March 28, 2024

Bank of America Drops Plan for Debit Card Fee

The bank, the nation’s second-largest, said it was abandoning its plan to charge customers a $5 fee to use their debit cards for purchases. Only a month earlier, the bank had announced the new charge, immediately setting off a huge uproar from consumers.

Despite an outpouring of complaints online and at branch offices, the bank had remained steadfast in its plans until last Friday, according to a person briefed on the situation, planning to ease just some of the conditions for avoiding the fee. But over the weekend, after two major competitors — Wells Fargo and the nation’s largest bank, JPMorgan Chase — said they were backing away from their plans to levy similar charges, two high-ranking Bank of America officers recommended to Brian Moynihan, the bank’s chief executive, that the bank simply drop the fee.

Then, on Monday morning, when SunTrust, a regional bank in Atlanta, said that it, too, would abandon its $5 charge, Bank of America was left standing alone, the last major bank planning the fee. The announcement came on Tuesday.

“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” David Darnell, co-chief operating officer at Bank of America, said in a statement. “As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”

The revenue the bank expected to raise from the debit fee was not worth the damage to its reputation, the person briefed on the matter said.

The bank never disclosed how many of its customers would have been affected by the fee. It also declined on Tuesday to comment on how many had closed their accounts after the original announcement, but sources close to the bank said that account closures were higher than usual. And smaller institutions like PerkStreet said that their account acquisition rate had spiked in the days afterward.

Besides Wells Fargo, JPMorgan Chase and SunTrust, Regions Financial has also said it would roll back its debit fee as of Tuesday and reimburse customers for any charges incurred.

All along, though, Bank of America took the brunt of the criticism, and apparently, it was not just the debit fee that caused consumers to lash out. For Grace Anderson, of Madison, Wis., the bank’s recent decision to cut 30,000 job positions had prompted her to close a checking account. “I cannot in good conscience invite them into my house and my life,” she said, adding that she had moved her account to USAA, a federal savings bank.

The new fees were part of an effort by the banks to raise revenue lost elsewhere. On Oct. 1, a new federal rule went into effect that limits the fees banks can levy on merchants every time a consumer swipes a debit card to make a purchase. The new limit is expected to cost the banks about $6.6 billion in revenue a year, beginning in 2012, according to Javelin Strategy and Research. That comes on top of another loss, of $5.6 billion, from new rules restricting overdraft fees, which were widely seen as onerous and went into effect in July 2010.

Now that all the large banks have decided not to impose the debit fee, experts said, they will find other ways to fill the hole. “Those revenues paid for a lot of things,” said Joe Gillen, chief executive of Pinnacle Financial Strategies, a bank consultant in Houston.

Now, he said, consumers can expect more fees over time. “It will be slow and gradual, but they will bring those revenues back,” Mr. Gillen said.

What he said was most frustrating, however, was that the banks were penalized for their openness. The fees the banks were trying to replace — the so-called swipe fees — were not readily apparent, even though all consumers were ultimately paying them in higher costs at the cash register. Now, Mr. Gillen said, the banks “are going to have to hide the fees and the customers will still have to pay them.”

But those customers may have found their voice, which has been amplified by social media. “People can now use tools like Change.org, Facebook and Twitter to rapidly organize and collectively act to influence the policies of even the largest companies,” said Ben Rattray, founder of Change.org, which allows consumers to start grass-roots campaigns using its online platform.

He pointed to Molly Katchpole, a 22-year-old woman from Washington who collected more than 300,000 signatures opposing the fee by using his company’s platform. And then there is the grass-roots effort that is calling for this coming Saturday to be “Bank Transfer Day,” where customers of big banks move their accounts to community banks and credit unions.

Mr. Rattray and other consumer advocates said the outcry was about much more than fees. “Bank of America’s new debit card fee was the last straw for many consumers who are tired of banks that got bailed out that are now turning around and hiking fees,” said Norma Garcia, manager of Consumer Union’s financial services program. “There was this phenomenon with banks and others confusing passivity with loyalty. And consumers are saying, ‘You can’t take us for granted anymore.’ ”

Lawmakers also openly criticized Bank of America’s planned fee. Days after the bank announced that it would charge the fee, President Obama said customers should not be “mistreated” in pursuit of profit, while Vice President Joseph R. Biden Jr. called the move “incredibly tone deaf.” And Senator Richard J. Durbin of Illinois, the No. 2 Senate Democrat, spoke out on the Senate floor, urging consumers to vote with their feet. He had sponsored the rule, known as the Durbin amendment, that limited the amount banks could charge for debit card transactions.

On Tuesday, he took to the floor again. “What we have at work here is a very fundamental principle of our economy, the free market economy, transparency,” he said. “So people know what they are being charged. So they have a choice.”

This article has been revised to reflect the following correction:

Correction: November 1, 2011

Because of an editing error, an earlier version of this article incorrectly referred to Bank of America as the nation’s largest bank. JPMorgan Chase has overtaken Bank of America in assets, according to third-quarter results released in October.

Article source: http://feeds.nytimes.com/click.phdo?i=b5be0dd2641e092993355536e9125c38

Bucks: Don’t Forget the Cable Box in a Disaster

Picking through debris after a tornado in Pleasant Grove, Ala.Butch Dill/Associated PressPicking through debris after a tornado in Pleasant Grove, Ala.

Many readers made thoughtful comments in response to my post earlier this week, asking what they would take if they had to leave their home quickly in a disaster. Children, pets and sentimental keepsakes topped their lists, along with wallets and credit cards. No one talked about grabbing the cable television box. But apparently, that may be a good idea.

The Consumerist reported Monday that the cable provider Charter Communications initially played hardball with some victims of the tornadoes that devastated parts of Alabama in April, telling them they would have to return their cable boxes or pay possible late fees or even replacement charges. The company then relented and said it wouldn’t charge customers for lost or destroyed boxes.

A Charter spokeswoman didn’t return Bucks’s call seeking comment, but the company did provide an explanation that The Consumerist posted Wednesday, stating: “Some customers who called into our customer care centers immediately following the storm were unfortunately given direction on our equipment policy that did not fit the magnitude of the storm. Given the catastrophic circumstances throughout the state, we adjusted our policy, waiving fees for equipment that was lost, damaged or destroyed during the tornado. This was the right thing to do for our customers, and no equipment fees were collected from customers who contacted us before the policy was adjusted.”

Another cable company, Bright House Networks, told a Birmingham, Ala. newspaper that it typically expected customers to file an insurance claim on its behalf for equipment that was lost or destroyed. But a Bright House spokeswoman told Bucks that it had modified that policy in Alabama. “Bright House Networks will not charge customers for equipment damaged or lost as a result of the storm,” a spokeswoman, Lorelie Johnson, said in an e-mail. She also said the company had “proactively” credited the accounts of customers who lost service due to the storms, and sent representatives to walk damaged areas to identify destroyed homes so billing could be suspended. She added that many of the company’s own employees had had to “deal with complete devastation to their homes and properties.”

Both companies also noted that they had made donations to local relief efforts.

Have you had to deal with cable or other service providers after a fire or other disaster at your home? What was your experience?

Article source: http://feeds.nytimes.com/click.phdo?i=1491305a284b988a0e78025f4fb2ac07

Skype-Style Calls Force Wireless Carriers to Adapt

Wireless carriers now funnel voice and data traffic over two separate networks and charge customers accordingly. In the not-so-distant future, analysts and industry executives say, all mobile services, including text messages and voice and video calls, will travel over data networks.

Microsoft’s recent $8.5 billion deal to buy Skype, the Internet calling service, could accelerate this change — one that is forcing wireless carriers to adapt. Services like Skype can cut into the carriers’ revenues because they offer easy ways to make phone calls, videoconference and send messages free over the Internet, encroaching on the ways that phone companies have traditionally made money.

The telecommunications industry is already in a state of flux as more people disconnect their home telephone lines in favor of cellphones. Now the wireless carriers are looking for new ways to make money based on mobile broadband and applications, rather than voice minutes.

“Eventually, everything migrates to a data channel,” said Brian Higgins, an executive at Verizon Wireless who is developing products and services for the company’s high-speed 4G network. “We’re moving away from silos of communication to one where everything is combined together.”

Analysts tend to agree that Microsoft is not looking to steal business from the wireless carriers. Instead it hopes to revitalize itself by creating innovative software for smartphones and tablets, with Skype’s services built in. Microsoft will need companies like ATT and Verizon Wireless to put their confidence and marketing budgets behind those devices to appeal to consumers.

But the Skype deal also signifies a larger interest in next-generation communications services. It is not just Skype that the wireless companies need to worry about. A bevy of mobile messaging applications, including WhatsApp, Kik, GroupMe and textPlus, allow people to send messages over data networks, sidestepping the cost of sending and receiving standard text messages.

Carriers already must deal with many new competitors in the communications game. Name companies like Apple, Facebook and Google are making services available that traditionally only carriers could offer. Google, like Skype, offers ways to make free phone and video calls over the Internet. Apple lets iPhone owners make video calls.

The ultimate risk for the carriers, analysts say, is becoming “dumb pipes,” providing only the data connection and not selling any more sophisticated communications services themselves.

“Much of the value in communication now sits above basic connectivity,” said Charles S. Golvin, a telecom analyst with Forrester Research. “Things like IM, video calling like FaceTime, and Web conferencing. These are delivered to consumers by companies like Google, Apple and Cisco — not the carriers.”

Chetan Sharma, an independent telecommunications analyst, points to one instance in which the growing popularity of using mobile applications to communicate has hurt a wireless company.

Last month, KPN, a wireless carrier in the Netherlands, cut its profit forecast and reported a 10 percent decline in quarterly revenue from text messaging, which the company attributed to applications that give people free access to voice and text services if they have a data plan.

“It’s an early indicator that it could happen elsewhere,” Mr. Sharma said.

In the United States, no signs indicate that the volume of text messages sent or voice minutes used is in decline, he said. But revenue from voice services has dropped steadily as carriers have move toward unlimited calling plans to stay competitive with one another, lowering the average revenue that can be generated per minute of talk time.

In the United States, Mr. Sharma said, voice revenue has declined 7 percent over the last four years, while data revenue has soared 132 percent. Over all, data revenue now makes up 35 percent of the total revenue for the wireless industry.

Carriers have responded to the shift toward digital communication differently. Some seek to leverage the new wave of services to differentiate themselves and gain an edge over competitors. Sprint, for example, recently united with Google to let its customers link their Sprint phone numbers to Google Voice, a service that rings all of a person’s phones and even Gmail when someone calls that person’s number.

Others, like Verizon Wireless, say there is plenty of money to be made from their mobile data networks. They say demand for data services will drive sales and adoption of smartphones, which are more lucrative to wireless carriers because they require expensive data plans.

“There will be an increased appetite for devices that can access higher bandwidth, which I find very encouraging,” Mr. Higgins of Verizon said.

Article source: http://feeds.nytimes.com/click.phdo?i=ab931fd2f87a0d12537e9a48464465f4