I’m fuming right now for several reasons, but this one struck me as potentially illegal. It’s unethical at best.
Earlier this month, my bank account was overdrawn because of a merchant’s mistake. The bank acknowledged this, and refunded me the associated overdraft fees. Suddenly, I find myself hit with a $10 “service charge” at the end of the statement period, with the rational somehow being that it’s because my account was overdrawn during this period. That’s predatory and absurd in itself, but since this was a merchant’s fault in the first place and the bank already took care of the other charges, I figured they’d just wipe this one off, too. Wrong. They basically won’t budge and are being enormous dicks about it for no apparent reason.
But what struck me as possibly illegal is that the banker told me that they’ll be happy to remove the inappropriate fee if I apply for a line of credit with them, but “otherwise, they can’t help me.” I told him that I didn’t appreciate this sort of coercive behavior and even asked if it was legal.
Is it? It doesn’t seem like it should be. Is there some outside agency I can file a complaint with about this, or is it completely legal?
My WAG is that the best you could hope for is to get the merchant to reimburse you for this extra fee you incurred because of his/her mistake.
When you opened the account you were probably provided information about the bank’s policies, procedures, fees and charges. This fee under these conditions was probably in there (or they told you about it in some mailing later). The fact that they offered to let it slide if you signed up for an additional service (probably thus changing the nature of the account) is not really coercive. What would it cost you to open the line of credit? Probably nothing. You don’t ever have to use it; you could simply forget it ever exists.
It’s not something I’d be inclined to put up with from a bank. That said, I am really surprised the bank took care of the merchant’s mistake. As a banker, I would have told you to take it up with the merchant, if the merchant ever wants your business again. (Tangent - any chance the merchant uses the same bank and is thus also a customer to them?). So while the line of credit thing would generally be enough to make me consider changing banks, I might just let that cancel out the goodwill I felt toward them for taking care of fees they probably didn’t have to.
Mmm, VCO3, lately you’ve opened a few threads asking if something was “legal.” You seem to be under the assumption that things that piss you off should be illegal. Unfortunately, I can attest from experience that they rarely are.
Why, precisely, would you expect it to be illegal? And are you certain you understood exactly what they were offering? My guess is that your bank was telling you that, should you link in a line of credit, then their normal fee structure changes; that’s probably one of their selling points for the line of credit and not unusual. That they would be willing to apply that benefit retro-actively isn’t something that should upset you; it simply is an offer of a way to make you happy.
Which isn’t to say you don’t have a valid reason to be unhappy. Indeed, current bank fee structures are almost guaranteed to upset you if you don’t maintain really large, positive values most of the time. <sigh>
Earlier this year I was required to take Anti-Tying Compliance training, which deals with this exact issue. It’s all covered by the anti-tying provisions of the Federal Bank Holding Amendments of 1970. The bottom line is that the anti-tying rules, which prohibit policies which “condition the price or availability of one product on a requirement that the customer also obtain another product from the bank or an affiliate of the bank,” specifically permit tying "if the customer is required to obtain a ‘traditional bank product’ such as a ‘loan, discount, deposit or trust service’. The Federal Reserve provides a whole list of ‘traditional bank products’ – the first one on the list is “All types of extensions of credit, including loans, lines of credit, and backup lines of credit,” so it looks like they are completely within their legal rights.
I’m just happy that I actually found an opportunity to use that training.
Well, I’m in Canada, and perhaps our banks are kinder and softer, but my bank will take care of pretty well any fee that comes up, even legit ones. Each month I phone the bank and say I don’t want to pay the fee associated with my chequing account, and the take it off, so there you go.
I suppose it just depends on your relationship with your bank - I am a one horse kind of girl - I have all my investments, credit lines, mortgage, etc with one bank, so I guess they’re trying not to piss me off.
I won’t think it illegal for a bank to pay $10 if someone applied for a line of credit.
I might think differently if by applying for it obligated you to additional fees or charges–your post didn’t indicate one way or nor in this regard.
While you are unhappy about the $10 charge and believe it unfair, IMO, your question about the legality can be stated as I answered above. That is, is it legal for a bank to offer an applicant $10 to apply for a loan.
The way I read it, he’s asking to be comped for being a good customer.
Well, the first time, they comped him for being a good customer. He can reasonably argue that the overdraft “wasn’t his fault” but that has naught to do with the bank… it’s a matter between him and the merchant. So the bank was smily and happy the first time.
Then, at the end of the month, he asks again to be comped for being a good customer.
The bank decides he’s a good customer, but not that good. He has recourse against the merchant, still, but the bank has no obligations to go outside of contract to help him.
The bank offers a compromise where they will waive this fee as a “gimme” in exchange for him applying for a product. Banks offer gimmes to reward applications all the time… sometimes little stuff, sometimes big stuff.
He doesn’t like the idea of applying, so he comes here and posts.
If I were him, I’d try explaining to the merchant how I’d been harmed, and try to leverage my $10 loss into merchandise worth more than $10. Lots of merchants would rather part with $25 retail worth of product than $9 worth of cash.