Yet Another Hidden ATM Bank Card Fee Scam
I particularly enjoy that the president has called his “Financial Crisis Responsibility Fee” a fee. Banks know from fees…
Twenty years ago Texas-based banking consultant Bill Strunk convinced banks that they should allow customers overdraw their accounts and charge them a fee to do it. He’s also credited with convincing clients to make checking accounts free to entice more customers. But high to low transaction processing, that the banks came up with on their own:
LOWELL BERGMAN: Bill Strunk says that many of the big banks have taken his concept of overdraft fees too far. They do that by not processing checks and debit card charges to your account in the order they are received. They use a computer program so the banks can pick out the biggest amounts first and charge them against your account. This empties your account faster, resulting in more overdraft fees for each of the smaller amounts. There’s no restriction on a bank ordering that way?
BILL STRUNK: No. That’s correct.
That from Frontline’s, The Card Game [excerpted above]. Now watch as this sleazy, sneaky, despicable practice is described as something customers asked for:
SCOTT TALBOTT, V.P., Financial Services Roundtable: The program is set up to honor what the customers have told us they want. We’ve set up on a high to low, right? We’ve told you that up front, we were going to process them from high to low. That’s what customers have told us they want- “Process my mortgage first. Process my student loan first. Process my car payment first.” And then all the other transactions, the smaller ones.
LOWELL BERGMAN: Which customers have told you this? When? No one ever asked me.
SCOTT TALBOTT: Yeah, that’s- as I’ve told you- you asked me if there was a survey. There wasn’t a survey. This is the years of working with our customers to find out what they want, and this is what they’ve told us.
Am I the only one who didn’t know they do that? Mark Gimein explains this is standard operating procedure for the banks:
Of all the insults that the consumer banking industry has hurled at the public’s intelligence in the fight over noxious fees—29 percent credit card interest, arbitrary rate hikes, and the rest of its shoddy practices
—the most galling is the argument that for the government to intervene in any of this would be to hamper competition and keep banks from serving their customers. In Bank Bizarro world, the chance to pay $39—sometimes five times in one day—for losing track of one’s balance and pulling out a debit card to pay for a soda is a service consumers are asking for. [...]
Here’s how the industry’s argument goes: Since, say the banks, we have a vigorously competitive banking sector, if consumers aren’t getting something better than the banks are giving them, it must be because they don’t want it. In this they get backing from friendly economists such as George Mason’s Todd Zywicki, who claim that because folks can always avoid overdrawing their accounts or paying their cards late and choose not to, they must like the option of paying the fees their banks have foisted on them…. The hidden premise in the banks’ rhetoric is that “unregulated” means the same as “competitive.” Unfortunately, it doesn’t.
Back in our Frontline program, the NYTimes’ Joe Nocera articulates the idea behind a Consumer Protection Agency:
The idea is to create a brand-new agency because the current regulators the FDIC, the Fed, the controller of the currency have a fundamental conflict, which is, on the one hand, they’re supposed to look out for consumers. That is part of their franchise. But on the other hand, they’re supposed to look out for the safety and soundness of the banking system. And guess what? When you gouge consumers, you’re actually helping the safety and the soundness of the banking system.
For the New Year, banks rolled out a whole host of new fees to get ahead of the new rules go into effect in February as part of the Credit Card Act of 2009. ATM cards are not covered by the act.
Frontline’s The Card Game will be rebroadcast on January 26 (check local listings). You can also watch the full program online.
Remember: Don’t use your bank ATM card and there are hidden costs when you use MasterCard &/or Visa Debit Cards.
26 Responses to “Yet Another Hidden ATM Bank Card Fee Scam”
I'm glad you were being sarcastic, Joe (in bashing the banks; it's understood) because the actual choice of name of the tax that Obama's administration made was not only indicative of a childish anger at the banks, but was an emotional appeal to losers — contemptible. (It's no surprise that the intention, as well as the effects, of the tax are not as stated; we're wary of everything they say lately. How the revenue from the tax would be spent remains an open question.)
Note that among the other issues and misdeeds associated with this, is that it's in lieu of regulating fees. Not that the federal government should ever be able to regulate these things nation-wide (it smacks of totalitarianism, no matter how greatly it appeals to the herdlike), but it's certainly the kind of straightforward thing “much new overdue regulation” might include (in addition to more sensible examples of, say, stimulus actions) than what we've been seeing out of Washington this year.
Note also that it's probably moot to gripe about fee increases and new fees before the laws change; that is to be expected even from angelic businesses or other parties subjected to new, tougher limits on what they can do.
“[Financial] Consumer Protection Agency”
On the face of it, it causes shuddering. Not more tentacles from Washington! They'll want to do far too much in the fake name of “goodness”…
[...] Yet Another Hidden ATM Bank Card Fee Scam – The Moderate VoiceLOWELL BERGMAN: Bill Strunk says that many of the big banks have taken his concept of overdraft fees too far. They do that by not processing checks and debit card charges to your account in the order they are received. They use a computer program so [...]
Wott? Another ranting whine about how the evil banks force me to pay when I don't bother keeping my checking account balanced? Why oh why can't we just live irresponsibly and have “others” pick up the tab through the government?
What next, the greedy bankers insisting we pay back money we borrow? Why can't we just charge loans off to the Obama Stash? Or is that another “just for unions that supported him” freebie like the taxes on good health insurance?
I've heard the government may leave check design and color to the banks. But what if the evil banks pick colors that clash or offend the artistic preferences of the discerning eye? Who will protect us? Shouldn't there be a Bureau of Acceptable Check Color Schemes to protect the people? And fonts. Some of them are atrocious. Obama should set up a Bureau of Acceptable Check Color Schemes and Fonts, lest we be at their mercy. And how about the spacing? It seems like there is never enough room on the “FOR” line to actually record the full note. Burean of Check Color Schemes and Fonts and Spacing. At the very least. With expert panels for each item.
Next week: If you forget to endorse your check, why doesn't the bank just send someone out to get your signature? Another scandal by evil banks!
[...] Yet Another Hidden ATM Bank Card Fee Scam – The Moderate VoiceLOWELL BERGMAN: Bill Strunk says that many of the big banks have taken his concept of overdraft fees too far. They do that by not processing checks and debit card charges to your account in the order they are received. They use a computer program so [...]
[...] Yet Another Hidden ATM Bank Card Fee Scam – The Moderate VoiceLOWELL BERGMAN: Bill Strunk says that many of the big banks have taken his concept of overdraft fees too far. They do that by not processing checks and debit card charges to your account in the order they are received. They use a computer program so [...]
Damn guys, doesn't something smell fishy about every bank charging the same exorbitant fee? I don't like the government being the solution to everything any more than you do, but if every bank is doing this at the same time, it smells of collusion. I know that an arbitrary opaque agency will either be impotent or abusive, depending on the administration, but can we at least get someone to investigate these practices in order to supply fuel for a lawsuit?
I belong to a small local bank and one reason I'm glad is because they process charges as they are received. My neighbors belong to a nationwide bank and have gotten screwed repeatedly by the “largest first” processing. I have sympathy but they know and just haven't gotten around to doing anything. So who is really to blame? It's not the banks fault people are stupid and lazy. All people have to do is ask and the go to a bank that doesn't do it. There are banks out there.
All that being said I wouldn't complain about a law requiring banks to process transactions as they come in. I'm not big on new laws but that one is hard to complain about.
This discussion is inane. Balance your checkbook. If you don't have the money, don't write a check, don't use your debit card. It's that simple. Problem solved.
A far more important factor than people's laziness, is the bank's ATM network. Most banks charge the customer two to three dollars per transactions that are done on another bank's ATM. Small local banks only have a handful of ATMs.
[...] Yet Another Hidden ATM Bank Card Fee Scam – The Moderate VoiceThat’s what customers have told us they want- “Process my mortgage first. Process my student to get ahead of the new rules go into effect in February as part of the Credit Card Act of 2009 . ATM cards are not covered by those new rules. [...]
Every bank doesn't charge the same fee. Nor use the sorting software to maximize bounces. In fact I specifically asked my bank if they did before I opened my checking account there several years ago, and the bank before that as well. Before that, I changed banks because they did.
I learned about the software that did this by happenstance about 15 years ago when I sat next to someone selling it on an airplane trip. I thought it was really clever, and called the bank I was using and switched accounts about two days later. Really. They make money from people who assume everything is the same — even smart people.
[...] Yet Another Hidden ATM Bank Card Fee Scam – The Moderate Voice procedure for the banks: Of all the insults that the consumer banking industry has hurled at the public’s intelligence in the fight over noxious fees—29 percent credit card interest, arbitrary rate hikes, and the rest of its shoddy practices [...]
[...] This post was mentioned on Twitter by TMV, AntiScam. AntiScam said: Yet Another Hidden ATM Bank Card Fee Scam http://bit.ly/7mk1hO [...]
[...] Yet Another Hidden ATM Bank Card Fee Scam – The Moderate VoiceLOWELL BERGMAN: Bill Strunk says that many of the big banks have taken his concept of overdraft fees too far. They do that by not processing checks and debit card charges to your account in the order they are received. They use a computer program so [...]
“I've heard the government may leave check design and color to the banks.”
No! Revenues from the Financial Crisis Responsibilty Fee will be spent on “temporary” “stimulus” jobs, hiring people in the “national” government to perform this vital national function.
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“Damn guys, doesn't something smell fishy about every bank charging the same exorbitant fee?”
It reminds me of the airlines (as well as OPEC). There is collusion (it's impossible to stop all collusion, which is an idealistic goal, except under totalitarianism) and communication, and competition. This is like the airlines, the subject of a Wall Street Journal story many years ago about air fares and the codes on the reservation systems that demonstrated the airlines were communicating, i.e., colluding One airline was undercut by another, starting a price war; the first airline responded, adding at the end of its stream of codes specifying the fare reduction: “… FU.” The banks are like OPEC, and more like OPEC, in my view, as they resemble a monopsony — and they obviously act, at least informally, as a cartel.
* * *
“Most banks charge the customer two to three dollars per transactions that are done on another bank's ATM.”
Get an account at a bank with many ATMs (I use B of A precisely for this reason). If you use a bank with fewer ATMs, you have to pay the price (just as I accept this when I use a different ATM, even if I don't like the size fees have climbed to from previous levels, actually a bigger gripe nowadays than that there are fees.) What to do about fees? Not the wrong thing, which is what (the People's Republic of) Santa Monica did in California. People complained about high fees, so the city banned charging fees by banks to non-account holders to use their ATMs. The banks did the correct thing: They prohibited non-account holders from using their own ATMs any longer in the city. The losers howled even more loudly, and the liberal media of course seized this issue (a good one, as it appeals to their kind of audience) and made it into almost another “crisis” for a few days. I recall Julianne Malveaux appearing on teevee then and saying that banks were “a public utility” and that people had a “right” to ATM access, and to free ATM access! Oooooooo. Incidentally, I heard on Thom Hartmann's show (lefty talk radio, i.e., far left, well outside the mainstream compared to righties like Limbaugh) when he was talking about banks and regulating interest, having a “national” fed-govt. “people's bank” with no- or low-interest loans subsidized by taxpayers (through heavily progressive taxes), and of course callers on his show included one who also said that banks are “a public utililty” — there's never an end to that nonsense. (Ed Schultz has advocated government banks as well, and at least gives lip service to constitutional federalism by having given as an example a state bank of North Dakota.)
Don Q., see my previous posting. Your only ideal solution is government banking — state banks or a federal bank. (Most lefties don't care about constitutional federalism and ignore the states; a fed bank it would be.)
Da Mav: Note the check design and color “stimulus” government job idea. The oversized children cackling and giggling about how great and smart they are — taxing the banks to pay for government replacement of their functions — could even broadcast political ads aimed again at losers expounding this. “Democrats. We're responsible. We make the banks responsible.”
“A far more important factor than people's laziness, is the bank's ATM network. Most banks charge the customer two to three dollars per transactions that are done on another bank's ATM. Small local banks only have a handful of ATMs.”
So? You know that when you join. Heck you almost have to seach out a small bank and you should know the situation.
I'm not advocating for myself, since I keep a buffer in my checking account. But the overdraft fees are obviously directed at poorer people, and are extremely out of line with the costs. Scams like this are flat out wrong, and shouldn't be accepted or excused by anyone. I'm not necessarily advocating government intervention, but mass media outrage and boycotts would be perfectly acceptable and have proven successful in the past.
This should be something that everyone can agree on, and instead it gets broken down along partisan lines.
Why would the “poorer” people suffer more? I was a “poorer people” most of my life and I learned to keep my checking account balanced. Poorer people are not “dumber people”.
If you want to protect people, make sure they have a good math program at the local school and add in a “how to manage money” course for seniors.
Dumber people: no; people that have problems: yes. I know a few of them. Many have family problems, money management problems (duh), personal problems (such as sex, drinking, drugs, anger management), and some are recovering from their past problems. No, banks aren't going to collect all of these fees from the poor, but I guarantee you that's where most of it comes from.
“Burean of Check Color Schemes and Fonts and Spacing. At the very least. With expert panels for each item.”
If only the Left's and “our” “ascent” hadn't faltered sometime after the 1960s. We could have had this, and so much more, by now! It's time to get angry again, as well as blame the “right” demon, for this:
Thom Hartmann: Everything was great in the 1960s and 1970s. “Then Along Came REAGAN. grrrrrr …”
[...] Yet Another Hidden ATM Bank Card Fee Scam – The Moderate VoiceLOWELL BERGMAN: Bill Strunk says that many of the big banks have taken his concept of overdraft fees too far. They do that by not processing checks and debit card charges to your account in the order they are received. They use a computer program so [...]
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“But the overdraft fees are obviously directed at poorer people, and are extremely out of line with the costs.”
Actually, it's striking what some people want. Not only with respect to constitutional federalism but with respect to the role that people have for Washington (synonyous in practice with “government” or “the government”) as their parent. It's a form of totalitarianism, touchy-feely totalitarianism. There are people — I heard this on left-wing talk radio — who don't like how badly “the poor” are doing, with payday loans, to name one example, rather than using a checking account, and want the federal government to intervene (or intrude!) and become involved in helping people with setting up checking accounts at banks, maybe setting up a program for low-fee checking accounts. (Interestingly, there was no mention, with this paternalism-totalitarianism subject, of new financial education programs.)