Tuesday, March 17, 2009

More Than Ever, It's Important to Follow The Payment Trail


Let me tell you something. This blog of mine could be a full-time job. I get a lot of email -- and a lot of good stories to write about. Most of the time I do not turn my email messages into stories. Every now and then, though, I do. That's especially true when I start to see a trend in my email box. Which brings me to today's story.

One of my readers, we'll call him Hank, recently scheduled a payment on his eBay MasterCard. The card, which is underwritten by GE Money Bank, has a modest limit. Hank uses the card to make purchases on eBay (shocker). Anyhow, this month's payment was around $165. The statement closed toward the end of February and the payment was due on March 14. Once the statement closed, and the bill was generated, Hank scheduled the payment through his PayPal account, which is how he pays his eBay card each month. All is well.

Until yesterday. "Got home from work last night and it occurred to me that the money had never been withdrawn from my checking account. So I log into PayPal, and then to the card details, and I note that a late fee of $39 has been assessed," Hank says. Sounds like a simple mistake. Somewhere along the way, the technology hiccuped. The payment never got to GE Money Bank. A simple call should fix this right up.

"I have paid this card in full every month since I got it; since it was their error, and I have an email confirmation of my payment being "set-up," I call them to try and get the charge removed," Hank continues. In addition to the error that occurred somewhere along the payment chain, the late fee appears to have been assessed on the payment due date, too. No matter. This looks like as an easy case to resolve. Just call GE Money Bank and explain the problem.

Hank lobs a call into GE Money Bank. The first customer representative cannot help him. Hank escalates the call and gets a supervisor. The supervisor offers to refund $15 of the $39 late fee. No dice, says Hank. He refuses to make that concession. He wants the entire $39 back. Cancel the account, Hank tells the supervisor. The supervisor, according to Hank, begs him to keep the account open. "I told him sorry -- if this is the way they treat their best customers, I would hate to see how they treat distressed ones," Hank told me. "Sorry, it is not a lot of money, but it is the principle for me. If they are not willing to waive a late charge that is their fault, I really do not want to do business with them." (Note: Hank accesses the card through PayPal, but he is ultimately redirected to GE Money Bank's site to make the payment. That's why this isn't a PayPal problem and it is a GE Money Bank problem.)

Hank believes this is happening more and more -- though this was the first time it had happened to him. Hank's right. I have noticed a pick up in these kinds of complaints. Don't get me wrong, though. These kinds of errors are not new. What is new, though, is that card issuers are becoming more and more reticent about refunding the fees. When things were going well for the card issuers, it wasn't a problem. Now that they're going broke, though, good luck.

What has Hank learned from this experience? "I guess I would say if you pre-schedule payments, double check them right before the due date. A $39 late fee on a $165 balance is usurious," Hank says. "And I would also say [this]: if negotiation doesn't work, be prepared to walk away. Just because they successfully stuck it to me once doesn't mean I have to give them the opportunity to do it in the future. Card issuers clearly have no loyalty to their customers, why should we have any for them?" Anything else, Hank? "I will not do business with them anymore. It is going to get to the point, and I think sooner rather than later, that they need us more than we need them -- especially those of us who don't carry balances."

Here's my take. Watch the payment trail. If you schedule a payment be sure that it actually clears on time. Hank didn't catch the error early enough. In the future, he will. Used to be that an error like this could be resolved easily and quickly. Those days have seemingly passed. Card issuers -- desperate for fees -- are not as sympathetic to errors as they used to be. Let this story serve as a reminder of that.

34 comments:

  1. I'd have written enough regulators that those cretins would have *earned* that $39 responding to the inquires. But that's just me.

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  2. I believe that the servicer gets to keep fees like this. GEMB (or whoever) securitizes the balance (sells it to someone else) and services it for a fee. So the large majority of interest and principal just get passed on to the security holder. But if they can tack on a late fee, they get to keep all of that; so it's an even bigger profit stream than people think.

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  3. P, yep. The servicer does keep these fees. Drops right to the bottom line of these servicers. Good comment, P.

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  4. "Sympathy" should have nothing to do with it. They made the error, not him. A "confirmation" email is just that--it CONFIRMS that the payment he requested to be made will in fact be made on the date he requested. The ball is in GEMB's court once the confirmation is sent, barring any changes on Hank's part.

    If it is not made as confirmed--and he did not cancel or otherwise modify it--the error is theirs and should be rectified by them with no harm done to him. The fact that GEMB is going broke doesn't entitle them to charge customers for their own errors. The customer should never be out of pocket for your error.

    This whole situation is becoming ridiculous. "We need the money" has never been a legal, acceptable excuse for stealing before, now somehow it's become the norm. If it's allowed to continue with no recourse, soon creditors will be routinely making deliberate errors just to reap the fees.

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  5. I agree with Uly-fees are becoming more and more egregous. Seems to me these banks have think tanks established that come up with new fees.

    I especially loved the letter I got recently from WAMU/CHASE describing how they have established an overdraft line for me and that now if I use my Debit Card it will be approved regardless of account balance, and for this "convenience" I am charged only (!) $34. AND-They claim this helps prevent bounced check fees-haven't quite figured out how yet?!?

    It costs WAMU NOTHING to cover an overdraft (well okay, maybe the .25% federal funds rate for 1/2 the day). And for they get $34?!? I told WAMU to forget about it.

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  6. An unlucky game of cards

    http://moneyfeatures.blogs.money.cnn.com/2009/03/17/an-unlucky-game-of-cards/

    Glad to see that CNNMoney is highlighting this stuff.

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  7. "Sympathy" was probably not the best choice of words, U. My pen got away from me. :)

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  8. Off the subject - Hmm, I got some letter from Citibank recently telling me about my ThankYou rewards points, and something to the nature of them changing the rules, and if I wanted to keep them I'd have to pretty much jump through hoops and never ever walk across the road until the traffic light tells me to! I'll have to check it out in more detail and get back... (I just opened and quickly scanned it last night.) Anyone else get one of these? Not a big thing, but another case of providing people a "bonus" for choosing their card, then (possibly) taking it away from them.

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  9. Nathan, sounds like the notification that a lot of other Citibank cardholders got. Let me if this is the one that discusses the structure of the ThankYou rewards program. That program is getting scaled back.

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  10. My wife has had the same problem with the Target Credit Card. They have a prescription reward program if you run it through their card. So we did (Mistake #1).

    We pay via our bank's wire (we know the manager and get true wire transfers for free) the day before its due. Target ties to hit us with a late fee. First month, they give in (after also volunteering to waive only $15).

    Second month, we run the wire three days ahead of time. Still, they don't show it processing until one day after the due date... wow, a late fee!

    I call them up, and lets say this time I'm not happy. We go round and round and finally I tell them that 1) I'm not paying the late fee and 2) if they don't remove the charge, I'm going to ask my friendly Attorney General to file charges of wire fraud against them, not to mention my own civil suit.

    At first they didn't give in, but I convinced them to look up the number for my bank, call the manager and have a conference call. They didn't waive it until he said that he would testify under oath that the wire went through when it actually did.

    This is the crap we had to go through. This is stupid on so many levels. I'm still tempted to file civil charges if I can dream something up...

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  11. Sort of is off the subject, but this has bothered me for a month or so. I have never had a problem with The Citi in this regard because I pay BEFORE the cut off date. Citiflex HOLDS the check for 9 days after receipt. I have the proof. On back of check is date received, two days after snail mailing it (Citiflex doesn't allow you to pay on line.) Mailed on 02/02/09, stamped or printed on reverse 02/04/09, but paid by my bank on 02/12/09. This happened the month before, but couldn't prove it because I used another bank's balance-transfer check to pay The Citi off. Now this is a large 4-figure check. They must either want: late fee, pay by phone fee, or want me to send overnight mail or FEDEX. Since I pay long before statement is cut, not a problem for me, but for some folks it might be.
    Don

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  12. Don, I have complained about Citiflex in the past.

    http://www.creditmattersblog.com/2009/02/citibank-hacking-lines-of-credit-again.html

    http://www.creditmattersblog.com/2008/09/from-use-it-or-lose-it-department-citi.html

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  13. I wasn't scolding you, CM! I'm sure in their minds they ARE being "sympathetic" by even listening to Hank's "sob story." Meanwhile, it's Hank who should be getting an apology, and deciding whether or not HE wants to be sympathetic to their stupidity.

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  14. U, but sympathetic may have been the wrong word to use. I know you were not taking issue with me, though.

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  15. This is pretty unrelated, but it's curious to me. The eBay card, (GE Money Bank) can be paid via PayPal, but my PayPal Buyer Credit (GE Money Bank) cannot be paid with or through PayPal at all. That's frustrating enough, but to learn that other products can is just crazy.

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  16. CS, I'm clueless when it comes to this product. I had to have my reader explain exactly how it works.

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  17. It's just weird. You can pay anyone in the world for anything in the world with PayPal, but you can't pay PayPal with PayPal.

    It's OK though, on their two year anniversaries a lot of my GE accounts will probably be closed. It'll be time to take the training wheels off.

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  18. Sounds odd enough. Not sure why my reader didn't just go straight to GE Money Bank's site. For someone he had to go through PayPal's site first. You guys understand this better than I do.

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  19. CitiFlexLine has an Autopay option.Real easy no headache.

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  20. Anon, that's good to know. Any idea how long CitiFlex has had that option? Thanks!

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  21. GE does have their own site, with access to the cards they issue. Their non-co-branded cards, that is. Other cards, like JCPenney, Amazon, Chevron, Wal-Mart, etc. are not accessed there. To access those card accounts you have to go to the partner website's own page for credit accounts. That page pulls data from GE, but it's inaccessible from GE's site otherwise.

    It's funny, because if I pull up my Amazon and Penney's accounts in the same browser session, with different tabs, they'll get mixed up. Like, I'll log into Penney's and it'll pull Amazon. So I have to do those sessions separately.

    It would be lovely if I could have one page to access all of those accounts.

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  22. I already made three payments using Autopay.I'm not remember exact date CitiFlex started offering this option.

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  23. Thanks for the follow up. I don't remember that as an option early on. Could have been, though. Was just checking to see if you knew.

    Thanks.

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  24. Hi-I am the "Hank" in the article.

    To Clarify the payment process-you log on to paypal and then access the Ebay account from there which takes you to the GEMoney web site.

    From there, you authorize an ACH transfer from your checking account.

    The only involvement paypal has is it's the portal to the GEMoney site. They have nothing to do with the payment processing.

    Hope this helps

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  25. The only reason I have not had a late fee or overlimit fee on any card in the last two years is because I pay them within a few days of charging something or at the very least two weeks before the due date and I pay ONNLINE at the card sites.

    Without the internet many of us would be screwed by these new lag times on payments and posting.

    Capital one taeks the money out of your checking account the same night you pay them whereas HSBC waits three days and psots it a day after that.

    Perhaps the most insane one is Juniper (Barclays) which puts a 7 day hold on even ACH payments.

    You MUST learn how each card works and what they do with the time lag on each payments.

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  26. Cheer up I made a payment on an account from a major bank the other day. My local bank stopped the payment indicating it was "out of range" as they thought it was fraud. I then got hit with returned fees and went from 0% to the default rate even though I did nothing wrong. It took three letters and ten hours to get it straightened out.

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  27. Outrageous. Seems cut and dry, legally.
    ...Waiting for carnap to say it's Hank's fault.. :)

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  28. I have found that HSBC takes at least 3 to 4 days to process a payment. I was use to Cap1. I paid through my bank and glad I did it early. I wasn't close to the due date but I wanted to pay the balance down so I could pay for my washer and dryer and didn't want to have to much on the card. Now I pay them about 2 weeks before the due date and the rest about 1 week before.

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  29. GE takes 2 business days to post a payment on the PayPal cards - any payment you schedule won't process without making it 2 business days into the future.

    Of course, you can pick up the phone, dial in your checking account # and pay by phone on the same day ... for a fee.

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  30. I'm late to this article, but this is the NUMBER ONE reason why you should not use your bank's payment feature and instead use the bill payment feature of your own bank.


    Always pick the more reliable of the two. My bank (TD) has happened to have a 7 year perfect on-time record with my bill pay. They have NEVER, ever screwed up or paid anything late.

    On top of this, if the payment is manual and sent as a paper check, the check is a cashier's check drawn directly to the bank. So there is no arguing that the payee has to "wait" for the check to clear in order to recognize the payment. If the payee wants to verify that the check is good, pick up the phone and dial the 1-800 number prominently printed on the front of the cashier's draft. Can you honestly argue in Small Claims Court that you considered a payment to be late because you had to wait for your OWN bank to post a check drawn off the general funds at another bank and not on a consumer's demand deposit account? I don't think so.



    There are only a few exceptions to this rule. Capital One, as nasty as they are, has cleaned up their track record on payment posting and how clearly states their policy on their website. If you initiate the payment on Capital One's website, they WILL post it without even waiting for the ACH to go through. Your available balance will be adjusted accordingly at the time Capital One says it will be.



    Capital One posts payments on Saturdays, so there is no issue of making an electronic payment on a Thursday and the card company not bothering to post the thing until the following Tuesday (or even later, if there are bank holidays in between).



    If Capital One can do this quite easily, I wonder why HSBC, AMEX and BofA cannot.


    For companies that are VERY notorious for holding up payments (old ChaMuProvidian accounts, First Premiere, etc)... there's the old tried and true method of forcing the credit card company to admit to the hold up:

    Send your payment check manually, in the mail, certified mail return-receipt requested. When the payment center opens their mail drawer and sees a certified letter in there, you can bet that they know you're watching them and they will make 100% sure it gets posted to your account correctly and on time, because if they screw THAT up---you have a perfect case (with proof) in front of the OCC and your state Attorney General's office.


    Providian was brought down by purposeful payment holds in order to extract late fees. Providian was so blazen about it, they didn't check to see if any of the accountholders they were doing this to happened to be lawyers or consumer-rights attorneys. They just did it haphazardly to extract the fee income.


    The AG in San Francisco sued Providian and extracted a large settlement. Providian's portfolio then started to falter and the executives arranged a midnight wedding with Washington Mutual... who got addicted to the same subprime and fee extraction culture that Providian cards had and carried it over to their mortgage book. Well, we all know what happened to WaMu now, don't we?



    The declawing of consumer credit from the marketplace hurts right now, but it's going to make us all financially healthy in the long run.

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  31. Anon, thanks for the comment. Next time we need to get you into the thread earlier. :)

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  32. PP bites. I've always paid them through my CU checking account. Never had a CC on file. Finally, for the points I add a card. PP won't allow me to use the card then clutches the card for a week after my CU transferred the money before I could delete that card. PP's explanation for not releasing the card so I could delete it from their files was,"We're not a bank." They never had a problem w/me transferring from my CU w/o a different card on file before. Wouldn't let me use it, yet held it hostage. Out of a six card limit increase request, two were denied. One, a Cap1, was a week or two being six months old and the other one was PP, almost three years old. I'm pushing a 750 score w/no balances and lack thirty clams paying off a nine thousand dollar, four year loan. PP can expect me to charge a fin a month from here on out. No thank you, I'll not be participating in your paperless program. Cut a tree, slap some ink on it and snail-mail my measly single charge...

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