The American Bankers Association and industry consultants claim surveys show customers have "opted in" to high-fee debit card overdraft coverage because they want this service. But these surveys likely only show the success of aggressive, deceptive marketing campaigns to steer customers into bad products, not true customer preference.
Industry-sponsored survey results would be more credible if banks and credit unions actually gave customers the information they need to make informed choices. But instead, too many banks and credit unions do the following:
- Do NOT tell customers they won't be charged a fee when the bank declines a debit card purchase that causes an overdraft. As a result, some consumers believe they will be penalized for overdrafts if they don't opt-in.
- Present customers with a FALSE CHOICE between no overdraft coverage or a high-fee overdraft program. If customers really knew they had lower-cost options, would they pick the most expensive one?
- Do NOT fully inform customers about lower-cost options such as a line of credit or a link to a savings account. Often even using a credit card would be cheaper, but banks don't tell customers that.
- Subject customers to relentless, MISLEADING MARKETING aimed at steering people into the highest cost product. At one bank, for example, each time a customer who has not opted in calls on an unrelated matter, he or she is urged to opt in to high-fee overdraft coverage.
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WRONGLY IMPLY that a debit card won't function correctly unless a customer opts in or that high-fee coverage has some advantage over lower cost options.
With banks and credit unions pushing this much misinformation, what chance do customers have to make an informed choice?
For more information: Kathleen Day at (202) 349-1871 or kathleen.day@responsiblelending.org; Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org; or Charlene Crowell at (919) 313-8523 or charlene.crowell@responsiblelending.org.