Here’s what John Hall, spokesman for the American Bankers Association, told a Congressional committee earlier this month in response to criticism that banks unfairly sock customers with NSF fees without warning:
Knowing how much is in their accounts is certainly something that consumers are in control of. They know what checks they have written, the automatic payments they have authorized. Overdraft fees can clearly be avoided. [Emph. Added]
It’s hard to imagine a dumber response. It says a lot about what the A.B.A. is thinking these days—and not much of it is encouraging.
First off, Hall is just wrong on the facts. No, customers don’t necessarily always know how much is in their checking accounts at any given moment. One reason why is all these cussed deposit-hold rules that so many banks have clung to for all these years even though technology long ago made them unnecessary. If I deposit $10,000 in my bank account, I might have to wait ten days or more, depending on where the deposited check is from, before I have access to my money. If I try to spend that cash on day nine, bam!, I’m out $34 for an NSF fee. And Hall says that that’s my fault? Also, I don’t know about you, but I have yet to memorize the precise dates and amounts of the various automatic payments I’ve authorized. But according to Hall, I’m supposed to carry all that around in my head whenever I withdraw cash from an ATM. If I slip up, well, that’s my tough luck.
So the A.B.A.’s spokesman is blowing smoke--and he probably knows it. His comments underscore why so many people just hate dealing with banks. The A.B.A. seems to be officially endorsing the “customer-as-chump” business model, which is way too pervasive in the industry, that nickels and dimes customers with fees when they’re not paying attention.
On the one hand, I have absolutely no problem with banks charging $30 or more when it honors an NSF for a customer. The bank is providing a service and is incurring a risk, and deserves to be compensated. But for Hall to imply that there’s nothing the industry can do to not trip up its own customers is idiotic. Is it really too much to ask that customers who are about to overdraw via an ATM withdrawal not be warned of that fact ahead of time? Sometimes the customer will go ahead and pay the fee, and other times he won’t. But it should be the customer’s choice—not some gotcha game the bank is playing without the customer knowing.
(For that matter, I don’t get why more banks don’t give full credit for deposits the next day. The customer goodwill they’ll engender will way outweigh any losses they’ll incur.)
Maybe the oddest thing about Hall’s views is that they are at odds with the actual business practices of some of the best-run banks in the industry. It is as if the A.B.A. has decided to sanction some of the industry’s worst practices.
Wonderful. Here’s an idea: how about the industry responds to reasonable criticism thoughtfully, and with the customer’s best interests in mind?
Tom Brown is head of BankStocks.com.