I’ve recounted my own sorry experience with Chase, in which branch staff repeatedly misrepresented its business checking product. I’ve closed that account, but Chase nevertheless managed to extract some fees on a supposedly “fee free” account.
Another example of Chase’s aggressive and less than upstanding conduct comes from a reader via e-mail:
I have been unemployed for 8 months now. I would not normally tell any one this except that I have an Unemployment Benefits (UI) debit card from JPM Chase. The card only works at Chase ATMs and the grocery store. When I tried to purchase gas with it or tried it at my community bank’s ATM, it gave an error.
I am in the unusual situation of having a lot of money in the account. I have been living off of personal savings instead of using the card because of convenience. You can’t pay rent via debit card or cash, only by check.
I finally decided to try to transfer the money from the Chase debit card to my community bank account. My bank told me to just have Chase perform a wire transfer for $25. So, I went over to Chase. It turns out that it is not so simple. First off, the UI debit card Texas gave me is a state account managed by Chase. I can take out $2000 per day max. The “easiest” way was to set up a checking account with them. The woman I spoke with was a really good salesperson and I told her so. Both she and another man were trying to talk me into switching my banking over to Chase. Here were a few of the claims:
1. They have 250 layers of encryption so their computers were the safest and most secure among the banks. (Utter rubbish since they had Windows XP Pro desktops and software. I’m in IT Security.) I heard this from the banker I was dealing with and another banker in the next cube over. Encryption confers secrecy, not necessarily security.
2. I explained to them that their customers’ computers were the weak link in their security. Many banks do not have to reimburse business account owners’ lost funds that are stolen by online thieves via trojans on the customers’ systems. She and a third man claimed that all accounts were covered by comprehensive fraud insurance.
3. She claimed that if I switched my retirement accounts and consolidated them into one account with the aid of a portfolio manager at Chase, I could possibly realize 30% yields though I didn’t press her on the time frame of such a yield. It seemed a bit preposterous. She stated that if I rolled my retirement accounts into a portfolio that it could earn up to a 30% yield. I heard her say that twice. She asked me if I lost a lot of money in my retirement accounts and she implied that they could give me a high yield to recover my previous losses. She was appealing to my greed or financial insecurity, take your pick. The thing is, she didn’t say 30% annual yield, or give any time reference for the yield. It could have meant 30% yield over 30 years for all I know, but there was no time period associated with the word yield. That leaves a lot of wiggle room for escape. I likely didn’t look as smart or as old as I was, and I did present her with a state debit card, so she may have assumed I was easy pickings.
She claimed that they did quite well last year. I told her it was due to the government guarantees and the investment side of the company, but she claimed that the commercial side (retail and business) was something like 65% total profits (30% retail +35% commercial).
4. Convenience – easy online bill payments. I have that at my bank, but I don’t use it. I don’t want my account information in too many third party’s computer systems. Also, a coworker missed a direct deposit one month a few years ago and his account overdrafted several times due to automatic bill payments.
I suppose that I am lucky that I walked out of there with all of my fingers. I have never seen such aggressive salesmanship by a banker in my life towards a small retail customer. I now have a Chase checking account with a debit card and the Overdraft Protection is tied into my pre-existing Chase Credit Card and costs $10 per overdraft (It’s $2 per overdraft at my community bank.) and a way to transfer the money from the state debit card to something I control. I should be able to transfer all of the money out of there within a week or so and then cut my community bank a check. I’ll still be stuck with a checking account I didn’t want, and I’ll likely be pestered every time I try to transfer money from the original UI debit card to the Chase account. The alternative would have been to walk out of there periodically with $2000 cash which wouldn’t have been very wise.
I thought that the UI debit card was a bad deal, but I didn’t realize that it was even worse because Chase is managing a state account and limits the amount of funds that can be removed at any given time. The state is saving money, but citizens are being forced to deal with a private entity to get benefits they are eligible for.
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Banks everywhere use their quasi oligopolistic positions to make supernormal profits in dealing with their less informed customers.Same case with private utilities in the telecom,internet,electricity and gas sectors as well
Chase also doesn’t take a full payment for a credit card if you want to pay it off and close the account.
I owed them $270 last fall, and wanted to pay off the whole thing and cancel the account (they’d raised my rates to 30%). The guy on the phone swore that because it was between billing cycles there was no possible way on God’s Green Earth that ANYONE could possibly figure out what the actual amount I owed was… never mind that he was talking to a quantitative analyst (me) who was TELLING him what it was).
Anyway, all he could do was take my $170 and leave the account open until the next billing cycle when I would owe whatever the interest was (turned out to be ~ $2).
Now then, this was not a huge problem for me, just an inconvenience. But I figured out the REAL scam later. A friend of mine canceled her Chase card as well, but she did it online. She wasn’t expecting more bills and then moved later that month. It took a few months for her to get her forwarded mail from Chase and they’d billed her another $150 in late fees and charges on top the $1.00 left over in her account based on the fact that she canceled between billing cycles. Ridiculous!
So let’s hear the “capitalist” swine defend these legbreaker practices.
Hidden and fraudulent fees, pure obstructionism, making the customer navigate a pointess maze and jump through the hoop of a pointless sales pitch, the lies within this pitch the point blank refusal to provide an easy, demanded service – it’s all nothing but extortion and fraud which generates no value whatsoever, which generates nothing but cost and complexity and inefficiency.
What, praytell, to any of these have to do with vaunted “productivity”, with holy “efficiency”, with allegedly real “growth”, with “innovation”, or a “right” to “property”?
Also, state assistance programs – if these are reprehensible “welfare” the way the “libertarians” are always whining, then what’s a shining capitalist hero like a Wall Street bank doing mixed up in it? I thought they’re such “talented” heroes of “innovative” “productive” “capitalism”.
So where amid all their miraculous innovation and monumental value creation do they find time to demean themselves with welfare administration? Surely their majestic Randian pride and dignity and integrity should forbid this?
Amen.
Next topic: insurance companies.
My bank in Chicago too, this past year started hitting me with all sorts of fees for every little transaction that takes place. It adds up. And this also is supposedly a free checking account. As soon as I set foot back in the US I’m closing the account and go to a community bank.
Vinny
Vinny,
Try Fifth Third. I’ve got truly free business and personal checking with them. Very satisfied.
Thanks. I’ll give them a try.
Vinny
About nine years ago I was trying to open a business account at the Evil Empire itself, Bank of America. Now I had only banked with BoA and the predecessors they’d swallowed for about 26 years at that point.
After three trips, a new story every time about required documents and still no account I noticed a sign at a new and unknown community bank across the strip center parking lot: “Free Business Checking – Give Us A Try”. This was R-G Crown Bank. About 30 minutes later I had a business account open. I was so happy with them I soon opened a personal account too.
A few years later Fifth Third acquired R-G Crown to expand their Florida presence. I was initially suspicious but 53.com actually added services in this case, for no extra cost.
A Chase portfolio manager persuaded my wife to put her life savings into stocks in August 2008. She works in a law firm and has a masters degree, but so comprehensive a job did the guy do on her, that she did not realize they’d put her into stocks until I told her when I looked at the paperwork months later. Of course she lost a ton of money. I’m sure legally all the i’s were dotted and all the t’s crossed, but I’m in no doubt they did this in an underhanded way.
I cut my ties to big banks. I had three branded Chase cards that I reduced the balance on to zero (from low balances) and canceled. The reason: rates went from 6-9% to over 15%. No notice. The claimed it was all on the leaven and I was sent the paperwork….whatver, goodbye. The same thing happened on my Citi and Cap. One cards. I had had those for 20 and 10 years respectively. The rates went from 6.9% to 16%. I zeroed them out – well the Citi was at zero anyway – and closed them. I was told it would destroy my credit score by Citi – but after ditching about $40k in available credit – my ratting stayed the same. How do I know? Wells Fargo.
Wells Fargo sucks. Before I close all the card accounts, I had a balloon mortgage to refi. I bought a fixer-upper for a record low price in a zip code where the average home price is $750K – in the midwest. I fixed it, moved in and refied to 5.25%/30yr fixed with Midwest Bank Center. Credit score: good. They promptly sold my loan – which was only disclosed to me while we were signing papers….They sold it to Wells Fargo. I then got a letter 3 months after the transfer stating I had to basically max my flood coverage or they would do it for me and charge me 3x the policy cost. The balance on my mortgage is $150K – I had flood coverage for $150K which the originator assured me was industry practice/norm. My insurance agent called Wells to explain to them that they were the ONLY mortgage holder that requires the flood coverage to match the home replacement coverage – their answer: tough. IMHO this is a way to nail homeowners that don’t comply with hefty fees – in some cases the 3x charges would be over $6000 – of which $4000 is their service fee for obtaining insurance for you.
At this point I decided to refi AGAIN. I plan to stay here a long time and nearly doubling my flood insurance cost on an annual basis will cost thousands of dollars. I spoke to my credit union and explained the situation – they can get me into an identical mortgage (current flood coverage is adequate) and roll the closing costs into the loan (which BTW are less than two years of flood insurance increases) and the investor holds the loans the credit union originates. The employees at the CU have their mortgages through the same investor and none have had them sold to another bank. Anyway the whole reason for this rant is that my credit score POST card cancellations was identical to the score I had before I wiped out a large chunk of available credit. I just got the reports back and was stunned that they had not moved – even one point.
The bonus from all this is that the credit union’s appraiser gave a number that doubles our down payment equity. Not that that is a hard and fast number – but it was a nice result. I think I managed to make some lemonade.
I sell books @ B&N, and this kind of aggression has been evident with us since the summer of 2009.
It began right when things went south in September of 2008, and B&N changed its return policy (down to 14 days from 30 days), though we actually began enforcing this policy in earnest only in the summer of 2009. Membership (an annual fee service) renewals changed slightly as well, and most people don’t know this. The policy now is such that they may be paying for the same few weeks at the end of their membership period twice. The renewed membership period is no longer are tacked onto the end of the existing period, but begins from the month of renewal. It’s only a couple of weeks, but it’s a negative change from the existing policy.
Membership discounts for online shopping ended yesterday. Instead, members get free express shipping. I’m sure we negotiated an attractive bulk rate with UPS or whomever. In practice, express shipping works no better than regular domestic shipping, however.
At every meeting, we’re told to sell, sell, sell. We’re told what to sell, how to sell it, etc. (these days it’s all nook, all the time – customer capture, you know) This isn’t so bad. Product knowledge is a good thing, but bear in mind these people, though very bright where I work, are minimum wage employees who get no benefit from being good sales people. It’s obvious that the pressure is coming down from on above.
There is a situation with our board, and with one particular major shareholder afflicted with master-of-the-universe syndrome, which I’d call abnormal except that I’ve seen jerks like him many times before (and he really is a jerk – B&N’s isn’t the first board he’s tried to muscle).
Which is why it was so refreshing to read this at The Fourteenth Banker blog, The Ownership Conumdrum and especially, The Ownership Conumdrum II.
Nothing new here, but this is a concrete case of what we all know to be true: shareholders don’t always act in the best interests of a business. I prefer to think that it’s a management error to cater to shareholders’ wishes overmuch. Not when shareholders’ demand for returns either drain the business or run counter to customers’ needs.
So my business hierarchy runs like this:
The Customer – who can opt out of the whole equation, and in fact is the only variable who can do so without loss.
Employees – who directly determine and service customer needs.
Management – who should ensure that the product is available to satisfy the customer as well as the tools employees need to function are available.
Shareholders – who contribute nothing. Other than the purchase of new shares, what does a shareholder bring to the equation? Please enlighten me if I’m wrong, but I can’t think of a single concrete thing shareholders bring to the table, not in the business domain.
Just because it’s been done to death by advertisers makes putting the customer first no less true as a sound business strategy, and not just in mass retail. I’ve been involved in 5 startups (4 1/4, really – one was an established business who changed product line midstream and as far as I can tell, was little different than any of the other startups I’ve been involved with). Four of these startups were manufacturing operations and one service. Four of those startups made the successful leap to becoming established businesses, and considering that 66% of all startups fail within 36 months, mine is a fairly decent record. Every success was based on customer focus. This focus forced us to pull some radical stunts like hopping in the car and driving all night to deliver orders, etc., but I can speak from experience to say that this approach works.
Every time.
I realize bankers live a whole lot closer to the bottom line than do other businesses, but still, is the fee-for-service revenue generating business model really a valid one for the banking system we want?
Regarding Herman Sniffles’ comment:
Ah yes. I forgot to mention that the B&N membership signup form has a line beneath the signature asking whether the customer wants to cancel the automatic renewal service fee they’ll be charged in a year.
Maybe one in fifty people who sign up actually see this line – it’s hidden below their hand as they sign the form. Maybe 3-4% actually want the convenience of automatic renewal.
A few months back, we were specifically prohibited by management from asking the customers if they would read the line and decide if that’s what they wanted, which was my practice. As it turns out, the opt out is a metric used in evaluating store (and manager) performance. 100% of customers appreciated having this pointed out.
I’ve been on this parasitic investment rant for a long time. I credit it’s origin to Reagan and tax deferment for IRA’s. At first it was just mutual funds. Now “instutional investors”. But it changed the complexion of ownership who now have nothing in common with the entrepreneur who originally “invested” in the business. We see poison pills, etc. Who can imagine having to do that to secure a business? Inconceivable (as in Princess Bride).
I have a Chase credit card with a zero balance. Just by chance I opened the monthly statement, and to my surprise there was a $39 balance and a $10 minimum payment due in two days (not enough time to mail a check). So I called
Chase. The nice man told me I had opted for some kind of protection plan. I told him I hadn’t. He checked and said I had. After about five minutes of my demanding to know what had actually happened, he said “The protection plan offer came with one of your regular bills. It is automatically added to your account if you do not decline it.” I pointed out that this beyond sneaky (considering that there are about 20 pages of crap and goofy offers with each bill) and that I would close my account with them asap. I had to do a phone check to make the $10 minimum payment so that I would not have a late payment recorded on my account. The nice man promised he would remove me from the credit protection plan. A true pit of vipers.
I’m an attorney and my advice is this: stop being frightened by these snakes. When they try and take advantage of you, don’t pay. When you get the threatening letter with the return envelope, scribble a note that you object, the charge is incorrect and demand proof and send it back. If they call, don’t answer the phone or hang up on them. Check your credit score peridocally. Write or email the credit scoring company and object to any marks on your score. The banks and companies will in all probability not engage an attorney for anything under $10,000. They aren’t equipped to respond to objections and will often drop their pursuits. We need to collectively as a nation change the economics of this bad behavior by the banks and simply render it too costly and dificult for them to behave like this. We can do it!
PEOPLE! CLOSE YOUR ACCOUNTS WITH THESE BIG BANKS! WITH THE EXCEPTION OF MORTGAGES DO IT NOW! TED IS RIGHT! TAKE CONTROL!
I live in Manhattan and would love to ditch Chase and move over to a credit union. But I have no idea what might be a good one. Can anyone suggest a good one? Or at least one they’ve been happy with?
Hey, a good topic for a blogposting here: credit unions. Or has that been done and I missed it?
Wisconsin has extremely competitive banking, with not only community banks but many credit unions. I won’t bank with Chase or any other national bank. With electronic deposit and the internet, if I ever have to move, I will keep all my banking here. BTW we use University of Wisconsin Credit Union (Not officially a part of the University. It has branches here in Milwaukee.)
I haven’t banked anywhere but a credit union for over 15 years. They aren’t perfect but are at least accountable to the members via annual elections to their boards. I have my credit cards, my mortgage and also financed my last car through them. I’ve never understood why more people don’t use them.
Looks like I have some company. Here’s my sneaky Chase story:
I responded to Marriot’s 50,000 mile Chase Credit card offer online after receiving several mail solicitations. After quite awhile I finally received a letter saying I left off DOB and that they wanted a copy of my birth certificate as proof of identity. The letter claimed I had 30 days to respond, but it was dated 2 weeks before I received it.
My guess is that Chase realized my net worth isn’t what they are looking for in a high end visa customer (credit is fine). So instead of just rejecting the application they decided to help ensure I never returned it.
I could have, I wanted the miles, but I was just so PO’d at the ridiculous/unethical ploys I said to hell with it.
I refinanced my mortgage at a community bank recently, I moved my checking account there. It’s a completely different experience; I hope everyone makes the effort to move their business to a local bank.
Rent seeking behavior from banksters? I’m shocked.
‘So let’s hear the “capitalist” swine defend these legbreaker practices.’
What’s there to defend? The situation here is clear as day:
1) You have a bailed out, subsidized, government-backed behemoth (Chase) providing crappy service at a high cost. Note that the government FORCED this person to use Chase.
2) You have a business that actually needs to compete in a free market (the community bank) providing effective quality service at a low cost.
Sounds to me like the libertarians have it exactly right…
But those who call themselves “libertarians” always lie and deny:
1. that the government does this at the bidding of Chase;
2. that it will always be this way so long as feudal structures like Chase exist;
3. so if we want freedom and small government, the first and necessary thing that has to be done is to break up all oligopolies, and freedom must then be vigilant against such structures ever forming again.
Whenever anyone instead simply blames the flunkey (the government) and not the flunkey’s boss (the corporations), which is what economic “libertarians” always do, it’s really a pro-corporate scam. They really want the dictatorship of these corporations.
They’re not real libertarians at all. By definition any true libertarian wants to eradicate all large structures, public and private, as being existential, inertial assailants of freedom.
But ideological con-men like economic “libertarians” are really just pro-corporate libertines.