emergency manager Kevyn Orr said of the judge.

Orr, who ran Detroit for 18 months until late September, took the city into bankruptcy with Michigan Gov. Rick Snyder's blessing in 2013.

"No one has said it's not feasible. No one has said it will not provide adequate services," Orr said of the bankruptcy exit plan. "Everybody said, `It's skinny, so we'll be on a little bit of a diet for a while.' That's OK."

Quick decision

With Rhodes' decision, the case could be concluded in just under 16 months, lightning speed by bankruptcy standards. That was largely due to the series of deals between Detroit and creditors, especially retirees who agreed to accept the smaller pensions after Rhodes last year said they had no protection under the Michigan Constitution.

The most unusual feature is an $816 million pot of money funded by the state, foundations, philanthropists and The Detroit Institute of Arts. The money would patch holes in pension funds, prevent even deeper cuts to retirees and avert the sale of city-owned art at the world-class museum.

It took more than two years for a smaller city, Stockton, California, to get out of bankruptcy. San Bernardino, a California city even smaller than Stockton, still is operating under Chapter 9 protection more than two years after filing.

"Chapter 9 is an open book. It's not going to look the same from case to case," said Melissa Jacoby, who teaches bankruptcy law at the University of North Carolina at Chapel Hill law school. "One shouldn't look at Detroit and say, `We're going to do exactly that.' That would be very difficult to do."

She noted the "high level" of involvement by the governor and Legislature in the Detroit bankruptcy as well as federal judges who acted as mediators to broker settlements between the city and creditors.


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