DBDB – B.O.A.

I think I have a great idea for Michael Moore’s next documentary.  It’s quite simple, it might even be genius!  He should go to the headquarters at Bank of America and stand outside with a bunch of protestors and continually yell “Don’t Be a Douche-Bag”!  And every time one of these corporate jabronis (great word) come outside, I literally want everyone to yell this phrase over and over.  Seeing as their douchey behavior has been relentless for a long period of time even though they have crippled the entire country while they all get insanely rich, I doubt our protest will do much to change anything.  But it sure as hell would be a ton of fun!  At least for a little while.

You see, Bank of America has done something dirty.  Actually, they have done two dirty things.  One they have been doing for the better part of ten years and the other they are trying to do now since they got caught doing that other dirty thing.  Now your probably thinking to yourself, no duh, this is old news.  We already know all about their corporate greed, the buying and selling of sub-prime loans, gambling on derivatives and insurance, and ingesting lots of cocaine.  But this isn’t about that, so before you decide not to read any further, I’m going to tell you a story…

A few months ago I received a postcard in the mail informing me that I was in fact part of a class of people involved in a lawsuit.  In other words, a class action lawsuit.  We have all seen those commercials on TV  with the over-zealous lawyers urging you to call right away so you can spend six hours filling out forms and when the suit is settled you get a check for twelve bucks.  I thought this postcard odd because it was unexpected.  I have never been involved in anything which would warrant a lawsuit.  I have never taken any strange, experimental medication, been involved in any weird studies, or been to jail and been illegally strip searched (some of the more common class action lawsuits).  Since my time is slightly more valuable to me than twelve dollars for six hours, I immediately decided that I wasn’t interested.  But when I flipped over the postcard it said in big bold letters Bank of America – Overdraft Fee Settlement.  And further, that if I wanted to be included, I simply had to not do anything.  So, I did nothing.  And now I am going to be involved in my first ever class action lawsuit!

A few weeks later I stumbled upon the postcard again and upon closer inspection I found a website that explained exactly what the lawsuit was about, this is what I found out… Basically Bank of America was involved in a scheme where they would fraudulently charge its customers overdraft fees by adjusting when certain transactions would post to your account.  In a normal banking system, a reasonable person would assume that items and transactions would be posted chronologically.  What Bank of America and many other banks were doing was posting transactions into accounts based on the size of the amounts largest to smallest.  This would have little effect on the richer members of society who would never have to deal with low account balances but for many Americans who live paycheck to paycheck, this wreaked havoc on their bank accounts, and here is how it works.  If you had a relatively low account balance and say four transactions about to post to your account and you don’t have enough in your account to cover all of them, Bank of America would post the largest transaction first ensuring that they overdraft your account and can charge you multiple fees.  Let me give you an example.

You have $600 dollars in your account on Tuesday so you go to Target (not Walmart) and spend $56 on necessities.  Then on Wednesday you decide to take your family out to a dinner and a movie and spend $100.  On your way to work on Thursday you stop and get coffee for the office and spend $11.  You completely forgot that your rent comes out on Thursday which is $550.  You come home from work on Thursday to deposit your paycheck and find that your account is overdrawn and you have been charged 3 overdraft fees totaling over $100 dollars.  It doesn’t matter that you go to the bank with paycheck in hand to deposit more money, they already got you.  In a normal banking system you would expect it to work like this:

Normal

Tuesday                        $600

Target                            -$56

Balance                        $544

Dinner and Movie    -$100

Balance                        $444

Coffee                          -$11

Balance                      $433

Rent                         -$550 (overdraft fee)

Balance                    -$117 – $35 = -$152

In this scenario the transactions are processed chronologically.  This incurs 1 overdraft fee and in actuality, most banks wouldn’t even post this transaction at all and would return it unpaid.  The way Bank of America was posting their customers transactions looked like this…

Fee Scam

Tuesday                       $600

Rent                            -$550

Balance                         $50

Dinner and Movie    -$100 (overdraft fee)

Balance                      -$50

Target                         -$56 (overdraft fee)

Balance                      -$106

Coffee                         -$11 (overdraft fee)

Balance                     -$117 -$105 = -$222

This scenario incurs 3 overdraft fees (for the exact same purchases) at $35 dollars a piece when they were really entitled to only 1 or possibly even none.  But you can imagine a million scenarios like this where the bank only got one extra fee or others where they got five and six overdraft fees when they were only entitled to one.  With over 50 Million customers, imagine, conservatively of course, that they did this to each customer only once.  That’s a pretty good chunk of change.  It’s not enough that these guys were in the middle of destroying our country on Wall Street but in this case they were literally taking money directly out of people’s pockets $50 and $100 dollars at a time.

So, I am pledging my $12 dollars to the judge hearing the case (and I think I can get other people to go this too) if the judge will begin and end his judicial opinion with the words, “Don’t Be a Douche-Bag” Bank of America.

The other dirty thing which has gotten Bank of America some publicity over the recent weeks is the introduction of…wait for it…a new FEE!!  Since they had their overdraft fees cut down because they got caught defrauding people and the government put a cap on how much they can charge merchants to process debit cards, they have implemented debit card fees.  Earlier this year the government reduced from 44 cents to 21 cents per transaction how much the banks can charge merchants to process debit cards.  Bank of America says that they are going to lose billions of dollars as a result of this and the debit card fees are going to off-set some of that cost.  They are planning to charge $5 a month or $60 dollars a year to any account that uses a debit card for purposes other than withdrawing money from their ATM.  That’s $60 a year on top of the account maintenance fees, check fees, overdraft fees, NSF fees, and any other fee you might incur throughout the year.  A spokesman for Bank of America came out and rationalized them by claiming that they need these fees because they “need to be able to turn a profit”.  If I can quote George Carlin here, “What are these cretons talking about!?!”.  For anyone who doesn’t know, Bank of America is the 2nd largest company in the U.S. behind on the more cretonous Walmart.  Trust me, they aren’t hurting for money.  They post income in excess of $2 Billion and have assets of over $2 Trillion.  And they acquired most of their money on the backs of the lower and middle class.

Banks in general make a very large percentage of their money on fees.  Late fees, check fees, overdraft fees, account maintenance fees, not-sufficient funds fees, and ATM fees!  How much money do we give to banks every year in the form of ATM fees?  And of course, the newly created debit card fees.  The largest of these fees are the overdraft and not-sufficient funds fees which average around 30-35 dollars.  Who exactly do you think incurs overdraft fees?  Certainly not the wealthy, it’s the lower and lower middle class who are living paycheck to paycheck.  The people who are already poor are giving large portions of their money right back to the bank simply because of the fact that they are poor.

Now, you say, what does the new debit card fee have to do with the overdraft fee or even this overdraft fee lawsuit.  The answer is, everything.  These people just want to make as much money as possible and they don’t care if their methods are illegal or immoral.  The fact is this is not the first time Bank of America has been sued.  In 2009 they paid $150 million to the SEC over non-disclosed bonuses paid to Merrill Lynch employees at acquisition, in 2010 the had to pay $140 million over “illegal activity involving municipal bonds”, and this year they are about to pay $410 million as a result of the overdraft scheme.  That money will most certainly not come out of Bank of America’s pocket.  It’s going to come out of customers pockets.  How do they get it from the customers?  They introduce new fees!

The recent lawsuit involving overdraft fees caused the banks to be hit with stronger regulations on overdraft fees.  As a result banks have began using not-sufficient funds fees to replace overdraft fees so they can still get their money.  Now they have these new debit card fees and I surmise that it is only a matter of time before Bank of America finds a way use these illegally.  And why wouldn’t they?  In the duration of the latest scheme they made at least a billion dollars a year in revenue each year for ten to twelve years and in the end they settled a lawsuit for $410 million.

The fact is, Bank of  America isn’t the only bank behaving this way, Chase and Wells Fargo among the other large banks have been caught in similar immoral acts like the overdraft fee scam and many other banks are also considering debit card fees.  I guess the moral of the story is to be mindful of where you are putting your money.  Even if you aren’t among the many people in the United States who live paycheck to paycheck or a victim of this overdraft fraud, you can’t deny its treachery.  You should put your money into companies and banks which are responsible and operate with good business ethics.  Many local community banks have vowed to never charge a debit card fee and haven’t been brought up in million dollar lawsuits for defrauding customers or shareholders.  Maybe it’s just me, but there is something to being able to walk into the bank and talk to the owner/manager who has an interest in your community’s well-being as apposed to calling a customer service line and having to…(listen carefully because our menu options have changed).

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