The numerous grammatical mistakes (and end of the message) made me wonder if it was from a low level customer service representative.  I have little doubt in my mind that many of these individuals are at the mercy of higher-ups at Chase, and as such must do the “dirty work” of enforcing edicts by senior executives (which is what really “jerks my chain” when I note that Gordon Smith was off lecturing on “leadership” while his employees were implementing one of the most abusive acts against customers in the history of the credit card industry).

I have researched the name of the submitter as was indicated, and I found several links that were suggestive of the individual’s role with Chase (discussed below).  I do not have the ability to determine the authenticity of the submission, but I do have the right to document what has occurred.  Thus, here is what was submitted:

[-------BEGIN SUBMISSION-------]

I am just writing to let your users know why we are treating you this way.

First understand that times are hard and people are having trouble payi,ng us back what they borrowed. This is a real problem.

As a bank we are expected to make a profet for our customers that invest.

Secondly, we really have already loaned more money to Americans than we feel comfortable about.

The economy in America is just not expected to rise any time soon. The employment rate is bottoming out and this affects our buisness. If people don’t have jobs they cannot pay us back.

So the bottom line is we want people to take their buisness elsewhere. Especially those of you that are not using your cards any more.

Please just transfer your accounts to another bank and leave me alone.

Kelly Hanick

[-------END SUBMISSION-------]

First, there does appear to be a “Kelly Hanick” with Chase.  On the ComplaintsBoard.com site under a post entitled “Credit Card Gouging” I found several comments referencing this individual, including some with an email address and telephone number, along with personal (i.e., home) and corporate postal mail addresses.

As an aside, the aforementioned home address was presented with the suggestion that complaints should be sent there, and while I understand the anger, I encourage site visitors to maintain the moral high ground by corresponding to Chase’s offices.  (This is also why I moderate the site.  This is a PG-13 site, for instance, because I will not let Chase have the upper hand by characterizing customers as a bunch of financially illiterate fools who do not have the vocabulary to do anything other than spew expletives; this would aid Chase in justifying the twisted logic that, they — customers — deserve the treatment that has been bestowed upon them.  I maintain this is especially appropriate given that smooth talking executives such as Jamie Dimon seem able to seduce Congressional representatives in Washington, with their “words of wisdom.”)

Kelly also has a profile at LinkedIn.com, a snippet of which is shown in the screenshot below:

Assuming for a moment the veracity of the comment itself, and that it indeed represents the views of the “Kelly Hanick” referenced above, I will provide a response (although I have saved the notification to moderate on the site, including the IP address):

1) Yes, times are challenging.  Unemployment is rising, entrepreneurs are struggling (one of the major reasons unemployment is rising), and Chase is SQUEEZING consumers and small businesses HARD at a time when they are at a tremendous disadvantage.  When payments are jacked-up so high that families and small businesses cannot pay, they default.  Individuals in this predicament were not planning to default; rather, they were PUSHED INTO DEFAULT, by Chase (and other banks).  Banks as a whole have acted in bad faith.  Yes, Kelly, “this is a real problem.”

2) I have never advocated that Chase or any businesses should not make a profit.  The problem is, Chase has attempted to do so by employing unethical tactics.  Where’s my “proof,” you might ask?  Telling me or customers at large that adding a so-called “service charge” that “is a finance charge” would not impact a promotional APR is a lie (I’m not dancing around with other possible word-choices such as “disingenuous,” “incorrect,” or “misleading” — anyone who knows the first thing about interest and amortization knows that adding a finance charge to an existing APR increases the overall rate).

3) Relative to item 2, above, Chase did rescind the finance charge (in a settlement with the New York Attorney General’s Office).  However, it appears to have done so under pressure while admitting no wrongdoing.  (And for me, personally, the damage and repercussions were already done — I’ve addressed that further below).

4) With regard to the “economy” and “unemployment rate bottoming out”: I have been advocating for small businesses as the major contributors to the economy that they are, for years.  On October 12, 2009, I just presented yet another paper based on scholarly research, and I am well aware that approximately half of very small businesses use credit cards as a source of capital (over ten million very small firms).  And, as can be seen in the SBA Office of Advocacy’s most recently published FAQs

Small firms:
• Represent 99.7 percent of all employer firms.
• Employ just over half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Have generated 64 percent of net new jobs over the past 15 years.
• Create more than half of the nonfarm private gross domestic
product (GDP).
• Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
• Are 52 percent home-based and 2 percent franchises.

Hence, while Chase is worried about being paid, its policies are DECIMATING (in yet another way, besides squeezing consumers to the point of defaulting), the very entrepreneurs who are our only hope for an economic recovery, not just “anytime soon,” but ever.

5) Chase has already made it abundantly clear that its wish is to have people take their business elsewhere.  We got that message.  Unfortunately, that’s not so easy to do, for some individuals.  This is especially true after having their credit scores ruined, lines of credit slashed, and in light of a credit card industry cartel which provides few options (in good times or bad).

6) If Chase is so worried about investors and profits, then it might want to keep in mind that engendering a sentiment of fear, disgust, and loathing among customers is not an effective long-term strategy.  Rather, it is a short-sighted, imbecilic tactic, which will become a “textbook case study” in how NOT to treat customers (by the time I’m finished, here).

7) The submission concludes with the remark, “and leave me alone.”  (Kelly) I’m afraid I’ve already made it clear what the conditions are for that to occur.  Banks want customers to read their contracts; meanwhile, READ MY TERMS, CHASE:

• If Chase Wants Peace, it Can Issue a Press Release.
• Apologize for defaming us (after the first round of change in terms notices), and continuing to disrespect account holders with a PR spin campaign which portrays us negatively before members of the media.
• Now, for me to personally “leave Chase alone,” I’ll simply suffice it to say that Chase has damaged me in several ways, including, but not limited to the following:
  • I was forced to suffer penalties and fees by prematurely withdrawing from a retirement account in anticipation of making higher payments;
  • I am among those that Chase defamed (making payments on time, and in many cases paying more than the minimum);
  • Chase did “steal Christmas” last year;
  • because I knew of no other option but to cooperate with members of the media in order to defend my family, my personal finances have now been the subject of coverage in Business Week, the New York Times, the Wall Street Journal, and other outlets (and I do not appreciate being put in such a position by virtue of Chase’s actions and its wherewithal to take advantage of customers, who can do little else to mount a resistance);
  • Chase’s actions exacerbated an already horrible set of circumstances, causing undue stress and emotional hardship for a family that has already been suffering;
  • As we speak, I have just learned that a rock slide on I-40 near the TN/NC border will block off that interstate for months.  I already drive 305 miles each way to and from work every week, because our house has not sold after over two years on the market (the point being, we’ve got enough problems, and we’re not alone: Chase should work with consumers and small businesses, instead of “kicking us while we’re down”);
  • Chase still sends change in terms notices to my wife and household (that is a very, very, very, bad idea) — I already told you to “leave us alone,” in no uncertain terms.

Accordingly, I personally have no plans to leave Chase alone until the damages to small businesses, customers at large, me, and my wife and family have been undone and rectified (to the extent that this is even possible after all of the pain Chase has caused to its previously identified “most valued cardmembers“).

I’ll admit, it is interesting that a SVP of Customer Service* at Chase would possibly submit such a request — to be left alone.  However, I regret to inform you, Kelly, or any other site visitor that “Chase drew first blood.”  There is no way in hell that I’m going to simply go away “elsewhere.”

Chase shouldn’t pick fights at all, but since it chose to start one (by trying to coerce customers via unethical actions), you can all count on this, until MY TERMS and conditions are met:

I’M (STILL) COMING AFTER YOU

AND I’M NOT GOING TO LEAVE CHASE ALONE

* Noting your previous HR background, might I respectfully recommend a career change, Kelly.  “Customer Service” does not really seem to be a supported organizational role at Chase.  I think most interviewers would understand your “reason for leaving.”

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 12 comments | Add to del.icio.us
Post tags: advocacy, banks, change in terms, complaints, consumers, credit, customer service, economy, fees, interest, notices, penalties, small business

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In one sense, this story is already well known, at least by virtue of its observable impact.  We have seen it in neighborhoods across America: foreclosures, short-sales, and a devaluation of property values.  Speculators and house flippers were understandably giddy over profits that seemed at the time, easy and never-ending.  But this period of exuberance did end, badly.  Those of us who are concerned with credit card company abuses, are paying the price.  Taxpayers are paying the price.  Investors from around the world are paying the price.

In essence, the mortgage industry sold “instant gratification” to buyers.  Yes, buyers “signed the dotted line,” and certainly, many knew (or should have known, if they lied about matters such as their income and obligations on “stated income” loan applications — that’s why the slang, “liar’s loans,’ came into being), that they too, were taking a risk.

Everyone was gambling.  But in common, the core belief that drove this scenario was the notion that housing prices would continue to rise.  Refinancing, to take “cash out” of real estate investment gains (or otherwise leverage the cash from appreciation in property values), enabled people to buy even more.  They used that money for anything under the sun: vacations, home improvements, adult toys (and “toy haulers”).

We now know this was a fallacy.  Anyone who may be watching squirrels gathering nuts on the ground for the coming winter can use this as an analogy for what many people did not do.  There are many adages which capture this failing, but perhaps the one (which in history seems to repeat itself) that best captures the miscalculation is this one: “What goes up, must come down.”

The “House of Cards” production does a great job of explaining, how we who are fighting credit card company abuses got where we are today.  Banks bought bad investments.  They want to recoup their losses by dipping into other sources of cash.  First, it was the bail out money: your money, and that of your children and grandchildren.  Second, it is every dollar and quarter, dime, nickel and penny, from fees, interest rate increases, and payment increases that banks can impose on the backs of people who still take pride in trying to pay their bills and fulfilling their obligations.  (But for how long?  Most people who walk away and “leave their keys on the counter” have simply given up, knowing that they can never pay.)

Obviously, the lax regulation that allowed Wall Street to profit and party on what we now know are toxic assets (I’m not an accountant, but it seems to me that a so-called “toxic asset” is a bad debt!) enabled a complex scheme with many participants to arise.

Unfortunately, as banks squeeze those of us who are still standing, more and more “able bodied borrowers,” including small businesses which account for much of our economy, suffocate.  Layoffs and fear have led to the destruction of consumer confidence — so spending slows to a crawl.  Here we are.

I personally found that one of the most interesting interview questions that was posed to various participants in the CNBC piece had to do with “feeling guilty,” for having been a part of this debacle.  The body language told a different story than the words that were uttered, slowly and carefully, in several instances, consistently along the lines of “just part of the food chain.”  Well, I already know where I am in the food chain: near the bottom.  However, when these banks try to “eat” what’s left of the rest of us, I want to make sure that we at least leave a very bad taste in their mouth.

Just a Few More Notes

This present post is very difficult to write.  I am separated from my family by virtue of real estate.  I have a house that has not sold, even though it is well cared for and in a decent middle-class neighborhood.  I have debts that are primarily associated with a decision to go to graduate school, trying to help others by becoming academically qualified to teach.  Those who walk away from their own homes (or who are forced to leave by eviction); those who enabled this to happen (see the documentary for the entire “food chain”); and I, along with my wife and children, are entangled.

Credit card companies (i.e., the banks that run them), are dealing with issues such as losses and liquidity pressures.  Nevertheless, because the banks are equivalent to “Goliath,” and we could be likened to “David,” naturally, ChangeInTerms.com and its supporters are in a position such that if we don’t throw “sticks and stones” to defend ourselves in any way that we can, we will be destroyed.

Sadly, I could be sympathetic to the banks’ problems, if they weren’t so mean and uncaring about what happens to others.  The most typical response to consumers (some of whom are the entrepreneurs we desperately need to nourish for a recovery) when they call to “negotiate,” just as appears to be the case with distressed homeowners, is that banks don’t want to work things out.  Rather, they just want to take everything that they can get, forcibly, mercilessly, and immediately, no matter what the consequences may be for individuals — and when taken in the aggregate — for the economy and this nation’s citizenry as a whole.

This behavior on the part of banks is sure to lead us all down a path to further destruction, I predict, unless we “work things out.”  How do we do that (those of us who are on the receiving end of banks’ callous, greedy, untenable dispositions)?  That’s really quite simple.  Anyone who has survived a schoolyard bully knows that the only way to prevail, is to make him or her very afraid of you.  If you are a small person, then you may need to assemble an army and gang-up on that bully.

I actually have a post in draft mode on the subject of “somebody should do it.”  Here’s what it boils down to: all of us “little people” must band together (this is a tiny example, but I sometimes get frustrated: why have I written several times, trying to get someone to print-out a free protest T-shirt, and send me a picture for the site?  Scared; too busy; afraid to raise a “stink” in public — I can understand all of these, because they describe me, but I still fight).

The formula for returning to a period of economic stability is also fairly simple.  Banks are in the business of taking in deposits, and lending at a profit.  Profits are a function of “time and terms.”  If they wanted to do it, they could institute all kinds of creative workarounds, because that’s what ends up happening in settlements.  Why they don’t want to work with people until the situation becomes such that a settlement is for “pennies on the dollar” (with the losses being shifted to those who are still standing, financially), is hard to fathom.  I suppose it’s because enough people have not has yet boycotted media for running credit card companies’ ads; written to affinity partners; threatened the reelection prospects of representatives; or gone “viral,” like the Debtor’s Revolt video.

If you aren’t willing to combine forces and join the fight, then you can count on being fleeced, beaten, and terrorized by such a bully.  We have already seen that this bully’s greed is insatiable.  I guess you’ll get involved once you’ve “lost your backpack and lunch money,” one too many times.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | One comment | Add to del.icio.us
Post tags: "Bail Out", banks, consumers, credit, credit cards, debt, economy, fees, interest, interest rate, regulation, small business

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I set out this morning trying to research “Mafia loan-sharking rates,” but my inquiry was frustrated a bit when I entered that term in search engines.  Many of the hits that were returned pertained to credit card companies and their rates, which clearly, people associate with Mafia rates.  But I wanted to know specifically about the Mafia rates.  Since I am not a criminal, I really wasn’t certain.

Among my findings, I came across a Google books preview of The Complete Idiot’s Guide to the Mafia.  In a section entitled, “Bringing in the Loan Sharks,” I found the following information:

“Mafia guys love loan sharking….Loan sharks make tremendous amounts of money….Most loan sharks charge customers anywhere from two to five points a week in interest on the unpaid balance of the loan.  For example, if a customer borrowed $1,000 on a Friday at five points a week, the following Friday a would pay a $50 ‘vig’ to keep the cash another week or pay it off with a $1050 payment….Small loans, say $100, are usually six payment affairs in which a customer makes weekly payments of $20 to satisfy a $100 loan.  Some loan sharks take $4 at the front end….His average rates are about 150 percent a year.”  (p. 138).

With regard to the “$4 at the front end” in passage above, that’s an interesting coincidence as it relates to balance transfer fees.  Most of the promotional balance transfer offers I see are typically three percent, no maximum; however, Bank of America’s are now four percent of the amount borrowed.  You will note that $4 on a $100 loan is four percent, so it appears that Bank of America’s up-front fee is possibly modeled after that of some loan sharks.

I also found another site, which provided a transcript of testimony from Michael DiLeonardo in the case, United States of America v. John A. Gotti, Jr., defendant (scroll down to the section, “Earning Money With the Mob”):

“Q. Why were you stronger with the Gambino family behind you?

A. I had a whole enterprise behind me, a whole army. It’s like having a license.

Q. What kind of money did you start to earn on the street?

A. I got $10,000 from Paulie Zac to go out and start shylocking, which I did.

Q. What do you mean by shylocking?

A. Well, I was able to go out and lend money out at an interest rate, a weekly interest rate.

Q. What kind of interest rate?

A. I charged up to 5 percent, from 3 to 5 percent at that time.

Q. And that’s 5 percent a week?

A. 5 percent weekly, yes.

Q. If someone pays that weekly percentage, does it do anything to affect the principal?

A. No, never.”

The aforementioned site also has a fabulous bibliography (developed over a long period of time by Thomas P. Hunt, who is evidently an excellent researcher and subject matter expert on Mafia activities).

As I discussed when I was in Washington, a question exists, at what point do we consider interest rates to be too high?

Even though I have to acknowledge that banks are not actually charging as much as the Mafia (with the exception of some up-front balance transfer fees, like those of B of A), thirty percent or more is certainly prohibitive to the average consumer: students, middle class Americans, people in your neighborhood (would you like your home’s value to drop even more, because a neighbor is in financial distress for any reason, not just a mortgage?).

Thirty percent is also high enough to destroy all hope of repayment on the part of most borrowers, so they default and pass on their debt to those of us who are still paying (I know, some holier than thou individuals exist, and will be simpletons in their “solution”: just “pay cash”).  If we want an economic recovery, these rates must come down so that entrepreneurs can get back to work, too (and part of their work is creating jobs).

Meanwhile, thirty percent is certainly a slap in the face of taxpayers, who have bailed out the banks (especially given a FED funds rate of one quarter of a percent; “The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight”).

Now, with Chase, it “offered” some customers an “alternative“: If customers couldn’t stomach the increase in payments, then they could alleviate the pain of higher payments simply by switching to a rate that was (typically) double the previously promised promotional rate.  For example, a customer (aren’t they considered victims by the Mafia?) could agree to go from 3.99 percent to 7.99 percent (and the 7.99 percent was for a limited duration).

Of course, exactly what rate constitutes “loan-sharking” is a subject that deserves more discussion.  However, it’s not strictly about the interest rate.  Rather, we’re back to the notion of good faith versus bad faith, and intent.  Is it a loan, or is it a purposely set trap, designed to ensure a victim’s exploitation until death?  To my last point, I think that the Mafia and credit card companies use tactics that are exactly alike: “We’re gonna hurt you or your loved ones, and we’re gonna enjoy it.”

In keeping with the above, I’ve come up with a new slogan when you communicate with banks’ Congressional representatives:

CAP INTEREST RATES, NOT OUR KNEES

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | No comment | Add to del.icio.us
Post tags: banks, credit, debt, fees, interest, interest rate, Testimony

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In life, she helped people instead of harming them, and as compared to where I think the executives running Chase will end up (I picture an ending where the devil is a banker…and Chase executives are his customers), I’m confident that Toni is in a far better place.  I will miss her, as will thousands of others whom she has touched in her life and career as a teacher.  Although she and I have for the most part taught at different levels, she has been an inspiration.  

Looming on the horizon, I have been busy taking “two steps backward,” all because my house in TN has not sold.  It’s a long story to be made short:

Contract on home last summer fell through (end of July, 2008);

Thought/hoped a new one might arise by October;

Nevertheless, new job started in NC (5 days after contract fell through);

Leased a condo in NC (big enough to accommodate my family, given the “what if” scenario that it might be needed);

Brought half our stuff to NC, especially “conveniences” such as the kids’ beds and our washer and dryer; August: realtors leave lights on, doors unlocked, so we determine that wife and kids stay must close to home in TN, essentially “camping out” with kids on air mattresses, and not much other furniture;

From our perspective, a very dissatisfactory real estate agent relationship with the next agent “up to bat” (November, 2008 – January, 2009) begins and ends;

Wife had major surgery in February (6 to 8 week recovery – meanwhile, I am in NC and she is in TN – left primarily in the care of children, all still “camping out”; she could not drive or leave during the recovery, either);

Placed for sale sign direct from owner (after now having had 3 realtors) in yard as of Easter at a “rock bottom price” with no add-ons such as agent fees or buyer’s closing costs (please, no time for answering troubleshooting comments – not wanting to come across as a know-it-all, but we do understand staging, comparables, appraisals, condition, pricing – an extremely similar home two doors down built by same builder with the same materials and features, except we have numerous upgrades, is over $40k more and we are thousands of dollars under market with a home in immaculate condition);

Buyer’s agents now sell against us as they want their commission and have done a great job creating the myth that their services are free* to buyers;

Now anticipating another year like the past one, moving stuff back to TN (I am looking into other possibilities for my own accommodations, such as faculty housing – dorm-like);

We will put the house back together, as we can’t win a fixed race - signing with another realtor as soon as the house is put back together;

If I do not take steps to avoid “paying double” for housing next year as we have been doing, there will be trouble on the horizon;

Ever vigilant against the likes of credit card companies, I am a responsible borrower, and I will pay my bills regardless of the hardships (Obviously, if I am incapacitated or dead they would have to settle with my estate – but then, what would happen to their empire of economic slavery?   Best to keep us all alive with slow, non-lethal torture techniques.)

I thought that the above review deserved special mention of the fact that I purposely do not allow the spell-checker to capitalize the word “realtor” (especially when under our present scenario, most buyer’s agents we’ve encountered are so unethical they want to keep a discussion about their 3% commission hush-hush, and make sure that they corner my wife or me to ask if we’ll pay, out of ear-shot from their “client”; hint to “clients”: these unethical individuals are working for their 3% commission, not to protect your interests).

Secondly, since the above basically chronicles the past year of our family’s life, separated from one another by virtue of real estate hell, knowing my wife needed surgery – soon - even back in December, you might now have a better picture as to why I felt so cornered by Chase’s actions that I became aggressive with the ChangeInTerms.com site at that time.  Chase did steal Christmas.  But, in its almighty, high-flying, political palm-greasing, “wisdom,” it picked the wrong guy in the wrong place in life at the wrong time.  And, as it has turned out, my suffering and that of my family is nothing special – most American families, sans the intellectual, political, and economic elite, have been hurting as well.  But a “kick ‘em while they’re down” philosophy can sometimes backfire, Chase.

* Supposedly “free,” when in fact, sellers set prices high enough so as to be able to cover the total 6% commission (half for the seller’s agent and half for the buyer’s agent) - so actually, buyers do pay – duh!  Want “free” closing costs?  Where do you think sellers come up with this “free” money?  Duh!, again -  it’s built into the selling price of the house.  You’d think that people who have seen a “buy one get one free” grocery ad (in which the first item is usually twice the going rate) would understand that nothing is really “free.”  I predict that with little appreciation on the horizon (or continued falling prices) realtors and financing charges will be the biggest costs in many real estate transactions for a long time to come.  Oh, and by the way, don’t expect your local newspaper to run any exposé articles on the shenanigans of the real estate industry any time soon (realtors tend to spend a lot of money on newspaper advertising).  In good times and bad, realtors skim the cream off the top of any transaction - buyers and sellers may win or lose, but realtors own the game.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 3 comments | Add to del.icio.us
Post tags: credit, fees, interest

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“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).

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 14 comments | Add to del.icio.us
Post tags: banks, consumers, credit, credit cards, customer service, fees, interest, interest rate, Testimony

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NY Times:

President Obama threw his support on Thursday behind legislation that would keep banks from imposing higher fees and interest rates on credit card users, and said terms must be “written in plain language and be in plain sight.”

“The days of any-time, any-reason rate hikes and late-fee traps have to end,” the president said at the White House after meeting with top executives from the nation’s largest credit card companies, a session Mr. Obama called “constructive.”

“No more fine print, no more confusing terms and conditions,” the president said, following up on campaign pledges to try to curtail high fees and rates and chop away at the thickets of fine print in credit card statements.

Washington Post:

The message that bank executives are braced to receive from the president is that he believes the marketplace is unfairly stacked against the consumer, with credit card companies holding all the cards and able to change the terms of their customers’ agreements at any time without any penalty.

In the same article, our dear friend from Chase (who has been defaming those of us who were “aimed at” relative to Chase’s now infamous 5% minimum payment, new service fee “that is a finance charge” notice), Ms. Stephanie Jacobson, seems to have changed her tune:

As they prepared for today’s meeting, credit card executives and their representatives sounded conciliatory.

“We look forward to meeting with administration officials on Thursday and hope to have a constructive dialog on several key issues including consumer spending and credit demand as well as best practices in the credit card industry and progress on regulatory reform,” said Chase spokeswoman Stephanie Jacobson.

Reuters:

Senior White House aide Valerie Jarrett said Obama, who is trying to rescue the U.S. economy from recession and fight the financial crisis on a variety of fronts, hopes to see “new rules of the road” for the credit card industry.

Bloomberg:

Industry leaders sought the White House meeting as they confront an outpouring of anger from cardholders and Congress. The executives are likely to hear from Obama about “some of the deceptive practices that we’ve seen,” White House spokesman Robert Gibbs said.

The administration would require card companies to apply excess payments to balances with the highest interest rates, and to periodically tell customers how long it would take them to pay off their balances if they make minimum payments.

CBS News:

While President Obama met today with executives from the leading credit card companies, two senators called on the Federal Reserve to immediately implement an emergency freeze on interest rates tied to existing balances on credit cards.

Another CBS story:

“I trust that those in the industry who want to act responsibly will engage with us in a constructive fashion, and that we’re going to get this done in short order,” Mr. Obama said, delivering a pointed message to leading executives of credit-card issuing companies seated at his side.

A couple of months ago we were lucky if abusive and deceptive credit practices made the 13th page of a small local paper.  The times have changed.  A “change in terms” notice is now coming “right back at ya!” bankers (especially you, Chase).

On another note, e-mail the journalists in the above stories.  Let them know that this issue is important to you.  We must capitalize on the momentum of this issue.

© RegulateNow for ChangeinTerms.com, 2009. | Permalink | 5 comments | Add to del.icio.us
Post tags: banks, change in terms, credit, credit cards, economy, fees, interest, interest rate

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The aforementioned Reuters report indicated a list of credit card industry representatives that may be involved, which was as follows: Discover Financial Services, Visa, Mastercard Incorporated, JPMorgan Chase and Co, Wells Fargo and Co, Citigroup Inc, American Express Co, Bank of America Corp, Capital One Financial.  If the banks do face any changes, I expect that they’ll whine that they need plenty of time to comply.  (Remember, Chase argued customers should only need 15 days to comply with its new rules, but it wanted 18 months to comply with new FED Regulation Z rules.) 

I note that an unnamed official was quoted to say the meeting is “basically just a part of our normal outreach to different groups to hear some of their concerns.”   A Capital One spokesperson said that “We have been invited to the White House.”  I’m also willing to bet that at the meeting these supposedly competitive company representatives will all get along with one another famously — they operate like a drug cartel, so I’m sure it will be one big happy family gathering.  Perhaps the White House chef will have some wine ordered in from the “old country” to serve with lunch (no fryer leg quarters with cream of mushroom soup for these invited guests).     

We already know that the theme on the part of the bankers will be the one we always hear: we have to manage risk.  But the reality is that what banks really mean (as evidenced by their actions) is that “if we can’t rate-jack and payment-jack account holders, and design card products with built in traps such that we can ‘have our way’ with customers [victims] any time we want,” we’re going to threaten that credit availability will suffer and costs will be higher.  And you know what?  I hope that when these banks later try to prove their point, it backfires on them and leads to a resurgence of community banks and credit unions.  Once gasoline prices double again (they will), we’ll all need to stay closer to home, anyway.

Somehow, in the minds of these bankers, they have grown accustomed to thinking that it’s “normal” and a valid “business model” to offer customers one set of terms, with the premeditated intent to change those terms into an altogether different proposition as soon as the account holder is “hooked.” 

In any other industry, this is called bait and switch, but with banks, they call it “managing risk.”  I do wonder how much risk all of those “clever MBAs and lawyers” working for these banks think is entailed in alienating a group of good-paying customers who have done nothing wrong? 

Of course, Chase has been the worst in recent times, using a blatantly coercive tactic to get customers to give up their previously promised promotional rates.  How does it help to manage risk, making payment terms so onerous (raising them to two-and-a-half times the previous rate) that customers can’t pay — literally pushing more and more American consumers into default?  These customers, already paid these banks once, by the way, with bail out money (so the banks want to double-dip). 

Well, I think it’s about time that our government did some “outreach” to “hear the concerns” that banks have created for consumers and small businesses, instead.   It’s ordinary working people, not banking executives, who are being massacred with an avalanche of change in terms notices by this group of thugs.  Hear some of mine (“Bob the Professor”):

1) Sooner or later, the bail out costs will come out of payroll deductions and increased fees and taxes on everything you buy: gasoline, cigarettes, car tags, property taxes, utilities, sales tax (have you noticed list of fees and taxes on your phone bill?). 

2) Your children and grandchildren are going to be footing the bill for this bail out debt, too. 

3) Talking about risk, I fear a new era of economic slavery (our ever-shrinking paychecks will be what’s left over after working for the government and the bankers most of the year). 

4) The problem that started this all in terms of consumer confidence and the tumble was the housing market (which has caused a year of separation/commuting in my family thus far); the bail out funds would have been less or perhaps not necessary at all if instead of bailing out banks, government had addressed the housing issue, first. 

5) Banks are knee-capping entrepreneurs – next to war or acts of terrorism, there is no greater risk to the possibility of an economic recovery, than that. 

Given that a significant portion of our so-called free press serves as nothing more than a mouth-piece for the financial services industry – as one of the most aggressive industries of all relative to advertising expenditures — I am also not surprised that reports about “invitations” to speak to Congress or the White House practically all include a “poor, poor, banks have to control risk” justification. 

Noting that Chase executives already lied about providing opt outs in testimony before Congress, I gather that there’s a good chance that they will not be held accountable by the media (or anyone else in our government) for whatever they say when they attend a meeting at the White House, either. 

Have you seen any significant coverage about these lies and misrepresentations with regard to the missing opt out despite the prior testimony in the major media?  Not me.  If I tune in to the national brand 24-hour news stations, it’s more likely that the story I’ll see 7 times in one hour is  ”a woman found an alligator in Florida.” 

Where’s the “Chase executives lied to Congress about opt outs” headline?

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 13 comments | Add to del.icio.us
Post tags: "Bail Out", banks, change in terms, consumers, credit, debt, fees, notices, regulation, small business, Testimony

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Jim’s piece, entitled “Exclusive: Lone protester takes on corporate giant,” highlighted Alessandro and his efforts to protest Chase for his abusive practices.  Quoting from Jim’s observations, at least as a writer he “gets it,” and seems to have no appreciation for the antics of the credit card industry:

And Machi tugged at my own heartstrings when he went into a rant about how Chase shouldn’t be allowed to succeed because it’ll inspire other banks to follow suit. “If Chase gets away with this, then guys in boardroom s around the country are going to say, why aren’t we doing this?” he said, taking on one of my favorite themes. I’ve often written about how corrupt business practices become part of the standard business model.  

As we here at ChangeInTerms.com well know, the missing “opt out” issue is paramount with Chase, especially since its executives testified before Congress about providing opt outs and treating customers “fairly.”  I’ve been saying all along that this egregious behavior must not only be stopped presently, the Chase debacle must go down in history as textbook case study about failed leadership, unethical and illegal behaviors, and a PR disaster, such that other card companies know they had better not dare try a stunt like Chase attempted perpetrate.   In other words:

If we do not make an example out of Chase, card companies will follow Chase’s example.

I contacted Jim to thank him for his article, and in the course of exchanging some correspondence he sent me another interesting link to a book-length report entitled, “Sold Out – How Wall Street and Washington Betrayed America.”  In case you’d like to have a preview of what’s inside, Jim also sent me a link to his take on it: ”Required reading for the outraged – a book review.”

In perusing some of Jim’s other pieces, I think we’ve found a friend who seems willing to “tell it like it is.”  Here’s another link (the first line says plenty about Jim, and about Chase):

A crooked credit card company (are there any that aren’t?) is issuing “refunds totaling $4.4 million to about 184,000 customers”, for charging fees to their victims, ahem, CUSTOMERS that were deemed illegal.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 16 comments | Add to del.icio.us
Post tags: banks, credit, fees, interest

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Unfortunately, the form does not provide a means for linking, or text effects such as italics, but that’s a very minor point; passing these protections is vital, so please visit the site and submit your own comments, today.  The text below is what I submitted (feel free to copy and paste into the aforementioned form, if you wish):

In recent weeks, several of the major banks and credit card companies raised interest rates and fees yet again. The media reported Capital One hiked interest rates to 17.9 percent from 12.9 percent. Citibank raised their rates an average of 3 percent.

Over at Chase, customers had a “choice” of paying a $120-a-year fee (which was actually a “finance charge” that changed a previously promised promotional rate) and a coercive higher minimum payment (5% of the balance), or paying a higher interest rate.

Worse, given that Chase executives previously testified before Congress about playing “fairly” by providing “opt outs,” guess what was missing?  If you guessed that the “opt out” was no where to be found in Chase’s change in terms notice, then you are correct — there was no “opt out.”  Doesn’t Congress take testimony seriously enough to hold these executives accountable for misleading our elected representatives with what can only be taken as an outright lie by the 400,000 account holders who received Chase’s notice of such onerous new terms (obviously designed to force customers into other choices, such as doubling their interest rates)?

I don’t understand why interest rates for consumers are so high, when the interest rate banks charge each other for overnight loans is as low as 0 percent.

As a responsible credit card consumer, I shouldn’t be subjected to unexpected interest rate increases and fees, which only drive up my costs during these tough economic times. The Federal Reserve Board recently agreed to new credit card reforms which would curb many of these abuses, but those rules will not go into effect until July 2010.  Further, Chase wanted 18 months to comply with these new rules, yet it argued that customers should only need 15 days to comply with its new rules.  Why not protect consumers from these one-sided and completely unfair credit card issuers RIGHT NOW!

The bills being considered would go even further than the rules to help consumers, such as limiting the duration of penalty fees which can sap consumers’ wallets, and curbing aggressive credit card marketing to teenagers without an ability to pay. The bills would:

– Prevent my card company from changing the rules of the game midstream. Companies shouldn’t be allowed to arbitrarily hike the interest rate on my existing balance or new transactions if I make my payments on time just because of an “anytime/any reason” clause in the contract. The deal I signed up for should be the deal I get.

– Require card companies apply my payments fairly across my different balances, not just to the lowest-interest balance. That’s just common sense.

– Control the size and duration of penalty interest rates. Companies shouldn’t be able to keep me at usurious interest rates forever only for one late payment or another minor infraction.

– End abrupt reductions in my credit limit, which negatively affects my credit score through no fault of my own.

–  Provide an adequate amount of time to pay my bill on time by requiring my bill be sent out no later than 21 days from the due date.

– Prevent fees just to pay my bill online or on the phone.

– End aggressive marketing of credit cards to young people who need a chance to establish themselves without a heavy debt burden.

Let’s not forget that small businesses frequently use credit cards.  According to a Federal Reserve Report (2007, showing 2003 data), almost half (46.7%) of small firms used personal credit cards!

ChangeInTerms.com has published a “Credit Cards and Small Business Usage Report,” which provides additional information about the impact of credit card company abuses on entrepreneurs.  Given that an economic recovery will not be possible without a healthy entrepreneurial environment, it is extremely important that you support these needed reforms. 

Indeed, while they are generally long-overdue, under our present circumstances it is vital that you act to stop the next meltdown that the banking industry’s reckless “strong-arm” tactics with consumers and small business owners will actually create, this time over “plastic.”  Don’t let those who have exhibited a clear pattern of failed leadership relative to the banking industry’s numerous misjudgments, unethical behavior, and greed, lead us all down a path of financial destruction in yet another context. 

If these banking industry executives were honest and competent in the first place, we would not all be where we are today, in a crisis that spiraled out of control at a tremendous cost, which will be shouldered for generations.  Please stop listening to their spin, lies and rhetoric, and listen to US (ordinary consumers and entrepreneurs on “main street”) for a change.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 5 comments | Add to del.icio.us
Post tags: advocacy, banks, change in terms, consumers, credit, credit cards, debt, fees, interest, interest rate, small business, Testimony

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I was not completely pleased to see the press release call the $10 per month a “service charge,” but it was obvious that the fact that it “is a finance charge,” was noticed.  (I know this, because unlike some members of the media who keep repeating the Chase verbiage (deceptive spin), using the terms ”service charge” or a “fee,” the Attorney General’s release also stated: “This extra $120 per year in additional fees significantly raised the effective APR on these balances, in some cases more than doubling the effective interest rate.”)

The refunds will apply to 184,000 credit card accounts and amount to approximately 4.4 million dollars.  Still, there is a discrepancy here, comparing 184,000 with the other number, 400,000, which we’ve seen quoted in numerous articles (it could be explained perhaps, by noting that the NY Attorney General’s settlement may not have included every impacted account holder — I am sure we’ll learn more, later).

Special Counsel Carolyn Fast, Assistant Attorney General Melvin Goldberg, and Bureau Chief Joy Feigenbaum of the Bureau of Consumer Frauds and Protection handled the investigation and secured the agreement with Chase.   Since the Bureau supervised the process, I would like to especially thank  Bureau Chief Feigenbaum (please join me, here is a link to the contact page).

In the press release Attorney General Cuomo was quoted to say:

My office will not sit back and allow banks to promise one thing in its solicitations and agreements with consumers, and then when times get tough, change the deal, leaving consumers holding the bag.  Truth-in-lending laws prohibit this very conduct. I am glad that Chase has now reconsidered its ill-advised decision and will now live up to the terms it originally offered and agreed to.

I would note that the Attorney General was less direct in the passage above, but when Chase’s executives decided to do something that the Truth in Lending Act prohibits, this is the same thing as saying, “Chase broke the law.”   After Chase sends out the “letters to consumers nationwide, including thousands of New York consumers,” as per the NY Attorney General’s demands, we at ChangeInTerms.com are also still demanding the press release that rescinds not only the “finance charge,” but includes the apology for having dissed and defamed 400,000 account holders in an effort to portray this illegal act as being justified. 

You know the other reason I am demanding an apology?  Because I happen to know it is the one thing that Chase’s legal department will not want to do.  It’s like throwing water on the Wicked Witch of the West:

You cursed brat!  Look what you’ve done!  I’m melting!  Melting!  Oh, what a world, what a world!  Who would’ve thought a good little girl like you could destroy my beautiful wickedness?  I’m gone!  I’m gone!  I’m going!

Further, I have previously mentioned that I think for having inappropriately defamed those of us who were affected, we also want letters sent for each account holder, to each of the three credit bureaus.  The whole “these were deadbeats who were ‘only a small percentage’ who were taking too long to pay off loans” portrayal, was really a nasty thing to say about us given that in fact, we were meeting our obligations.  And, I for one, think we deserve to see Chase’s wicked stirrers of such a cauldron of illegal swill and misrepresentation exclaim, “We are melting!” 

Last but not least, even when the above demands are met, Chase’s decision and actions should not be punished with a simple “slap on the hand” in the form of a refund of the $10 “FINANCE CHARGES.”  In the course of perpetrating this illegal attempt to ”change the deal,” Chase created unnecessary pain and damage; Chase caused thousands of account holders to incur costs so as to escape its tyranny; Chase defamed us with a negative portrayal in the media; Chase played a game of obstruction; Chase treated us as prey; Chase hurt small businesses; and from my family, Chase Card Services Stole Christmas (and by no means is this to be construed to suggest that my briefly sketched list even comes close to describing all of the damage inflicted upon hundreds of thousands of account holders who have had to have a “heart, courage, and brains” just to deal with the Chase’s heretofore unbridled abusiveness). 

All along, Chase’s spokespersons continuously defamed “us” responsible account holders as individuals who were taking too long to pay as a deflection before members of the media (who frankly did not did deep enough) to justify this illegal act.  I have previously proposed that the perpetrators of the illegal act, who have also established that they are willing to lie before Congress and defame account holders, be punished in a manner which seems to be necessary when dealing with bullies.  It can’t simply be, “bully, give the money you just took back.”  The bully will try again, and again, and again.  Why not, when the only risk is that it if caught, what was taken will have to be returned?

The whole idea with a bully, is to indicate in no uncertain terms that if it messes with people, there will be consequences that are severe enough to suggest that the risk is not worth it.  Chase’s handling of this whole debacle has caused me to always think of “options” and “alternatives.”  Accordingly, I think one fitting punishment (in addition to the non-negotiable press release and letters to the credit bureaus) would be crediting accounts such that balances held by affected account holders are set to zero. 

Since Chase did not give account holders an “opt out” despite previous Congressional testimony (through which Chase’s executives used opt outs to illustrate the means by which account holders were treated “fairly”), I think the “alternate option” relative to setting account balances to zero, should be refunding all of the interest that has been paid to date on accounts, and (recalling that Chase wanted to double interest rates as its coercive strategy), providing zero percent interest rates “Until balances are paid in full.”  

The line of reasoning relative to this “alternate option” being that it might serve as an ample warning to ward off future attempts at bullying, if a loan that was at 3.99%, which Chase wanted to double to 7.99%, was required to be reset to zero percent.  With rounding, this amounts to what was to be a “plus 4%,” resulting in a “minus 4%,” instead — seems like a “just punishment” to me.  The preceding is presented as an average example to make a point — future “ill-advised” and illegal actions must be deterred; other loans were promoted at 2.99% and 4.99%, for instance, and for the sake of simplicity, I would propose resetting those rates at zero, too.  Otherwise, refunding the illegally collected ”finance charges” means to Chase: if at first you don’t succeed in fleecing victims (not that this incident is the first time Chase has abuse consumers), try, try, again.

Meanwhile, “Who would’ve thought a good little college professor like me would organize a resistance, set out to de-market you, and destroy your ugly wickedness, Chase?” 

Noting that it is April Fool’s day, just thought you should know, Chase, the above remarks are no joke:

NOW WE’RE (STILL) COMING AFTER YOU

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 13 comments | Add to del.icio.us
Post tags: banks, change in terms, consumers, credit, fees, interest, interest rate, small business, Testimony

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