Months ago, an ad came up on my Facebook page: “Congress wants to impose higher fees on your debit card,” or some such language. I’m pretty sensitive about debit card fees, ever since 1997 when a single bounced check wound up costing me about $400 in fees, thanks to manipulative bank practices. The Facebook ad invited me to join a group called “Don’t Make Us Pay,” a grassroots coalition working to protect consumers against higher banking fees. You can see their web site above (with one slight tweak from me.)
In the time since I subscribed I received several e-mail action alerts, and a couple of times sent form letters to my elected officials. But I’d been duped. Turns out, Don’t Make Us Pay is a fraud, tricking people like me into opposing the very legislation that would protect us. Last week an email from Don’t Make Us Pay made me a little suspicious, so I started poking around and learned that it is in fact run by the Electronic Payments Coalition, an astroturf front group that lobbies on behalf of a bunch of big predatory banks, including Wells Fargo, Bank of America, Citi, and JP Morgan.
After the jump there’s a pretty okay video from YouTube user thewah that exposes the fraud.
See, when Don’t Make Us Pay says Congress wants to impose new fees on my debit card, what they actually mean is that Congress wants to restrict predatory practices around overdraft and late fees, and if they do that the banks will simply have to impose new fees, I guess to protect their solvency. That argument is a bit difficult to understand, though, when one considers bank profits: Wells Fargo posted increased profits earlier this year, while Bank of America’s CEO last month predicted surging profits of $35 or $40 billion, and Capital One’s profits were up a whopping 85 percent in January.
So how about those predatory practices Congress wants to restrict, what are they exactly? Well, I can tell you a couple of things that have happened to me. I was a freshman in college in 1997, in the early days of debit cards and before most young Americans owned cell phones, and I had developed the (inadvisable) habit of using my debit card as a long-distance calling card. This meant lots of charges of $1.25 for calls to my parents across the state. One day, I had an emergency and I wrote a bad check. I knew it was a bad check, I knew it would cost me a $35 overdraft fee, but it had to be done. What I didn’t know was that the bank (Mellon Bank at the time, which is now part of Citizens Bank) would hold a week’s worth of $1.25 calling card charges that had happened on dates prior to the overdraft and apply them to my account after the overdraft, resulting in not one $35 overdraft fee, but eleven $35 overdraft fees. When I called the bank to rectify the error, they explained that this was perfectly within their rights. Neither pleas for empathy nor threats of legal action would sway them. I did, however stop banking with Mellon soon after.
I’ve had similar experiences, though none quite so dramatic, since. I was once late with a payment to Capital One, on a credit card that was close to maxed out, and because their late fee put me over my credit limit, I was hit with an additional overdraft fee. At least when I called Capital One, they rectified the error. Not so with Wachovia, who once charged me an overdraft fee on an account that was not overdrawn, because they “floated” twice the amount of a debit card transaction, and that created a virtual overdraft – nevermind the fact that I had overdraft protection on the account, and more than enough in the linked savings account to cover the “floated” overdraft.
One starts to see why Congress wants reform. Federal estimates said that the banking industry at large earned $25 to $38 billion from overdraft fees in 2009, up from $10 billion only four years earlier. After Congress passed a law requiring customers to opt-in to overdrawing their accounts, I had several long conversations with customer service reps at my various banking companies, explaining how Congress was out to hurt me and that I should give them permission to charge me exorbitant fees. I told every one of them that I’d rather the transaction just be denied.
The banks, as corporate interests are wont to do when Congress tries to protect consumers against corporate predation, created a fake grassroots group and worked to convince citizens that they would be harmed by the very laws intended to protect them. The Durbin Amendment, the major target of Don’t Make Us Pay, is really about “greedy merchants” not wanting to “pay their own bills,” but pass the costs on to consumers – leaving out, of course, that it is the massively profitable banking industry that would actually be passing along those costs. And like any other sucker, I fell for it.
What is the lesson here? We all have to do our reading, particularly when we come across a lobby group we’ve never heard of before. We can’t take them at their word that they are advocating for the cause they claim – they may in fact be doing the direct opposite. Oh, and short of burying your money in the yard or hiding it in your mattress (which are seeming like more reasonable options every day) I recommend finding a regional or local bank to support – one that doesn’t fund the Electronic Payments Coalition or any other fraudulent and deceptive advocacy group.