Quick Takes: Bank of America Debit Fee Rescinded

Response Shows Interest in Customers
Bank of America’s decision to retract its $5 monthly fee was a smart move – and the only choice it could have sensibly made under the circumstances.

If the corporation had persisted with this charge, it would have lost all credibility with its customers. Prior to the move, hordes of angry customers petitioned the bank and threatened to close their accounts if their demands were not met. Saturday, Nov. 5 was even deemed “Bank Transfer Day” — a day when many customers agreed to transfer their accounts to smaller banks and credit unions that treat their customers better.

Bank of America is not alone in caving to customer demands. In September, Netflix announced its intent to separate itself into two companies for DVD and streaming. A few months earlier, the company had announced that it would increase prices by 60 percent – two moves that cost the company 800,000 subscribers. Its once-loyal consumers have lambasted it — furthermore, its stocks have gone into free fall, and its market value has dropped 75 percent in the four months after its misstep. Since then, Netflix has rescinded its motion to create the DVD-by-mail subsidiary, Qwikster. This was a step in the right direction, and will undoubtedly help the company to recover from its rough patch. With competitors ready to nimbly pounce on every lost customer, it is paramount that corporations prioritize customer needs.

Once one corporation commits a blunder, competition ups its ante. The ultimate goal is to retain customer trust in this never-ending battle, even if that means submitting to cumbersome consumer demands. Corporations need to show that they are not leviathans and that their ears are receptive to their customer base – so that they can boast of even having one, for that matter.

— Hilary Lee
Staff Writer

It’s Too Late to Repair the Damage
On Tuesday, Bank of America announced that it will not follow through with its proposed $5 monthly debit card fee after weeks of vehement criticism from its customers. Wells Fargo and JP Morgan Chase planned to test similar debit fees in various local markets, a tactic they scrapped after witnessing the backlash Bank of America experienced. Though the repeal is a drastic concession to consumers, whether Bank of America’s backpedaling will win back customers remains to be seen.

According to executive director of the National Association of Consumer Advocates Ira Rheingold, Bank of America needs to put in a lot of work into winning back customer approval for their actions. Due to recent shady mortgage servicing practices in the past, he states that customers today are more inclined to notice unsavory business tactics.  

Bank of America has remained mum on how much money it would lose due to the proposed fee, but Wells Fargo and JP Morgan Chase have been more forthcoming with figures. They claim that they would have lost $250 and $300 million per quarter respectively.

Some customers have already switched to other banks or credit unions and will not be returning, and Bank of America is not forthcoming
with exactly how many customers have closed their accounts. Customers are willing to look for alternatives to national banks and “Occupy Wall Street” and “Bank Transfer Day” are manifestations of that. Bank of America’s customer trust remains on a precarious perch and while they are backing down from debit fees they are planning to hike up other fees in a more subtle manner via checking account fees. While one
act repairs trust, the other razes it.

Bank of America has avoided the debit fees but the damage has already been done. It’s uncertain whether Bank of America will recover from this pratfall or if this “too big to fail” bank set in motion its own dethroning.
— Aleks Levin
Staff Writer

Fee Shows Transparency, Not Greed
Last Tuesday, Bank of America announced that it would be dropping the debit card usage fee that it announced in October. The company was responding to an avalanche of criticism from its customers, as well as the announcements from competitors Wells Fargo and Chase that they would not be instituting similar debit usage fees as they had earlier planned.

The short-lived fee had been $5 for each month of debit card use. Only $5.
Bank of America had good reasons to implement the fee, but unfortunately, the fee’s critics are uninformed. In instituting the flat fee, the Bank of America was trying to do things in a way that banks aren’t particularly well-known for: transparency.

The flat fee would have replaced — or at least mitigated — the fees that banks normally charge whenever a debit transaction occurs. Without the $5 fee, Bank of America will have to find other (sneakier) ways of keeping its profit margins intact.

Today, in Facebook groups and Internet campaigns, Bank of America customers have tried to convince others to switch to smaller banks. Bank of America has been wise to listen to these warning tremors and back down with the fee.
Ultimately though, all this will do is make it harder for the customer to budget appropriately and save money — which was what the customers who signed the twitter petitions and sent the email invites wanted to do in the first place.

It’s a shame that a company that was trying to make a difference in the way banking was done was called out and forced into backpedaling.

— Ayan Kusari
Contributing Writer

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