the Sugar Conspiracy

Wednesday, February 23, 2005

Spend all your money. We'll make more.

Bank of America and Citizens Bank are offering a loosely regulated service called bounce protection, which automatically allows customers to overdraw their accounts by several hundred dollars at an automated teller machine or while using a debit card at a restaurant or store. Customers are charged fees ranging from $17 to $33 each time they overdraw their accounts unless they opt out of the service.

That means if a customer who has $200 in his checking account and withdraws $300 from an ATM machine or spends $300 at a supermarket can be charged a $25 fee for that $100, which translates into an annual interest rate of nearly 1300 percent. Consumers are typically not alerted that they are overdrawing their accounts at the time of the transaction.

And how are the banks selling this wonderful new way to get more of your money?

"This makes it possible to get the necessary services you need without encountering the embarrassment of being turned down," said Alexandra Liftman, a spokeswoman for the bank.

If being turned down is too embarrassing, maybe people shouldn't be spending more than they have. Such a situation is NOT an excuse for a bank to gouge you even more.

"In our ongoing efforts to make banking with us easier, our goal is to authorize more transactions made using your ATM or check card even if it creates an overdraft on your account," the insert said.

Translation: In our ongoing efforts to put more of your money in our pockets, our goal is to let you spend more money than you have. And then charge you for it out the wazoo.

The [bank] notice did not disclose that consumers could opt out of the program if they wanted. Liftman said customers could learn about the opt-out provision if they called or visited a branch to discuss the service.

Why an opt-out service? Cause if they made it an opt-in service, where the customer had to take the initiative, no one would want to participate in such a callous, greedy program that goes against their basic self-interest. Instead, make it "opt-out" so customers have to go out of their way to learn about the program and then proactively decide not to participate.

Find your Bank of America branch here and Citizens Banks here to opt-out of the program.

posted by chris at 10:20 AM
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