Tuesday, August 22, 2006

Greedy Bank Bastards, A Cautionary Tale

Anyone who knows me knows one thing is for sure.... I don't like to admit to mistakes, especially ones that show financial irresponsibility, but I feel like this is important information to pass along, and I hope you all help me in getting the word out, because it was something I just didn't know could happen, and I am sure I am not alone.

My husband and I have always prided ourselves on making sure that the bills were paid on time. We never had a late car, rent or mortgage payment in our lives. We worked hard to protect our credit, to keep the lights, phone and gas on, and to keep our family fed and clothed. It isn't easy with four kids, but somehow we always managed to hold it together, even if we ran right to the deadline, exhausted the grace period and brought our checking account to 14 cents we were pleased that we kept the balls in the air.

For the past two years we have banked exclusively with credit unions, and currently have two credit union accounts, one in St. Louis that offers us fantastic service and great interest rates, and one here in New Mexico for State Employees, like Charles. Recently we decided that we should have a traditional checking account, don't ask me why, because now I couldn't begin to tell you our reasons. So we opened a checking and savings account with Wells Fargo. Our personal banker was very nice, and we transferred the bulk of our direct deposit from Charles's checks over to that account.

Now, in an effort to always be on time with my bills and keep things like lights and phone on, I sit down most Tuesdays before payday and write the checks for the bills and stuff the envelopes, to be sent out in anticipation of the direct deposit arriving on Friday. They are sent off, and arrive at the vendors usually Wednesday or Thursday, at the earliest, but often days later, are processed through their systems and credited, then hit the vendor's banks, and then ours. I have never had a problem with the timing, everything was fine.
Well last week was no different. I got the payments in by the deadline, and on Friday I checked the account at 8 am and made sure that the deposit went in and nothing had gone through. Our previous balance was about $20, according to the system, and our deposit from Charles's check was in, fully credited. (Normally I wouldn't divulge such personal information but I feel it is important to the story.) I checked to make sure that all the balances matched up, and inspected the spending report, and everything was in good shape. I went about my day, and when I returned home in the afternoon after picking up the girls and buying a few things we needed at Walgreen's, I had a panicked message from Charles saying "Check the account, there are major problems."

I went back to the online banking system and couldn't believe my eyes. The account balance was just over $200, the deposit was marked "pending" and the previous day's balance was -$954!
Of course at this time it was end of business on Friday, so we had to wait until Saturday to hit the bank, which we did first thing. We sat down with a branch manager, who explained to us a little known law that had been passed a couple of years ago, called Check 21. What is boils down to is now a bank can look at the date a check is written, go back to that date in the account it was written from, look at the balance, and if the money wasn't there on THAT day they can bounce the check and exact huge fees. He said that it was slowly being implemented, and that they had just started enforcing it recently, initially giving credit to customers to get them used to the system. We had been with credit unions, who are loathe to enforce this on their customers, because they are customer owned and never knew of this. Of course, the information was provided to us when we opened our account, in the form of fine print in a thick book of banking information that came with stacks of papers, cards, fliers, and other things in our folder when we opened the account, in other words buried where we would never see it.

Now, the bank manager was very kind, sat with us for well over an hour, went through the account and reversed some of the fees, but not all. He said to sit on the account for a week, don't touch a dime of it, and let the dust settle and they would judge our discipline basically and make a decision about restoring more of those fees. Now, not only have we had our account pilliaged by the bank, our remaining funds are sitting there on hold. This is tremendously frustrating.
I write this not for sympathy, but to warn others. I know many people are accustomed to doing things like I am, but the times have changed and there are no more float times, no more leniencies, and no more leeways. I feel, personally, like all the laws now protect the corporations, and consumer protection is a thing of the past. I don't feel that this information is properly disclosed. I firmly believe that this is a great scheme by the bank to extract hundreds of dollars at a clip (in the form of $25 bounced check fees, $33 overdraft fees and sales taxes on both) on customers, whom are then scorned with the title "check kiters".

With no small amount of embarrassment over this situation I have decided to go public with it in the hopes of preventing it from happening to others. Pass the information along, it will save someone the aggravation and frustration that we are experiencing.


  1. I've certainly never heard of Check 21. Thank you for informing me.

    All the laws are built to protect companies. We're talking of millions if not billions of dollars in added revenue, and at the expense of good, honest people. This isn't a free market--where consumers have free and full information--it's corporate welfare.

  2. Mike from NE3:04 PM

    There is nothing to be embarrassed about. If I were you, I would teach the bank a lesson and close your account completely. Who cares if the local employees are friendly to you? They only work for the giant corporation. It's no skin off their noses if you pull out (even if it is, they might secretly understand). If more people do that, someone up the line might learn a lesson. It's a lesson that may not mean anything to them, but it will show them you still have a little say-so over them. No corporation can survive without the people they cheat every day. I wouldn't let it rest. The great thing is that it is a scam that most bank customers will only fall for one time. That source of revenue will soon be smaller than the bank CEOs and their republican friends in congress (and a few democratic friends, I'm sure) seem to think it will be.

    I didn't really understand your bill-paying methodology, even after you explained it. That's because I am not a financial type of person. It's like algebra to me, and my brain sort of glazes over when I encounter such details. Does your husband's check come shortly after all the bills are due every month? Whatever the case, your method doesn't sound unethical. On the other hand, the bank's new law certainly sounds highly unethical. I would even write your story, anonymously and publish it in a few newspapers (maybe even pass it out as flyers).

    I'm glad you're warning everyone; however, I've never been in your position as far as banks go. I didn't even have a "real" bank account until I was 33 because I never had enough money to bother with one. Also, unlike you, I don't have four kids to raise. Finally, have a good savings account, but I still avoid debt like it is the plague -- to the point of going without practically everything on a daily basis (I learned never to imitate my dad's lifestyle). I'm not much of a materialist anyway. This isn't to say that you incur unnecessary debt. I doubt that is the case. I'm just explaining why I don't. ;-)

    This is a very well written entry.

  3. tax on overdraft fees????? WTF??

  4. mzgambler12:23 PM

    wow....I hope this never happens to us. I plan to call our bank soon as I sign off here and find out if this can happen to us. Thanks for the info and God Bless you for the courage to tell folks about this problem.

    love ya bunches
    Mzgambler xoxoxoxo

  5. I don't know if it's big corporations vs. the little guy. I think there's simply too much legislation all together.

    The government (which really, is all of us) doesn't have enough people who are working on intelligent solutions to big problems... the people we have elected into office would rather create laws that pass the burden on to the corporations, who in turn pass the burden on to the employee and consumer. It seems the days are closing on a time when we could shake hands and agree to do business together.

    It's a shame really.

    I work in the field of Identity Theft, and if you want to see what the laws are doing to corporations (mostly small to medium sized businesses), take 2 minutes and 32 seconds to watch this video. It's aimed at people who own companies, but you might find it interesting nonetheless.)