Banking Bait & Switch

Almost 20 years ago, I got my first debit card. Just out of college, I had no credit at all, good or bad. So I sent Capital One $200, and they sent me a Visa card. I could use that card for purchases until it hit zero, at which point the company cut me off and I recharged the card. It was a great system: I had all of the advantages of a credit card with none of the siren-song of actual credit.

Fast forward to the present day. All this time, the term "debit card" has held the same meaning: acts like a credit card, but gives you no actual credit. If there's money in the account, the bank approves your purchase. If not, you're declined. No harm, no foul.

I think most Americans had the same understanding of what a debit card was. The banking industry introduced a product with certain name and a corresponding definition.

Then, they switched the rules of the game on us. Without any fanfare - I certainly missed it! - many banks decided to approve our debit card purchases even when our accounts were empty, and then charge us fees of up to $35 per purchase.

Found money for banks suddenly in big need of cash! What a windfall!

These fees are without warning, except of course for the age-old wisdom of "Buyer Beware." As my regular readers know, I've been following this scandal as it has (finally) been playing out in the national press recently. Seems the biggest banks, most egregiously Bank of America, finally took this scam far enough to gain unwanted attention in the media.

Defensive banks, and some sober-minded commentators, have pointed out that consumers can avoid these fees merely by being more responsible: by watching their account balances, and not allowing them to dip below zero.

That's absolutely true! I won't disagree, not at all.

But here's the rub: consumers need to know this is even an issue in the first place. Those who, like me, have learned through long habit to rely on their banks to balance the ledger for them have recently been taken by surprise to find notice of egregious overdraft fees arriving in the mail days after their purchases were approved.

The bottom line: banks gave us "debit cards" and taught us how to use them. We consumers followed the rules, and all was well. ...until the banks needed to scare up some profits. And guess what? They changed the meaning of "debit card," and caught legions of their customers with their pants down.

Hopefully, this will be illegal soon. But what does it say about our banks in the meantime?

This is a blog about customer service. When the company you patronize tricks you - seriously, how else can you present this debit card switcheroo other than a scam? - what kind of service is that? Why should you ever trust that company again? Why would you ever do business with them again?

Few industries are as penny wise, pound foolish as banks. It's ironic, isn't it?


***

I'm on a quest to learn which banks deceive their customers in this way and which do not. Stay tuned as I share the results.