Wednesday, May 30, 2012

Bank of America Manipulating Customers?

Bank of America wants to rid itself of its expensive Real Estate and pare down the number of tellers.  They are manipulating customers in order to do this.

I have written extensively about Bank of America in the past.  Until this morning, I was a shareholder.  Bank of America is like having a needy friend.   They can be a great friend, at times, but other times, they seem to take up a lot of your time and make you jump through hoops.   And lately, it seems this is getting worse and worse.

In my posting, Big Bank, Little Bank?  I mentioned that while small banks are "down-home friendly!" they often are not very user-friendly.  Clunky websites, few in-network ATMs you can use, and sometimes some pretty bad customer service.   Large banks, like BoA, on the other hand, have a network of ATMs throughout the country, and your cash is only a few moment's drive or walk away, if you need access to it.   If you travel, as I do, having a big bank is handy, as it helps you avoid ATM fees.

No one should pay ATM fees, or any banking fees, if they can help it.   There are banks out there today that offer fee-free checking and savings accounts, so why pay a fee, just to use your money?  Now, granted, banks incur expenses for certain things - usually things that involve tellers having to do real work.   Labor is their largest cost, right after their Real Estate costs.  So things like bounced checks and the like do incur fees.    And "maintenance fees" for dormant accounts are a way of cleaning out abandoned accounts from their books - most banks have these, nowadays.  So there are fees you may have to pay - if you don't watch your money carefully.   But if you play the game right, it should be fee-free.

Now, granted, it is possible to pay cash for everything and thus avoid any banking fees.  But there are a lot of places that just don't take cash, and despite the urban folklore you may have heard, no one is required to (the phrase "legal tender for all debts, public and private" only means that cash may be used to pay debts, not that anyone is required to accept it.)   Some folks try to "work around" banks by using prepaid debit cards or prepaid credit cards.   But these are very expensive alternatives, and being afraid of banks is no answer to the problem.

And in addition to ATMs, banks today offer one of the greatest services ever - paying bills electronically.   Writing checks is not only time-consuming and risky - it is expensive as well.   As I noted in that earlier posting, you save 44 cents or more when you pay a bill online, as opposed to writing paper checks and mailing them.   This is a service that puts money in your pocket, and with most banks, it is FREE.

So, big banks are great, right?   Well, yes and no.   They have real overhead, and many are struggling on a day-to-day basis, mostly due to unrelated losses in Real Estate loans and other shenanigans.   So many are looking to alternative revenue sources to improve their bottom line.  Bank of America floated the idea of a $5 a month ATM card fee, but was shouted down resoundingly.  So today, they are scrambling to find other sources of income.

They already charge a staggering $12 just to receive a wire transfer, which is sort of ridiculous.  In Europe, wire transfers are used in the same way we use electronic bill pay - you can send someone even a dollar this way, with little effort.   In the US, however, wire transfers are viewed as a way of transferring house payoffs, lottery winnings, and other "big tickets" from one person to another, securely.  So charging $12 to receive $500,000 doesn't seem like a big deal.    But when I receive $500 from a client in Europe, it is a big deal, and a big pain in the ass.

And of course, they charge pretty hefty fees for bouncing checks and "going over" your credit limit on credit cards.   The latter, of course, is an "opt-in" feature - you have to ask for "overlimit protection" which nicks you with a $30 fee if you go over your limit.  They cover the charge, and charge you a lot.   If you are astute, you would "opt out" of this "feature" as it doesn't help your bottom line at all.

Bank of America has been caught in a particularly nasty debacle, in that they bought Countrywide Mortgage at the height of the Real Estate Boom, and apparently didn't realize they were buying a steaming pile of turd at the time (or did they?).  So, as you can imaging, BoA is fishing around for ways to cut costs and improve the bottom line.

One way to do this, is to reduce the number of employees - the tellers - and the related hardware and Real Estate.   Bank of America is saddled with huge buildings in most towns and cities, which are usually quite identifiable as "Bank of America" buildings.   Paying tellers to work there is expensive, as you have to pay their salaries and benefits and health care, and retirement, not to mention that 9% matching Social Security and Medicare taxes, unemployment insurance, workman's comp, and the like.

So, many banks are experimenting with virtual banking - using ATMs to not only withdraw money, but handle deposits.  If you think about it, there is no reason why the dreary job of "Bank Teller" couldn't be automated like anything else.   And the technology works pretty well.   Checks are scanned in, read, and then automatically deposited.   In this era of Check-21, physical checks are not moved about anymore anyway, but rather are shredded and their electronic counterparts retained.   And some banks, like Citibank, are trying to sell this "virtual" account deal, to people like me, even though they have no branches in my area, just ATMs.

And the interesting thing is, if you do go into a physical bank these days, and see who is in line with the teller, you will see there are two kinds of customers, generally.   First, there are the local merchants, with a wad of money and checks from their businesses, making a deposit.   These are profitable customers for the bank, as they usually have commercial accounts that charge monthly fees.   And chances are, they have pretty good bank balances and maybe a line of credit or business loan as well.

But for many of this first group, a night deposit slot may be all they need.   Take the money and checks, put it in the night deposit, and the bank can process the deposit at its leisure the next day.

The second type of customer are poor people.   These are the folks who want to "cash a check" or withdraw $25 from Savings.   They have low balances and end up costing the bank more money than the bank can make from interest on their meager deposits.   Wealthier folks use checks, credit cards, debit cards, or the ATM outside.   It is only the very poor who try to use a savings account as a checking account, making multiple deposits and withdrawals per month.

So, you can see that tellers are not only expensive, but that for the most part, the only people using them are the customers who make the least amount of money for the bank.

Now, I know what you are going to say.  Suppose there is a "problem" with your account?   You want to talk to someone in person!  Right Away!   But of course, this "person" isn't available until 9:00 or 10:00 AM, and then only if you drive to the bank and then stand in line and explain your story.   And even then, you are referred to the bank manager, forced to wait in line outside her office, and then you have to explain your story again, at which point she calls someone in customer service and starts the process all over.   You might as well cut to the chase and just call customer service yourself.

So, it would seem that the Banks have an interest in you using the ATM for all of your transactions, to use the computer to get your balance and your statements online.  To use the call-in customer service, instead of a teller.  And for the most part, people use these modern conveniences - people such as myself, who have not set foot in a bank lobby in years.

But how do you go about making people do this?  That is an interesting conundrum.   A year or so ago, I received pleas from Citibank to open a virtual-type account, promising me a $100 bonus if I signed up.   Since there are no offices in my town, all my banking would have to be through their Automated Teller Machine.  It was a tempting offer.  The carrot is an effective tool.

So is the stick.

My account with BoA was opened in 2005 in New York State.   In the seven years I have had the account, I have never paid a monthly service charge - and why should I?  Other banks offer charge-free accounts.   They did have $3 a month service charge for savings accounts, unless you transferred a minimum $25 to savings every month.  But that was easy to set up using automatic online-transfers.  So for seven years, I have never paid a service charge to use this account.

That is, until this morning.

Logging onto my account, I was chagrined to see "Monthly Service Fee, $12" on my account.   So, as you might imagine, I lit up the phone lines to customer service.   And the story I got was, well, a load of horse shit.

The person answer the phone tried to tell me that this was the regular monthly service fee - you know, the one I pay every month.   I explained that I have never paid such a fee in seven years.  She countered that unless I had automatic deposit of at least $250 a month, or a minimum balance of $1500 at all times, the service fee applied.   I explained that I have never, in seven years, had automatic deposit, as I am self-employed, and moreover, my balance has gone below $1500 on numerous occasions without such a fee being applied.

At that point, she kept repeating herself, so I asked to speak to a supervisor.

The supervisor, after many keystrokes, claimed that my monthly fee was "waived" for the first seven years, and that his "waiver" had expired.   Again, horse hockey.   When I opened the account, there was no "service fee" discussed or waived.  BoA is changing the rules of the game, in the middle of the game.

That was the windup, here was the pitch:   The helpful service person said that, since I use the ATM and online services anyway, I could "convert" my account to a virtual type "eAccount" and avoid the fee in the future.  Interesting gambit.

The virtual account is the same as my existing account, except that I cannot use the teller at the bank for any transactions - deposits, withdrawals, check cashing, etc.   And that was the real deal behind this whole poorly thought-out charade - to get me to transfer my account to this "eAccount" status.

Naturally, I agreed to this, and as she "converted" my account (and refunded the $12 fee), I went online and dumped my Bank of America stock.  Why?  These are the actions of a desperate company, in my opinion.

Converting the account gives me time to think about where I will be transferring my business to.   BoA has been a good ride, but this just strikes me as crass manipulation.

And coming right after a very suspicious "theft" of my debit card, it makes me feel as though I am a cow being lead to the slaughterhouse.   As you recall, I had no problems with my debit card, but for some reason BoA decided I needed a "new" card, which they sent me without my request.  Almost immediately, this new card was stolen, and fraudulent charges made.   While the charges were reversed, it was not without a lot of hassle - and a dozen phone calls as well.   And of course, every step of the way, a helpful BoA employee would remind me of how convenient and easy this would have been with a BoA credit card.   It makes one wonder, after all, with the recent cut to debit card fees, whether this was by accident or design.

But of course, I don't believe in conspiracy theories.

Is this new "eAccount" a good deal?  Maybe, maybe not.   The point is, the way this was forced upon me was sort of crass.  And this lame excuse that my account had some sort of "special waiver" that mysteriously expired this month was, well, lame.   And I am curious as to how many other people out there got a similar surprise charge to their account this month?

But what really is interesting, is that BoA really isn't "saving" any money by steering me to this type of account.  I haven't seen the inside of a BoA branch in over a year, if that.   So it is not me that is tying up the tellers and using up that valuable face-time.  

But I suppose there are a lot of other customers out there - the kind that like that "face to face" with the teller - who will see a $12 fee on their paper statement (which they get by mail) and say, "Well, whaddya know about that?" and then put the statement on the coffee table and turn on Reality TeeVee and order a take-out pizza and forget all about it.    And I suspect that includes more than few million people, which represents a lot of "found money" for Bank of America.

But to me, it is a violation of trust.   I no longer trust this Bank as working in my best interests.   I feel I have to watch these people like a hawk.  It is like having a cousin who steals things from you.   As long as you beat the shit out of them every so often, they keep their mitts out of your wallet.   But eventually, you get tired of beating them.   And frankly, it is just easier to avoid time-consuming folks like that.

And that is what Bank of America has become - a time-bandit needy friend.