Customer-gouging datapoint of the day, Bank of America edition

By Felix Salmon
June 29, 2009

From WaPo:

Bank of America this year raised the maximum number of times customers can get hit with overdraft fees from five a day to 10.

This seems incredibly short-sighted to me: BofA here is just asking to get slapped down — hard — by Elizabeth Warren when she takes over the new Consumer Financial Protection Agency. And with behavior like this, it will have precisely no one defending it.


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But 5 now seems reasonable. That was probably the goal.

Posted by Marc | Report as abusive

“Elizabeth Warren when she takes over the new Consumer Financial Protection Agency.”

I admire your optimism; from your fingers to G-d’s eyes. More likely version: Warren will be thrown under the bus by the Obama administration, and Neil KashandKarry (or some other ex-GS person) will get the job.

I really dont think anything is too exorborant. You are lucky you are not carted off to jail. Pay your bills and stop worrying about overdraft fees; Alternatively you can stop being a cheap skate and buy overdraft protection. Why should any bank have to take it on the chin?

Posted by Ted Kinney | Report as abusive

Or better yet, Ted, don’t disburse funds that customers don’t have. Why would a bank disburse funds to a customer that don’t belong to the customer? Perhaps to charge “exorbitant” fees?

Posted by Gene | Report as abusive

Bank of America has the worst service among banks in NY. Their fees are higher than competitors and their is always problems with online banking That’s why I bank with Chase!!!!

Posted by David Webb | Report as abusive

Fees like this are a tactic in a ploy that Ms. Warren has characterized as Trick & Trap. Stand back a bit and what you see is folks on the margin, for whom it’s necessary to get the most out of their available balances, encountering a predatory regime that has established a minefield of new rules in that space.

Each one triggers a fee or a status change that invokes an even more dangerous and costly minefield replete with bloodsucking rate hikes and fees that kick account holders when they’re down. Ms. Warren describes an encounter with Citibank credit managers where she was sharing her insight about how to predict when a bankruptcy was coming to avoid losses when she learned about the dark side. What she hadn’t understood was that the extreme rates and fees that this cohort pays, losses and all, was actually the key to Citibank’s profitability.

I’ve seen that before on mortgage company financial statements where the profit reported on the income statement is equal to the income from late fees. The trap happens when the aggregate of these moves has the effect of locking a person in at this level. And then the players, careful to not kill the host right away, engage in parasitic engorgement of money from people who may be brave but they are not free.

It appears that Ms. Warren, a 30 year overnight success, will get her day in the sun having won the respect of just about everyone looking at these issues. Any attempt to throw her under a bus would result in its destruction and expose the throwers as chumps – it’s not a realistic prospect after the Bush: Justice Department revelations.

What she will face is lobbyists, dipped in blood money, who have learned how to enshrine incumbent legislative politicians. They peddle compromise of obscure things with hidden consequences. What you get when they’re done is the donut hole in Medicare Part D prescription payments and the administrators being forbidden to negotiate better prices.

That’s too much nonsense for any sane person to engage – let’s hope that she can find ways to render it. I’d love to see a couple of these predators get knee-capped somehow. It’s obvious that she has the chops and there’s every reason to think that Ms. Warren has the moxie to change the stage – it’ll be interesting to see what she finds to use as a woodshed.

Posted by JeffS | Report as abusive