The Corporate Observer Blog : Consumer Protection, Corporate Abuse : Class Action Lawyer & Attorney : Steven Berk Law Firm

Senior bank officials have had to dream up new fees to replace those trimmed by law

The title says it all: new year, new laws, new fees. Wednesday’s Wall Street Journal reports that big banks, fearing a loss in revenue following the enactment of key provisions of the Dodd-Frank financial reform bill, are brainstorming new schemes to extract fees from average consumers.

Dodd-Frank gave new powers to the Fed to regulate bank activity. Fortunately, the Fed has not failed to act. The latest proposals call for limits on charges to merchants for accepting credit cards – a move from a purely percentage based scheme to a fixed monetary range. In addition, banks expect to lose millions in revenue from curtailment in overdraft fee charges now that consumers have an easy opt-out option.

The banks aren’t taking the changes lying down. The Journal article claims that senior bank officials “have had to dream up new fees to replace those now trimmed by law.” The fees run the gamut from relatively benign to patently absurd. Here’s a taste of the negative changes we might see in 2011:

•       Annual fees of $25 or $30 on debit cards
•       Limits on the amount of debit card transactions allowed in a month
•       Limits on the size and amount allowable in debit card transactions
•       The end of debit card rewards
•       Increased ATM fees for non-customers
•       The end of free checking
•       Inactivity fees
•       Minimum deposits

To be sure, this is not an exhaustive list of the creative fees that Wall Street is sure to dole out – the list is merely a sampling from Wednesday’s Wall Street Journal article on the topic. What’s worse; many of these fees or other proposed fees can be avoided with high minimum balances. That’s right, if you’ve got a Wall Street banker’s salary there’s not much to worry about. On Main Street, however, we’d best beware: the fees are coming.

Wall Street Just Doesn’t Get It

Has something changed in the last 1,000 years to render the system of deposits and loans so grossly insufficient that no bank could possibly survive without complicated fee schemes? No. Main Street isn’t looking for some revolutionary service at no cost – all the people want is a bank where they can deposit money, spend that money as they please, and take out loans for reasonable expenses or investments. Fees for simply owning a debit card, maintaining a balance less than that of a New York banker, and inactivity are ludicrous. Unfortunately, Wall Street is unlikely to see the light. For now, hopefully the Fed and big banks can work out a plan that won’t add mountains of fees to the average consumer.

So, as the year progresses and regulations change, keep an eye out for new fees at your bank. Be sure to read any updated terms sent in the mail and monitor your account. If you feel that you’ve been charged any unreasonable fees, particularly fees to which you have not consented please contact Zach Kady or David Martin at info@berklawdc.com or 202-232-7550. Also visit us at www.berklawdc.com.

Assisted by Zachary Kady

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The banks are at it again!

Consumers’ deadline -- this summer -- for opting-in to overdraft programs on their debit accounts is rapidly approaching. Not surprisingly, banks are doing all they can to maintain this important revenue stream – and by whatever means necessary.

In an article published Monday February 22^nd, The New York Times reported that banks are focusing on “FEAR” as the key motivating factor for convincing consumers to retain overdraft protection. The advertisements and notices using fear are slick at best, but more often they are just downright deceitful.

According to the Federal Reserve rule changes passed last November, Banks are required to inform customers exactly what “overdraft protection” means and obtain written consent in order to legitimize these charges. The new rules take effect July 1, 2010. Needless to say, these rules do not continence scaring consumers into overdraft protection.

The banking industry made $24 billion from overdraft fees in 2008 and about $27 billion in 2009. What’s more? The banks aren’t the only ones on the hunt. The same Times article reported that a cottage industry of consulting firms like Raddon Financial Group and Strunk and Associates are moving fast to sell banks multiple solutions for retaining overdraft protection customers and its important revenue stream. Cynical examples of those solutions target users who frequently fall below their checking account threshold and pay overdraft fees 5 times or more per year. (See the Raddon Report). 

To be fair, we should not be surprised that the banks are fighting to keep every dollar possible, but is it too much to ask for honesty instead of trickery, and information instead of fear tactics? It is simply unacceptable that, in response to federal action to protect consumers, banks are running campaigns to push consumers into blindly agreeing to overdraft protection rather than publishing honest, non-biased, information and allowing them to make their own decisions.

Transparency is a critical starting point. Consumers need information to make the right decision for their own financial needs. There is not enough time before July 1 to change bank practices and it would be unwise to expect these scare tactics to cease. Instead, consumers are on their own. Wall Street has made its intentions clear. It is now up to the informed public to ignore fear tactics and use all available resources to make the best possible decision about overdraft fees.

Assisted by Zach Kady

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