In a comment from Barbara, she quoted the following statement attributed to Peter Garuccio, a spokesman for the American Bankers Association (ABA), originally taken from an article in the Washington Independent entitled, “Congress Delays Credit Card Reform“:
“The changes will require card issuers to reprogram computers, retrain call-center employees, verify the legality of the new policies and rework marketing strategies.”
Now, as for the difficulty in gearing up to abide by the new FED rules, I thought I might take a few moments to compose an analysis of the “not going to be easy” gripe (also from Garuccio of the ABA); I admit “just a touch” of sarcasm may follow.
Reprogramming computers: They probably have a lot to do. After all, creating a system that: automatically generates a late fee with split-second precision (”Oops, it’s 5 o’clock p.m. plus 1/100th of a second: you’re LATE — gotcha!”); sends a letter informing the customer of a new usurious rate; reports a late payment notice to credit bureaus (triggering universal default and therefore notifying other members of the cartel — credit card industry — to also impose new sky-high rates); and, places a flag on the call-center operator’s computer screen (”we got ‘em, whack ‘em, rub it in, gloat”), has taken a while for the credit card issuers to create. We can’t expect to dismantle a system like this easily — so many interlocking pieces.
Retrain call-center employees: Well, since a piece of my doctoral program was devoted to training and development, I think I can handle this one. First of all, even though my academic studies involved human adult learners and learning organizations, I would mention training dogs to get us off on the right foot, and keep it simple. Commands such as “roll over, sit, speak” are usually followed with a reward.
With human beings, we generally recognize intrinsic rewards, and extrinsic rewards. The former are often associated with a sense of personal satisfaction (internal to the person), while the latter are typically associated with some type of observable (external) reward, typically recognition, praise, or monetary compensation. People tend to be motivated by a combination of both.
Quoting from a “Post From An Anonymous Chase Manhattan Bank Employee” (as seen on Chase-Sucks.com), here is what appears to be an explanation of the current reward system at Chase:
The reason the bankers at Chase are so pushy, and recommend specific things are because we make what are called “Personal Value Credits” or PVC’s. That is our commission. We open a checking account: 5 PVCs, we sell a Debit Rewards card: 7 PVCs. Credit cards: 17.5 PVCs. Loans and investments pay the most. Loans are 0.7 PVCs for every $1000, so a $100,000 loan = 70PVCs. This is why customer service is horrible… there is a tremendous amount of pressure for each banker to make at least 1150 PVCs. That is 100% payout….Chase Bank will do anything, at any cost to acquire their business… Ethical or unethical. It isn’t the banker’s fault. We have our jobs threatened unless we push the products they say, when they say. If we don’t food is taken off of our tables, and we can’t earn commission.
By the way, the opposite of a reward is punishment. Obviously, if your whole culture is devoted to abusing customers and creating a system of servitude for account holders and employees alike, it will take some time to fix this. I would suggest replacing the executives with people who have leadership competencies (which include ethics).
Verify the legality of the new policies: Yeah, it will be a real hardship, and time consuming, to implement policies once banks are no longer able to answer any and every customer complaint with a quip such as, “It’s all perfectly legal, and we can do anything we want to you, any time we want, any way we want [as long as we give you 45 days notice that you are going to be bludgeoned -- we used to be able to "have our way with you" with only 15 days notice...tears of sorrow].” I would suggest replacing the executives with people who have leadership competencies (which include ethics).
Rework marketing strategies: Many people think of marketing as promotion, sales, or advertising. However, marketing starts with the identification of basic needs and wants (desires) of customers. Since prior to entering academia I spent much of my career in marketing and service oriented roles, let me shorten the new product development cycle for the banks, dramatically. Here’s what we want:
- A price we can depend on;
- A product performance that lives up to the promises that are made;
- A customer service experience that is based on we (banks) “want ya!” and your business, as compared to we “gotcha!” and you can take it, and take it, and take it (abuses, that is, especially with no “opt out,” like the one Chase executives described in testimony before Congress, and then failed to provide);
- “Fixed APR Until the balance is paid in full” loans that we pay back without a surprise later on like the one Chase imposed (with no “opt out”) because it “desired” repayment in two years, or “on demand,” or at double the originally promoted interest rate;
- Fees based on whether we, as consumers, actually did something wrong (as compared to banks trying to “make us late” by changing due dates, shredding payments, delaying the posting of payments, or blaming us instead of the postal service when we tried in good faith to send a payment on time);
- Treatment that does not include defaming us in the media;
- A monthly payment amount that we can budget for, depend on, and live with (instead of being subjected to a coercive payment-jacking scheme such as raising the minimum payment by a factor of two-and-one-half times the previously imposed minimum payment, which is what Chase did when it changed the minimum from 2% of the balance to 5% of the balance);
- We want to be able to mutually agree to terms, and any subsequent changes in terms instead of banks being able to use “any time, any reason, or no reason” clauses as a catch-all phrase which serves as a license to engage in loan-sharking and extortion;
- We want to have the ability to settle disputes fairly, noting that a forced arbitration trap exists wherein cases are almost never decided in favor of consumers (you can sue us, and we should be able to do the same to you);
- No “over-the-limit” fees for transactions that you, credit card issuers, approve or deny in the first place;
- Credit lines that are dependable (no lowering of these credit lines with no notice, just to then turn around impose an over-the-limit fee);
- To be treated fairly and ethically;
- Credit card products that are safe to use;
- A reasonable penalty system. For example, if someone has paid on time for several years, and then happens to be two or three days late (or an hour late), have a little respect and do not rate-jack that person;
- To not loathe you (as most of us presently who have been mistreated and abused do);
On second thought, relative to shortening the product development cycle, I guess the list of consumer “needs and wants” above may take some time to address, given that they are the antithesis of the credit card industry’s current business model. Organizational cultures have arisen over a period of decades that will be extremely difficult to change. But, I do have a solution to this apparent conundrum:
I would suggest replacing the executives with people who have leadership competencies (which include ethics).
Loading ...
on May 2nd, 2009 at 8:39 pm
Robert, I saw your post at Gather.com about this site, and thought I’d check it out. Did you know that credit card minimum payments were raised across the credit-card board as part of a new federal minimum payment law for all credit card companies a while back? That could correlated with your minimum payment increase and, if so, your beef is with the banking regulators who enacted that particular change. Here’s an article (http://www.bankrate.com/brm/news/cc/20060102a1.asp) with some interesting quotes you might be able to use in your own process.
on May 3rd, 2009 at 7:54 am
Yes, I am aware of the earlier regulatory admonishments for higher minimum payments in 2005-2006. However, Chase is not required to have a 5% minimum payment, especially when it clearly had a plan to allow customers to go back to a 2% minimum payment if those customers would give up their previously promised promotional rates.
For example, that if one would switch from 3.99% to 7.99% (double, and apparently a typical scenario), then he or she could keep the 2% minimum payment. The fact that Chase could offer a 2% minimum payment at a higher rate (or at any rate whatsoever) demonstrates that a 5% minimum payment was not a regulatory requirement.
Please read the lawsuits; they allege that Chase’s actions were coercive (and in my opinion, considering other contextual aspects of this matter such as a missing “opt out,” despite previous testimony before Congress, I agree with the lawsuits). Further, my “beef” is not about the 5% minimum payment, per se. There was also a “fee” otherwise called a “service charge” that was in fact, “a finance charge” — for a while, Chase tried to act as though this had no impact in the previously promised promotional rate. This was absurd (and in my view as well as that which is expressed in several of the lawsuits, deceptive).
Please read the “Lahm Personal ‘Battle’ Package,” for even more. This is an issue with many facets which I have documented extensively.
on May 3rd, 2009 at 12:33 pm
Ms. Meacham, you have been fooled.
Chase has deployed a carefully orchestrated campaign of slander and libel, designed to fool news consumers (and news professionals, like you) into believing that the 400,000 victims were “making little progress.”
Your comment above shows that you have been tricked into equating two things that are, in reality, almost exact opposites.
If you read that 2006 bankrate article carefully, and do the math, you’ll see that it describes a new federal rule that only affected people who had an interest rate SO HIGH that MORE THAN 50% of each payment was being used to pay their finance charges.
If you read the current articles carefully, and do the math, you’ll see that the current Chase scam only affects people who had an interest rate SO LOW that LESS THAN 20% of each payment was being used to pay their finance charges.
Let’s run the numbers right now, for a $25,000 balance:
For the permanent 2.99% rate that Chase originally agreed to: finance charge $62, which is 12% of the $500 minimum.
For the temporary 7.99% rate that Chase is trying to force us to accept: finance charge $167, which is 33% of the $500 minimum.
For the 23.99% rate that Chase can charge, after the 7.99% expires: finance charge $505, which is 67% of the $755 minimum.
As you can see, the goal of this Chase scam is to bring our finance charge percentage UP, to much MORE than the original 12% of the payment. The goal of that 2005 banking guideline, described in the bankrate article you referenced, was to bring people’s finance charge percentage DOWN toward 50% of the payment.
Almost exact opposites.
At this point, you are just one more news professional who has been fooled by the Dimon Gang’s carefully orchestrated propaganda campaign.
on May 3rd, 2009 at 1:16 pm
CorporateDeathPenalty,
Thank you for running the numbers for us. I knew that the reason my smaller balance account was not affected was that to accelerate those payments from a repayment of 50 months down to 20 would lose them 30 months even at 4.99%.
What I couldn’t understand was why that same logic would not apply to the higher balances and ASSUMED it had to do with their immediate cash flow for capitalization needs. There must be a magic number balance where keeping lower balance accounts at 2% minimums is more profitable than risky…I just wish I could figure out that number, get my larger balance down to that amount, and renegotiate with Chase to regain my 2% monthly.
on May 3rd, 2009 at 1:23 pm
Additionally, those 7.99 opt outs are simply new balance transfers into new account numbers thus show as new business. For Chase this “proves” they are lending due to all the new accounts they have generated.
on May 5th, 2009 at 1:58 pm
Someone who’s a gather.com member ought to “ping” Money Maven, and tell her there’s a comment here that shows how Chase made a fool of her. If I were a journalist in her position, I’d be very angry to learn how Chase had played me for a fool.
If the journalists would just do their job, instead of swallowing Chase’s deliberately engineered misconceptions and then going around helping to spread them, then this disaster would be less of a disaster.
on May 6th, 2009 at 12:00 pm
It is weird how some journalists don’t seem to “get” this whole issue… See the attached article from March 20, 2009 by an author who appears to have the consumer’s best interests in mind. He was against CHASE’s $10 monthly “service fee” but thought the increase in minimum payment was good. I tried to argue but couldn’t seem to get through to him…
http://www.debtcity.com/credit-cards/higher-monthly-minimums-good-for-credit-card-borrowers/
on May 7th, 2009 at 12:45 pm
I love the way you used one of his own articles to prove that he was writing nonsense.
His stubborn refusal to be even slightly logical, even after you proved that he was in conflict with HIMSELF, makes me think of the famous Upton Sinclair quote:
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”
on May 8th, 2009 at 10:24 am
Hey Corp… I just read the recent posts from you and from Peggy at debtcity.com, and the responses from Peter. You understand my frustration!!
on May 8th, 2009 at 12:47 pm
Barbara – I just left another comment to try again to get something sensible by way of response out of Peter….if this doesn’t work, we may as well give up. He is producing nothing but robotic responses straight out of Chase spokesperson Stephanie Jacobson’s playbook.
on May 10th, 2009 at 9:05 am
Pdurant…. you’re right. I keep trying and trying, and it’s just making me crazy! Peter’s last admonition to me was to just “stop spending”!!
on May 11th, 2009 at 1:30 pm
Yes, he is mindlessly parroting Chase’s deliberately engineered misconceptions.
But… he’s doing it in a forum where we can demonstrate how wrong those misconceptions are. Stephanie Jacobson would NEVER do that!
Maybe we can’t make Peter wake up and smell the coffee, but we can have an effect on other people who read that web page.
on May 14th, 2009 at 8:55 am
Corp, Peter Miller finally “responded” to your last comment with some useless statement regarding the difference between credit card debt and mortgages. I think he is tired of talking to us because all of a sudden, you have to be logged on to comment.
on May 14th, 2009 at 12:50 pm
You have to be logged on, and you CAN’T log on. He blocked comments altogether! Doesn’t make him look very honest, does it?
Since I couldn’t post my reply there, I posted it on the Ourbroker.com article that he linked to. It’s “awaiting moderation.” It may not show up there, so I’ll paste it here:
Peter, something has gone wrong with the page on your site (http://www.debtcity.com/credit-cards/higher-monthly-minimums-good-for-credit-card-borrowers/) where we were discussing Chase bank’s sleazy attempt to force 400,000 people, who have a low fixed rate, to re-finance at a high variable rate. The feature for adding a reply seems to have stopped working. My reply is below:
Peter, I looked at your Ourbroker.com article, and it seems very sensible.
But the fact that you linked to it from this article shows that you are still thoroughly confused about the Chase behavior that is the subject of THIS article.
Your Ourbroker.com article is about “non-traditional loans,” which were advertised, from the very beginning, as having initial rates which were only temporary.
The loan that I borrowed, along with 400,000 others, from a bank which has since been swallowed by Chase, was advertised as PERMANENTLY FIXED.
There was nothing “non-traditional” about our loans.
The only “non-traditional” part is the scam that Chase is perpetrating against us, right now, several years after the loan, trying to force us to re-finance at a high variable rate.