Wainwright Bank Update

[redheadedmuse.livejournal.com]

One of the managers at the Davis Sq branch called today, and since I happened to be in the neighborhood I went in. I blogged about this conversation here. The short version:

Maria was extremely polite and apologetic. She refunded my fees, and offered to help me set up a line of credit to protect against future overdrafts if I would keep banking with them. But she also defended the banks’ actions in processing my debits out of order as a) unavoidable – “that’s just how the system is set up” – and b) legitimate because they were legal.

I am glad that they've come around to doing the right thing for me in this instance. I hope they'll go further and reform this practice for all their customers, not just the squeaky wheels.

Comments

[ron_newman]

I'm glad to read this. Sounds like either your blog post or your LJ post or my blast e-mail had an effect (although I didn't get any reply to the e-mail). I still want to talk to the manager about the underlying issue that you have brought up.

[redheadedmuse.livejournal.com]

That was pretty much my take on it: they treated me with respect because I called them out. That's good, and probably puts them on par with what any other local bank would do. But they're not just any bank, and I think they have a responsibility to do better by their customers than the big corporate wolves.

I really hope this spurs some reform of their policies.

[ron_newman]

When I make my deposit today, I'll ask to talk to Maria, thank her for helping you, and discuss the general subject of daily transaction ordering. I assume she is not the person who originally failed to help you?

For the benefit of people who read this later, it would be good to edit your previous post to include a link to this follow-up post.

[m00n.livejournal.com]

Indeed the underlying policy has a disproportionate adverse effect on their poorest customers. This would seem to directly undermine precisely the values that they use to attract customers like myself. The should know that this fact is not lost on me.

This is exactly the sort of behavior that I'd hoped to avoid by doing business with Wainwright and I am not above moving my business elsewhere to back up this point.

What's more, if they do not change this policy I will try very hard to make sure that any potential customer learns about it. But if they *do* change this policy, I will make sure that potential customers know that they are the kind of bank that will take a hit to their bottom line in order to satisfy the demands of their community.

Hmmmm...

[nvidia99999.livejournal.com]

It's not that they will take a hit on their bottom line, I think. If enough people take their money and go somewhere else, that would hit their bottom line even more. It's the threat of a larger bottom line hit that would motivate them. So, in the end, it's always what they can get away with.

Re: Hmmmm...

[m00n.livejournal.com]

Yes, like any business decision they will have to strike a balance. My bet is that since they've predicated their entire brand on the quality of their "values" this is not something they'd want the public to associate them with, you know, from a business (i.e. bottom line) perspective.

[adaptively.livejournal.com]

Glad they listened to reason, but it's going to take a *lot* to get banks to overturn these practices.

For the record, almost any bank will wipe out occasional overdrafts if you call them up - but at the big banks, you're better off calling the executive customer service line. (Here's Bank of America's (http://consumerist.com/2008/10/reach-bank-of-america-executive-customer-relations.html), since it's the only one I have on hand. I've only had to phone up once, and it was bank error, but my less-fiscally-responsible coworker calls them at least three times a year and they always treat him politely and refund his overdrafts with no argument or wait time. Miles better than their standard 800 number.)

[m00n.livejournal.com]

Ha! Talk about a two-tier system!

[cos]

> it's going to take a *lot* to get banks to overturn these practices.

In general, that's true.

In the specific case of Wainwright, it shouldn't take nearly as much, because they deliberately set themselves up in opposition to these practices. They preach against these practices to other banks. If they don't seem to realize they have similar flaws, it should be a lot easier to get them to change that than it would take to get the rest of the banks to do so.

[adaptively.livejournal.com]

I guess I ignore the whole overdraft system and am not bothered by it because it is seemingly so easy to keep a balanced checkbook...and because I signed a contract when I signed up that laid out all of the details of how overdraft fees worked and how they were processed by the bank. Maybe Wainwright is less transparent about these things than BofA?

Overdrafts don't bother me as "predatory practices" or whatever because (a) they are a result of user error and (b) I view the fees as interest on the loan that the bank gives to cover the overspending. If I got one for that, I'd really just be pissed at myself. Executive service was good about looking at everything that'd happened to my account and going, "Oh, bank error, our bad," but I don't think I'd use it to have overspending fees resolved.

I guess my general attitude of banks is that they exist to make money, so I should stay on top of protecting my own shit so that they take as little of it as possible. It takes very little effort and has saved me a lot of money/groceries, apparently.

overdraft fees as a predatory practice

[cos]

Of course banks exist to make money, but that's a content-free observation in this context. Nobody suggested they shouldn't make money, and there are many many ways they can. Of course, they also exist to provide a service, and to be a part of our necessary economic infrastructure. We all (I hope) recognize that too, which is why we attempt to figure out the best ways to regulate them, why we consider it a problem when there aren't enough banks in an area, and so on. But saying "they exist to make money" as if that somehow justifies any possible thing a bank might do that will result in it making money is kinda thoughtless, IMO. It's like believing that the statement "people exist to have a good time" is the answer to anything someone does that they enjoy doing, so don't call anyone an asshole or a jerk ever. It doesn't matter how creepy or harmful or cruel they were being, as long as it was legal and they enjoyed it, we should just live with it and not complain or try to get them to change their behavior. That's approximately what you're saying here.

Regarding overdrafts as a predatory practice - and here I'm not specifically talking about Wainwright, I'm talking about the way a lot of banks deliberately try to maximize overdraft fees - I think both of your points are technically correct but miss the point, for these reasons:

a) "user error": Since you know that nobody has denied the technical correctness of this as a fact, it sounds like you're implying something more here: that as long as something can only happen to someone who makes a mistake, that inherently makes it a reasonable consequence for that mistake. Do you really mean that?

Everyone makes lots and lots of errors on a regular basis. We try, where things are under human control, to bring the consequences of mistakes into proportion, to the best of our ability. What a lot of people (including me) say about the use of overdraft fees is that they often have the effect of creating major consequences far out of proportion with the "user error". Whether or not you agree with that isn't the issue here, because you haven't addressed it at all - you've just said "hey, the person made a mistake". You're not arguing that this consequence is a reasonable one for the mistake in question, you're instead trying to imply that the mere fact that they made a mistake makes any discussion of the level of penalty for that mistake unimportant. Whatever your feelings on the substance of that discussion, I am 100% confident that you're wrong to imply that discussion is not the important piece here.

b) fees as an interest on the loan: That is one reasonable way to frame what they are, yes. However, that doesn't provide a value judgement, either negative or positive. We need to look at the specifics. In particular, if you view this as a loan, with the fees as interest, then what we have here is:
- A loan that someone can very easily accidentally make without having intended to borrow money,
- ... that does not make even the slightest effort to qualify the borrower and see if they're creditworthy,
- ... and charges an interest rate that is often > 1000% APR.

Clearly, that's not a good loan to have around. It's a landmine in the world of loans. And yes, it does indeed trap many many people who made very small mistakes, into very big financial holes, with bad consequences not only for them but for their friends/family/dependents and for the economy as a whole (including the rest of us who may not make that particular mistake ever).

If you want to learn more about this in its larger context, how it works, how it affects people, and what it means for the overall system, I recommend this episode of PBS Frontline (which you can watch online):
http://www.pbs.org/wgbh/pages/frontline/creditcards/

[lac.livejournal.com]

I have dealt with Maria before and I have found her very helpful and friendly. My account was once charged and overdraft fee because I was under by .15 cents. Yes, you read that right....15 cents. And that does have to do with how they process things (which, depending on who you speak to, they aren't as keen on as you might think).

But...they reversed it immediately when I called so I am glad to hear they've done the right thing, finally, for you.

[lizzielizzie.livejournal.com]

If their system is set up that way, then their system sucks. My credit union always processes deposits first, then withdrawls.

In any case, I'm glad this specific situation was resolved for you.

[m00n.livejournal.com]

Yeah, I mean, it wouldn't *cost* them anything to do it in either chronological order or deposits-first order. The only reason they do it the way they're doing it now is because it helps to pad their bottom line, and at the expense of their poorest customers.

[feylike.livejournal.com]

actually, there is a cost difference, but the explanation gets complicated.

[crschmidt.livejournal.com]

That wasn't the issue here. THe deposit made on Monday wouldn't have taken effect at all until the next day (when $100 would be available), and the full amount wouldn't be available until the check cleared.

The problem was that the order of the withdrawals: the small withdrawals (which happened when there was money in the account) were processed after the big withdrawal (which happened on Monday).

I'm sending a nice postcard to Maria.

[nvidia99999.livejournal.com]

If I just send it to the bank with her first name, do you think she'll get it?

Re: I'm sending a nice postcard to Maria.

[sunnyschettler.livejournal.com]

That's a nice response, and I should do the same. She's also corrected erroneous charges on my account. I love Wainwright and will bank nowhere else!

[bobobb.livejournal.com]

Eh, I'm glad that everything worked out for you, but I'm still not impressed by Wainwirght. Would they have reversed the transaction if you hadn't involved the local community? I'm skeptical....

[ron_newman]

I agree. The people whom this policy is most likely to hurt probably don't have ready access to amplifying microphones like DSLJ.

"it's complicated"

[feylike.livejournal.com]

the more one learns about banking, the more complicated it looks. there are perfectly legal and reasonable things that could lead to the regrettable situation you experienced, though explaining them could take quite some time, and involve many subtle points. banks take nontrivial risks on the behalf of their customers, including individual consumers with small accounts. i would suggest reading your account agreements and disclosures very carefully, no matter what bank you do business with. pay particular attention to the "funds availability disclosure" or similar notice. ("first business day after day of deposit" is a common policy, as are cutoff times before the close of business after which deposits go onto the next day's business.) there is also a difference between "ledger balance" and "collected balance" that will determine how much money you can withdraw or write checks against. the factors that determine order in which transactions get processed are complicated as well: it takes time to reconcile some automated operations such as from ATMs, and the effective date/time of the posting may be quite different from the date/time at which you, say, got cash from the ATM.

[darxus.livejournal.com]

I used Wainwright for the first several years I lived in this area, and finally gave up on their ineptitude a few years ago.

[ron_newman]

I talked to Maria Lucas for a few minutes this afternoon, thanked her for straightening out your issue, and expressed concern about the order that transactions are processed in. This is what I think she told me (I didn't take notes, so this is from memory, and I'm going to e-mail her a copy of this):

- All ACH (Automatic Clearing House) transactions are processed before anything else each day. These are electronic debits such as automatic loan payments or online-banking bill payments.

- Check deposits before 3 pm on business days are credited the same day if they are from local banks, but funds do not become available for withdrawal until the next business day. (I didn't ask about cash deposits.)

- Check deposits after 3 pm results in an additional business day's delay.

- Deposit of a non-local check may delay the availability of funds by another day.

- If multiple checks arrive at the bank on the same business day, they are processed in increasing numerical order by check number.

She said that the bank tries to take into account the customer's history, and that customers can always talk to her (the branch manager) if they think they have been erroneously charged fees. She seemed pretty willing to work with customers. She also said that whoever you had previously talked to wasn't a manager.

I told her that your blog post and the subsequent LJ discussion had caused a lot of locally bad publicity for the bank, and suggested that she or someone else from the bank post an official response on your blog or on LJ. She said they were working on this.

Thanks, Ron...

[nvidia99999.livejournal.com]

This is very useful.

[feylike.livejournal.com]

this is totally consistent with my understanding of the banking system. also, note that processing transactions in strict chronological order incurs additional expense: the bank doesn't get the transaction data in strict chronological order. think about the additional trouble of "oops, we just got the data for a transaction that's chronologically before other transactions we've already posted; we have to roll back those other transactions now and repost everything since then including the new data." -- now imagine this happening multiple times in one business day for a large number of transactions.

[cos]

> I told her that your blog post and the subsequent LJ discussion had caused a lot of locally bad publicity for the bank, and suggested that she or someone else from the bank post an official response on your blog or on LJ. She said they were working on this.

*nod* A couple of years ago, Wainwright invited some bloggers from the area to a meeting to get to know them, and I attended. I had contact info for one of the people who ran that, so I sent him the link to the earlier post (along with some of my comments) the other day. He told me they'd work on it.

[redheadedmuse.livejournal.com]

This is great to hear. Ron, thanks so much for following up. As I said in my original post, I really want wainwright to be the good guys. It's great to see them responding.

[enochs-fable.livejournal.com]

If there is a response, definitely post a follow-up!