Predatory Banking Practices -- I couldn't believe this!

[lbdavid98]

I had an eye opening experience today. Simply put, I was charged $365 in "overdraft fees" for a single transaction that brought me blow $0.00 during the holiday weekend... Read below for how that happened. I'm lucky to have a decent job where, while I am hurting, I am not in complete financial distress. However, the experience has me angry enough that I haven't slept in more than 30 hours--the wheels won't stop spinning and I can't even imagine how many people they're doing this to every day.

I'm taking a number of steps to address the situation so it never happens to me again, but I'm going to submit variants of the letter below to a number of different agencies and press organizations.

I'm including it here for a couple reasons. First, because I think everyone deserves to know what I learned today, especially if they're doing business with any of the major banks in the US... Also, to get feedback to help make this a stronger letter if it ever gets read by my intended recipients (dubious)...

Seriously, my stomach is still in knots just thinking about what is going on out there, even after I've made sure that I can make it to my next payday without doing much more than cutting back on nonessentials.

[lbdavid98]

Over the recent holiday weekend I learned, firsthand, about some very disturbing trends in the accounting practices and assessed fees being charged at many of the largest banks in our nation. As a working professional with a college degree, the exorbitant fees I was charged were distressing, but upon further research I was sickened to learn how commonly these practices are targeted at the poorest families in our nation. I don’t want our government involved in commerce more than is necessary, but we have laws against theft—and what I experienced this weekend, and then read of in dozens of accounts, should be criminal. If you’ll give me a few minutes of your time I’ll explain.

When American consumers use their bank check cards, the funds for each transaction are placed “on holdâ€

[lbdavid98]

Grrr.

[AntiM]

That does suck. That is why I will not use a debit or check card. Ever. Also, once the money is taken, it is near impossible to retrieve. My credit union keeps sending them, I keep shredding them. No, I've always used credit cards, the trick being to strictly limit spending to want I know will be coming in.

[lbdavid98]

heh, credit cards and I have a sordid history. When I was 18 I got my first credit card, six months later I found that they actually expected me to pay my balance down in monthly intervals. By that point I was maxed, over limit, and so far behind they closed it. So I figured, we're even right?

...not so much. Anyways, I paid off most of my debts by the time I finished my time in the military, but my credit history is still chasing me around like a <noun> on a <thing that nouns eat or mate with>.

A certain devil empire founded by Sam Walton offers a visa money card with direct deposit, no overdraft ever, and consumer fraud protection... but I'm going to check out a few of the smaller local credit unions today first and see if any of them are worth switching over to. Sometime soon I'm gonna try to buy a house and banks seem to be comforted by things like a savings account and regular deposits.

[Dad]

There is a new law starting later this year that will force banks to have you opt in or opt out of the overdraft scam. Since that law was passed the complaints of overdraft problems, rising fees, etc., etc. seem to be on the upswing. Seems banks know they have just a short time to profit from this practice so they are getting everything they can now. Good Luck with your claim.

[lbdavid98]

Do you have more information about that law? Having the information can't hurt in my struggle with the banks.

[Sham]

This happened to me a while back when I bought some furniture and it bumped me just over the line. The first thing I did was open a "formal dispute". I gave the info to the dope on the phone, but insisted that a complaint be opened. Then I paid off the balance on that card with the exception of the disputed amount. The balance that the bank was looking at on the account was just their unfair fees and interest on those fees. I made regular calls to the bank on this issue and I think they realized that they were spend more on customer service time than the amount owed. They finally credited out every penny including interest--then I closed the account on them.

No one one should ever back down when the banks do this to them. They have to hear about this from their own customer service reps that have to deal with screaming angry customers every day. Don't give them a single dime more than they deserve. They will back down if you are insistant enough.

[AntiM]

Over the years in the Navy, MyLarry and I acquired bank accounts all over the country. We've slowly been paring them down and now belong to two credit unions, one local and one federal. Their services have been impeccable. One of the local banks ticked me off years ago, possibly over fees, and I've stayed with credit unions ever since.

I'm far from tight-fisted with money, LOL, ask poor MyLarry, but I do manage cash flow and debt rather well. We picked up that habit in Japan, the husband earns the money, the wife manages it and gives the man an allowance. Works remarkably well, unless he goes out and buys big ticket jewelry for the wife as a surprise. Ouch, we're still paying for that one.

[gyre]

Be sure to send details to ALL your state and federal representatives and anyone else you can find that might help.
Don't forget the press.

Banks don't always back down.
I had to sue a credit union for deliberate fraud once.

I only got a debit card when I found out I couldn't access my own account (supposedly due to the patriot act!!!!) except in person or an atm!!!
Be aware that getting robbed while carrying an atm card can get you kidnapped and killed.

Banking laws are far from adequate still.
FAR!!!

Part of your issue may be gas stations rather than the bank.
I don't know why they don't tell people this, but gas stations often keep all charges for a week or more and then run them through.
This happened to me over and over until someone told me about it.
Point out to the bank that they didn't inform you of this, if they didn't.
There should be no delay because the bank is closed.
Posting may be different but deductions are usually immediate.

PS Everything has happened immediately for many years anyway.
They make money off the cash in hand.
It happens as fast as they can make it happen.
When they said checks took a week to clear, checks were rushed by plane from place to place overnight.
Fedex got in the act with First Express, a clearing house tied to fedex.
So, it was a lie, always.

[Dad]

Here is a press release by the Fed.


Release Date: November 12, 2009
For immediate release

The Federal Reserve Board on Thursday announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.
Before opting in, the consumer must be provided a notice that explains the financial institution's overdraft services, including the fees associated with the service, and the consumer's choices. The final rules, along with a model opt-in notice, are issued under Regulation E, which implements the Electronic Fund Transfer Act.
"The final overdraft rules represent an important step forward in consumer protection," said Federal Reserve Chairman Ben S. Bernanke. "Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service."
The Board's consumer testing shows that most consumers prefer not to be enrolled in overdraft services for ATM and one-time debit card transactions unless they affirmatively consent, or opt in. At the same time, testing shows that most consumers want overdraft services to cover important bills, such as checks they use to pay rent, utilities, and telephone bills.
To ensure that consumers have a meaningful choice, the final rules prohibit financial institutions from discriminating against consumers who do not opt in. The final rules require institutions to provide consumers who do not opt in with the same account terms, conditions, and features (including pricing) that they provide to consumers who do opt in. For consumers who do not opt in, the institution would be prohibited from charging overdraft fees for any overdrafts it pays on ATM and one-time debit card transactions.
"Overdraft fees can be costly," said Governor Elizabeth A. Duke, the chair of the Board's Committee on Consumer and Community Affairs. "Our rule will help consumers better understand the terms and conditions of overdraft services and will give them an opportunity to avoid fees when these services do not meet their needs."
The Federal Register notice is attached. The final rules are effective July 1, 2010.
Federal Register notice: Regulation E final rule (322 KB PDF)
Regulation E Highlights document (17 KB PDF)
Model Form A-9 (37 KB PDF)
Design and Testing of Overdraft Disclosures: Phase Two (811 KB PDF) 2009 Banking and Consumer Regulatory Policy
__________________

[Oldguy]

Last April when I sold my harley, I cancelled my GMAC insurance policy. I got a refund check from GM on a BofA check. When I cashed the check at the BofA branch in Gridley, California: they charged me 5 bucks because I was not a depositor, even though the check was a BofA check. I suppose they did not trust GM then.( GM is still 5 billion in the hole.) Third party fee my ass. Banks definitely need to be regulated more...

[Risky]

US Bank does the same. If you don't have an account and want to cash a check drawn on their bank , $5 you pay.

[ibdave]

ibdavid98 for President 2012....
[youtube][/youtube]




WATCH THE DAMN VIDEO.. Please
Running on the burner platform...

[dragonfly Jafe]

Banks are spending gobs of lobbying money (after getting bailed out by the Tax Payers) to exempt themselves from this legislation....so they can go on screwing the Tax Payers.

Keep your powder dry...

[lbdavid98]

Be sure to send details to ALL your state and federal representatives and anyone else you can find that might help.
Don't forget the press.

This is the list of people I'm sending it to so far:

John Erickson, Wachovia Bank District Manager, Kansas City Metro Area
John G. Stumpf, Wachovia Bank President and CEO
Eric Thorsen, Inspector General US Treasury
Congressman Dennis Moore, US House of Representatives
Senator Pat Roberts, US Senate
Senator Sam Brownback, US Senate
Senator Tom Holland, Kansas State Senate
Representative Tim Sloan, Kansas House of Representatives

I'm also writing a different (shorter, more succinct) version that I'll send to newspapers. I want to get this version done and in the mail by Friday though. (Tomorrow is Mr. Erickson's last day on his promise to call me back). When i get paid on Friday I can register a domain, post the simple text as an open letter, and spend the google ad dollars I've been accruing for the last 7 years as a customer of a hosting service. I can get the whole thing up and running for $10 even.

[Ugly Dougly]

I am lucky that I have a credit union. Mostly pretty okay.
They need prettier tellers though.

[gyre]

I would suggest banking committee members are worth special attention.

[Rabbi Dali Rick]

FYI - They also post all debits before deposts in the hope of sending your account into arrears to reap the benefits of the fees.



the rebbi

[lbdavid98]

BTW, Thanks Dad for the info. I'm driving down to meet with the district manager tomorrow morning and I printed out a copy of that press release as extra ammunition. It'll be really interesting to see how he defends his bank's policies when the writing is already on the wall for these types of transactions.

[Sham]

Dave, having the press release is good to have as a back up, but be very, very careful that you don't come across as using it as a threat. If you draw a line inthe sand right away, you will find that they will not back down. Keep the press release in your folder and use it only as a last resort. No one wants to be given an ultimatum.

Good luck with your meeting, and let us know how you make out.

[Elderberry]

If this has never happened to you before, simply go into your branch and talk to your banker. They will remove all of the fees. End of story.

Then make sure you tell them you want to fill out the form that says you do not want to have charges authorized if there are no funds available in your account to cover the charges.

It should be as easy as that.

JK

[gyre]

The always serene and diplomatic Shambala is right about being calm.

And try to point out financial advantages for them, in taking your suggestions.

Don't expect to win on the first try.

You may have no luck in negotiation, but it's worth trying.
It may be a marathon.

[lbdavid98]

It happened before, that's when I used up by 'courtesy' refund. So I'm not eligible for another 'courtesy'. I never thought that word would feel so dirty... it used to be something to aspire to until the co-opted it.

Right now the press release is the least of my concerns, that's the letter I'm sending to my representatives no matter what. I have 4 years of experience writing for a small newspaper and don't feel that draft would read particularly well or even make it to print.

This morning I drafted a letter to the executives at Wells Fargo, I managed to track down their internal email addresses using the internet and today at my meeting I'll bring a copy of the letter that I'll be sending.

Subject: Re: John Erickson, District Manager KC Area

[gyre]

As you note, terminology can be important.
Make it clear you are not asking for a courtesy refund, but for grounds, if you think that will work better.

Try to appeal to them on an emotional level (theirs) rather than technical, if possible.

Good luck.

[lbdavid98]

Net result, they're refunding 1/4 of my funds and I'm closing my accounts tomorrow when I get paid and have a positive balance. The letters I wrote will get sent to my representatives, who will probably reply to them six to nine months from now with a generic form letter about how much they're doing for me to improve situations like this that really have nothing to do with this.

The last two months have increased my cynicism to unheard of levels and it's getting harder to reconcile my love of modern conveniences and entertainments with the contempt I feel when I consider most of the companies that bring these services to us and how cost benefits analysis seems to be their only motivation.

On a side note, I called seven "local" banks in the last few days to get the low-down on their fee schedules, overdraft protection, and what services they'll go with online. They were all pretty generic, so I ended up going with the one (of seven) that answered their phone with a person instead of a machine. Is it lame that I was thrilled not to have to press '0'? Prolly a little...

[Dad]

I just got hit with the same scam and did a little research. Now don't get me wrong, I hate the attorneys but maybe they can at least make a change and get some kind of action. Here is a link you may be interested in looking into and the practices and current law suits into this predatory practice.

http://www.illegalbankfees.com/of.html

[Sham]

On CNN today!

[Dad]

Got about 3 seconds in and realized I was watching a mind control advertisement. Perhaps the later is worth watching but it seems obvious to me, there is an alternative motive.

[Deb Prothero]

The corporations and the banks appear to be in cahoots on this stuff.

When I was traveling to the US every two weeks last winter, I was charged holding fees by fuel stations and hotels. For example, if I used my credit card to purchase fuel at the pump, there was a $75 hold put on my credit card until the transaction posted. It had no relation whatsoever to how much fuel I actually purchased. Usually I made a purchase around $20. which is what it took to fill Caleb's Samurai tank.

I didn't know these holds were being put on. So imagine me arriving at a gas station knowing that I had over $400 credit limit and not being able to pay for $20 worth of fuel. Because my bank is Canadian, I had to wait to phone them when they opened a few hours later. Rather than call the national telecentre, I called my home branch and spoke to a teller that I knew. She explained everything.

So the fuel companies are borrowing your credit and not allowing you to have access to your own credit. Caleb and I had to sit at that gas station and wait for a couple of hours for the next transaction to post and then buy fuel. Now that is truly fu**ed.

Same thing happened on that trip with hotels. My son, fortunately for us, works as a manager of one of the call centres for Starwood Hotels (Sheraton, Westin, W, Four Points) so I was able to phone him to find out why my credit card wouldn't let me have access to the credit limit.

Turns out one of the hotels had put a hold on $400 when we checked in because that was the value of an average two night stay. We were paying the employee rate which amounted to $69 per night. I didn't know this until I went to charge a purchase and my credit card wouldn't let me make it even though I had plenty of credit limit to make the purchase. Without the interference of my son, the hotel's hold would not have come off for four days.

So the corporations are using your credit limit to fund their activities and the banks are charging you extra if you have a transaction that puts you below your overdraft protection or below zero if you don't use that while those holds are on. You can't do anything about it unless you know someone who has access to the system and can get it removed.

I've since moved all my accounts to a credit union. I will be moving my mortgage away from a bank shortly. I refuse to use my credit card to pay for fuel at the pump (and that is a fu**in' inconvenience, I'll say, when you drive over 2500 miles one way to the burn).

Also I have paid cash for a hotel since those experiences last year. The hotel had to phone their manager to figure out how to deal with me. They insisted that they had to have my credit card for the transaction and I refused. So I ended up paying a $150 cash deposit on top of the regular fee for one night in order to be registered at the hotel for that one night stay. BUT, I received that $150 back immediately on check-out and they never had access to my credit card limit (for four days like what happened last year).

The thing I'm worried about now is how to make a reservation in advance without a credit card being submitted. I had to do this and I made them promise that they wouldn't put a hold on my credit card before I arrived. They did promise and they did not put a hold on it. But it doesn't mean they don't do it to people who don't ask. They insisted on seeing the credit card on check-in but I only showed it to them, I wouldn't let them get their grubby paws on it.

It's time for a consumer revolt.