Bank of America Fined $250M for 'Systematic' Overcharging, Opening Unwanted Credit Cards (msn.com) 80
Bank of America "will pay more than $250 million in refunds and fines," reports the Washington Post, "after federal regulators found the company systematically overcharged customers, withheld promised bonuses and opened accounts without customer approval."
The Consumer Financial Protection Bureau [or CFPB] found the bank made "substantial additional revenue" for years by repeatedly charging customers $35 overdraft fees on the same transaction. The bank also denied cash and points bonuses it had pledged to tens of thousands of credit card customers. And starting in 2012, Bank of America employees enrolled customers in credit card accounts without their approval, obtaining credit reports without permission to complete the applications, the bureau said.
The bureau's director emphasized that "These practices are illegal and undermine customer trust," adding that America's CFPB "will be putting an end to these practices across the banking system."
The Post points out that Bank of America will now pay more than $100 million in restitution to customers, a $90 million fine to the CFPB and another $60 million fine to the Office of the Comptroller of the Currency. "Bank of America already has refunded customers denied credit card rewards and bonuses, the consumer bureau said. It will be repaying those it overcharged on fees by depositing funds into their account or sending a check..."
But how widespread is hte problem? Hundreds of thousands of customers were harmed over several years, the consumer agency said. Bank of America is the second largest U.S. bank, with 68 million residential and small business customers... In extra fees alone, the bank charged customers "tens of millions of dollars" between March 2020 and November 2021, federal regulators found. The regulator said Bank of America in that period hit customers with a $35 fee if they had insufficient funds to cover a charge. If the customer still lacked funds when the merchant resubmitted the transaction, the company assessed another $35 penalty... And bank employees opened credit card accounts for customers without their knowledge in a bid to meet individual sales goals, the CFPB said...
[T]he practice has given the banking industry a major black eye in recent years. Wells Fargo reached a $3.7 billion settlement with federal regulators in December over a range of violations, including opening millions of fake accounts. The CFPB fined U.S. Bank $37.5 million last summer over its own sham accounts scandal.
This is not Bank of America's first brush with federal regulators over its treatment of customers. The CFPB ordered the company to pay $727 million in 2014 over illegal credit card practices. The company paid another $225 million last year in fines over mishandling state unemployment benefits during the pandemic and a separate $10 million civil penalty over unlawful garnishments.
"The company did not admit or deny wrongdoing in its settlement with the agency..." notes the article. But a statement from the chairman of the U.S. Senate Banking Committee said Bank of America "has clearly broken the law in yet another case of Wall Street banks taking Americans' money to pad their already-massive profits...
"This kind of abuse is why we will continue to hold the big banks accountable, and it's why we need the Consumer Financial Protection Bureau — so consumers can keep their hard-earned money."
The bureau's director emphasized that "These practices are illegal and undermine customer trust," adding that America's CFPB "will be putting an end to these practices across the banking system."
The Post points out that Bank of America will now pay more than $100 million in restitution to customers, a $90 million fine to the CFPB and another $60 million fine to the Office of the Comptroller of the Currency. "Bank of America already has refunded customers denied credit card rewards and bonuses, the consumer bureau said. It will be repaying those it overcharged on fees by depositing funds into their account or sending a check..."
But how widespread is hte problem? Hundreds of thousands of customers were harmed over several years, the consumer agency said. Bank of America is the second largest U.S. bank, with 68 million residential and small business customers... In extra fees alone, the bank charged customers "tens of millions of dollars" between March 2020 and November 2021, federal regulators found. The regulator said Bank of America in that period hit customers with a $35 fee if they had insufficient funds to cover a charge. If the customer still lacked funds when the merchant resubmitted the transaction, the company assessed another $35 penalty... And bank employees opened credit card accounts for customers without their knowledge in a bid to meet individual sales goals, the CFPB said...
[T]he practice has given the banking industry a major black eye in recent years. Wells Fargo reached a $3.7 billion settlement with federal regulators in December over a range of violations, including opening millions of fake accounts. The CFPB fined U.S. Bank $37.5 million last summer over its own sham accounts scandal.
This is not Bank of America's first brush with federal regulators over its treatment of customers. The CFPB ordered the company to pay $727 million in 2014 over illegal credit card practices. The company paid another $225 million last year in fines over mishandling state unemployment benefits during the pandemic and a separate $10 million civil penalty over unlawful garnishments.
"The company did not admit or deny wrongdoing in its settlement with the agency..." notes the article. But a statement from the chairman of the U.S. Senate Banking Committee said Bank of America "has clearly broken the law in yet another case of Wall Street banks taking Americans' money to pad their already-massive profits...
"This kind of abuse is why we will continue to hold the big banks accountable, and it's why we need the Consumer Financial Protection Bureau — so consumers can keep their hard-earned money."
Why Do People Bank with Big Banks? (Score:5, Insightful)
Re:Why Do People Bank with Big Banks? (Score:5, Insightful)
1. Nationwide ATMs and branches
2. Most such people haven't seen a fee in decades.
3. Most people are fine with the service.
4. Inertia.
That said, this sounds like the same crap that happened with WF, just worse.
Re:Why Do People Bank with Big Banks? (Score:4, Informative)
1. Nationwide ATMs and branches
Credit unions have an ATM and even branch access co-op now.
Re:Why Do People Bank with Big Banks? (Score:5, Funny)
it's a union. no real american would ever join one, and they won't be fooled.
Re:Why Do People Bank with Big Banks? (Score:4)
it's a union. no real american would ever join one, and they won't be fooled.
I know you're joking, but unions are the most American thing ever.
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"I know you're joking, but unions are the most American thing ever."
If it's not mandatory to join. Freedom of association is equally American.
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wells fargo.
similar issues.
maybe this time people go to prison.
his is why i do not do business with wells fargo.
or bank of america.
in the long run.
it all adds up.
it just makes cents
Re:Why Do People Bank with Big Banks? (Score:4, Informative)
real americans exercise their rights to act in their self-interest, real, perceived, accurate, or not.
Fraud in these transactions lead to inaccuracies, and so the consumer (in this instance) is cheated. But their choice was based on the assumption of fairness or at least honesty, and BofA should be punished 10 times what is proposed. And management should be held personally accountable, to the point of felony convictions and being rendered unqualified for such work for a meaningful period of time, 10 years, lifetime, you name it.
You think felony convictions are cruel and unusual punishment? Ask a felon how they fare just renting a decent apartment... Or finding work with more than subsistence wages. BofA management deserves, indeed must be properly sanctioned for this.
Re:Why Do People Bank with Big Banks? (Score:5, Informative)
Better online apps and web sites. Smaller ones' are buggy, crappy, etc.
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The CU I bank with has a fully functional web site and app. I can scan checks and whatnot, the website is fast and I can get data out of it, etc. They presumably just contract it all from someone competent.
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Re:Why Do People Bank with Big Banks? (Score:5, Informative)
You accidentally almost answered your own question. In the US, checks usually have no fees. You write a check for $100, the recipient gets $100. Just about every other method of transferring money incurs fees of some sort. Often, the merchants eat those fees (like credit card fees) or pass them on to consumers as a higher price.
There are ACH transactions, but those are complicated to set up (AIUI), and are generally limited to long term business relationships, like monthly utility bills or employee direct deposit. Now, these and credit cards cover most all transactions, but there are still one-off things, like paying for a repair where the easiest solution is to write a check.
It probably shouldn't be that way, but it is.
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I can use ACH with Venmo and PayPal I think, and while those are the relationships, I can pay casual partners with ease. Not as fast often, but that can and will change as ACH modernizes and expands settlement improvements.
Credit card transaction fees fund some services not available from ACH, such as disputes. Debit payments are attractive due to the fee caps. Remember, if you use a reward card to pay your municipal utility bill, they either pay a 2-3.5% fee for that transaction, or they recover it from yo
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Interesting. US Bank web site was fine on this end.
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Ugh, yeah US Bank's website and app are the worst. Always have been too... I don't understand how such a big company can consistently have such horrible UI design.
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Better online apps and web sites. Smaller ones' are buggy, crappy, etc.
Keybank (A family member of mine is often complaining about their bill pay being unavailable or changed). And why do people stay with companies when they don't like their online banking. Bill pay, automatic transactions, inertia. People often hate small changes to sites/programs they use often, switching to a new provider is a horror show for them.
One of the upsides to credit unions is that even for credit cards, you need to have at least a savings account, allowing one to see what they're online banking
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1. Nationwide ATMs and branches
2. Most such people haven't seen a fee in decades.
3. Most people are fine with the service.
4. Inertia.
That said, this sounds like the same crap that happened with WF, just worse.
I read the question as "why do people trust banks", I'd argue that you shouldn't trust a bank regardless of its size.
Banks, as I see them, are necessary evils. Something we need for modern life to continue to run, as any Civ player will tell you, you cannot build a modern economy without banking and banks, So I use banks just like anyone with half a brain would, that does not mean I trust them as far as I could throw their head office. I know they're trying as hard as they can to make as much money as po
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I read the question as "why do people trust banks", I'd argue that you shouldn't trust a bank regardless of its size.
Note that "trust" didn't make my list. Well, I trust them to do certain things, and "my best interest" isn't on the list.
For example, I trust that they'll hit me with service fees up the wazoo if I overdraw, so I don't do that.
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5. Acquisitions
I ended up at a large bank when my small regional bank was acquired by Capital One. I've seen several small banks get gobbled up, I wouldn't be surprised if it happens a lot more than I'm aware of. Then that #4 (inertia) kicks in...
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That's the way it is with me.
My wife had an account with Crocker. They got bought out by Security Pacific, who got bought out by BofA. So I have a legacy BofA account that I've never bothered to move.
Most of my banking, though, is done through my Credit Union.
Re:Why Do People Bank with Big Banks? (Score:4, Informative)
As others have said, we don't always CHOOSE a "big bank".
I've had two credit cards in the past 50 years. Neither one stayed the same in that time. I finally got rid of my "Bank of America" card when they decided to take me off getting a statement each month. BOA was the fourth company name on that card since I opened it. It started as a card associated with a group I was a member of, and the first few cards had they group's name on them.
The other card has changed names just as often. That card was opened back when it wasn't every bank issuing cards, like today. Want a credit card? You need this bank to issue it.
Even if you open a card with "Bobbijoe's Collective Bank of Piscataway" today, you've just got a private label on some other bank's card.
The big thing to all of these is to not jump on everything the bank throws your way. There is a reason they're pushing X program at you, and that isn't because it will make YOU money (or save you some). It's being offered to make THEM money. "I just want a credit card to use" is not going to make them lots of cash.
Re:Why Do People Bank with Big Banks? (Score:5, Insightful)
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That's basically how I ended up with Wells Fargo. I don't even remember all the banks. But the original bank I was with, which I actually had a semi-illegal account with(under 18 without my parents on it; didn't know about that quirk until I was over 21), was bought out by another bank, which was bought out by another, then another, then finally by Wells Fargo.
But, well, they've treated me decently and I was moving around - but Wells Fargo was always where I was at, other than the overseas locations. So
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There actually aren't any fees for most checking accounts with BofA. And you never really need "service" so what's the difference if there is "poor service". It's convenience and security, the same reasons you would choose any bank for a non interest bearing account.
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For quite a while in my youth, every time I switched banks, they got bought out by Bank of America. Somehow I always ended up being their customer whether I liked it or not.
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It's a mystery to me why people choose to bank with giants like Bank of America and Wells Fargo. Their fees are enormous, their service is mediocre at best, and they're always pulling crap where they manage to bleed their customers for minor crap. In short, I can see no advantages at all in choosing any of them. If someone out there can enlighten us, what is the attraction?
If you're a business owner, having anything other than a big bank can be a no-go because major online service providers tend reject payment methods from locally-owned banks.
I started with a local bank and ended up switching after the first year because it was a huge PIA.
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It's a mystery to me why people choose to bank with giants like Bank of America and Wells Fargo
Decades ago, for many people, I think it was not as easy to find a credit union that would open an account.
When I first moved to the USA, I signed up with a credit union that only offered accounts to the employees of my employer. My account number was my employee number.
Let me guess... (Score:1)
The degenerate 'executive' that came up with this marketing scheme is still around and getting bonuses?
Sounds familiar (Score:5, Interesting)
I seem to remember another bank doing essentially the same thing [cbsnews.com] and all they got was a slap on the wrist [pbs.org].
Must be nice to commit a crime and not be held accountable. You will note, not a single person went to jail for opening these fake accounts.
Re: Sounds familiar (Score:1)
Re: Sounds familiar (Score:4, Informative)
It's almost as if these paltry fines are just token gestures, receiving much publicity to create the illusion that the Great Powers are being held accountable.
Given that people aren't boycotting, or staging public protests calling for jail time, or voting for politicians that are promising to actually for-real hold them accountable, it seems to be working.
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their tax rates should go the fuck up for this and stay up for a good long time.
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Yes. There are a lot of things that "should" happen but won't. I see it a lot in online forums including slashdot. People post solutions, just punishments, changes to law, etc., that would make things better. I suppose it's as good a reason as any to write an online post. But of course none of these ideas, however good, ever go into effect. Nor will they.
Our generation inherited a lot of freedom and privilege that our ancestors fought for. As such, we aren't used to fighting. Even politically. Well
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pffft... Fine them real fines, 10x this. And charge managers and executives who knew, or SHOULD HAVE KNOWN.
Banks etc. should proactively manage their businesses where consumers are at risk of real harm. They should look for and prevent these crimes.
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Indeed, but I think that WF's case was a bit less blatant. In this case, BoA is ALSO being hit for charging service fees multiple times and denying points and such, which takes programming. Not just setting up an incentive structure that caused employees to open accounts in "secret" to meet poorly thought-out quotas.
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Less important? (Score:1)
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Bank locally (Score:2)
Find a local credit union, use their services. The money stays locally, and they're far more motivated to take care of you.
Wells Fargo and BofA can both choke on a bag of dicks; I will never bank with either of them again.
Re: Bank locally (Score:2)
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Maybe, maybe not. I have a credit card with BoA (because they bought MBNA - it's my oldest card so I keep it and use it occasionally to keep the credit score people happy and to have a backup).
I also have a credit card with a local credit union (my main card usually). The CU card has bad customer service; they outsource the phone service to a third party, who can never actually do anything other than cancel your card and put in to have a new card mailed in a week or two (maybe). If you go to a branch, they'
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I'm connected to the credit union industry being on the board of one for 15 years. I follow the industry, go to conferences, follow the regulatory parts. Credit unions aren't entirely wholesome and some do naughty things too that you don't hear about because of the lower profile.
However, they are structured to be better aligned with the interests of the "member" (customer). Certain employees and the C Suite are rewarded with bonuses for performance. There are no shareholders though and that keeps success be
theft or tax? (Score:3, Insightful)
The people that were harmed will never be compensated. The Government gets the money, since the money came from the people this amounts to a tax on victims. Yeah, great job Government, only gangsters take from victims.
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The Post points out that Bank of America will now pay more than $100 million in restitution to customers, a $90 million fine to the CFPB and another $60 million fine to the Office of the Comptroller of the Currency. "Bank of America already has refunded customers denied credit card rewards and bonuses, the consumer bureau said. It will be repaying those it overcharged on fees by depositing funds into their account or sending a check..."
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It only says "Over a period of multiple years, Bank of America generated substantial additional revenue by illegally charging multiple $35 fees."
The CPFB article says:
"In 2014, the CFPB ordered Bank of America to pay $727 million in redress to its victims for illegal credit card practices."
"in 2022, the CFPB and OCC fined Bank of America $225 million and required it to pay hundreds of millions of dollars in redress to consumers for botched disbursement of state unemployment benefits at the height of the COV
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Why do the fines keep getting smaller? If BofA is supposed to improve its practices, where are the improvements?
It has to be more than a cost of doing business or it will keep happening.
If I rob the bank 3 times you can bet I'm looking at the 3 strikes law. If the bank robs me 3 times, then they are allowed to do it a 4th time. Throwing a few dollars at me years later is not compensation. How about a BofA executive gets 25 years to life in prison?
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"The Government still gets more money than those harmed in this case."
If the penalties are not significantly more than just the fraudulent charges, BofA will keep trying to charge them and giving back the money when caught.
Also you yourself quote "$727 million in redress to its victims" and " hundreds of millions of dollars in redress to consumers" when your original claim was "The people that were harmed will never be compensated". So you have refuted yourself.
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Way to miss which year and in which context those previous payments happened. I'm talking about this instance here, now, but also demonstrating how it is increasing easy for BofA to keep doing this. Enforcement has gone way down, to the point where the Gov gets the bigger check now - this is wrong.
Wells Fargo did same in 2016 -- crazy! (Score:3)
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at least the fines are going up -- 100M in 2016, now 250M in 2023
You expect Big Banks to follow the rules? (Score:2)
Unless they get caught, they'll keep on doing it. The upside is too attractive not too.
Re:You expect Big Banks to follow the rules? (Score:4, Insightful)
Being caught doesn't matter, "fines" are trivial (just a cost of "doing business").
Until executives go to jail, they'll keep doing it..
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And they will keep doing it (Score:3)
The fines handed out to banks for this kind of behavior is no deterrent. I can guarantee you that some team of bean counters has sat down and figured out that the bank will make more money cheating and getting caught than not cheating.
Eventually the government will catch them and give them a slap on the wrist. The bank will promise not to do it again, but they will. They will because the math is in their favor.
Until they start throwing executives in jail for this kind of behavior it will continue.
Should be fined 2.5B (Score:3)
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100%. Seeing these laughable fines against mutli-million or billion dollar companies is insulting. They hardly feel it, it's not a punishment and not in any way going to make them think twice in the future.
BoA is *really* questionable, all the way around! (Score:3)
I have a BoA MasterCard, which I accepted a pre-approval offer for years ago. I'm on the verge of cancelling it, due to BoA's incompetence.
1. I was trying to purchase an older used car from a college student, for my daughter to drive. I met the seller on a Saturday afternoon, but realized too late that the banks were closed for the day, so couldn't go in and get a money order for him. I had enough cash in the bank but no way to withdraw the amount needed, due to daily limits imposed on ATMs. I wound up making the deal work thanks to my friend who was able to pull cash out of her ATM to combine with my withdrawal, to get enough -- and I paid her back the next week. But first, I tried to use a BoA offer they'd emailed me about (and was basically a "click and done" thing via their app on my cellphone. It was supposed to loan me up to $15,000 or something like that, which could be direct-deposited to my OTHER checking account I had with a credit union. If I had the funds in that one, I could use Zelle to send this guy his money for the car. My Zelle was configured to use the credit union account. Well, BoA "started the process" but the money never showed up. I think it was only 4-5 days later, I got email notification that the transfer failed. (No explanation why... they just couldn't complete it. I'd given them the correct bank account and routing/transit number.)
2. About 6 months ago, I tried to pay off my BoA card via their app, like I usually do. Just shows the balance due, and you tap someplace to pay. Simple... Well, not this time! It kept asking me about transferring the payment from my "BoA Checking" account, which I didn't have! I called customer service and finally found out someone had opened up a checking AND a savings account under my name (with no money in either), so it wiped up my original preferences for paying from my other checking accounts. They got it corrected (after 48 hours or so). I changed my password too, despite never seeing evidence someone else had signed in as me. Then a few days later, it happened again! (The second time, it seems like they fixed it on their own though.)
3. My mom has a BoA credit card and started getting a small ($18 or so?) charge each month on it from some unknown service. Their fraud department kept catching it, but disabling her card. They'd mail her out a new card (after 10 days or so), and then the charge would hit the new card the next month. Rinse and repeat! Every time she'd go to use her card, she'd find it was declined thanks to this ongoing nonsense. Fraud department admitted it's a known problem because someone is paying a company that gives them info about your new card number/expiration date whenever you get a new one issued. (Huh?!) They said that's why this keeps happening, but they STILL had to mail her a new card because it's "policy"!
Re: BoA is *really* questionable, all the way arou (Score:2)
Who is getting hold of your mom's new card details monthly, and how can they be doing this?
Companies can give away or sell your credit card details, at least not legally.
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I wish I knew!
All BoA said is that services exist who you can pay to provide you with a person's updated card number and expiration date as long as you know their previous card info. Places do this so they can keep billing you even when your old card expires.
Legal? I highly doubt it, but that never stopped people from doing profitable things.
Isn't this criminal fraud? (Score:2)
Why haven't bank executives been arrested and put on trial for such blatantly criminal behaviour?
Oh, wait. Sorry. I forgot this occurred in the United States. Never mind. Bonuses all 'round and a "cost of doing business" fine that ultimately will be paid by bank customers. Next step: legislation passed with the massive support of both parties to explicitly allow this sort of thing.
Carry on.
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And identity theft. Wouldn't this fall under the computer fraud and abuse act?
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It certainly seems like it should. And that's got some real teeth in it.
Where? Who? (Score:2)
Insane that a bank would just open an account for you without your knowledge ... talk about the banality of evil.
I don't question at all that it happened, I just wonder if it's maybe geographically concentrated somewhere? It would be a mighty memorable thing to happen to a person, and I would think I'd have heard of it happening to someone in my network, but no, not even through the six degrees of Kevin Bacon [wikipedia.org].
But Remember (Score:2)
If you steal a candy bar from the local store, you will be charged under criminal law, and you can be locked in a cage, and be unable to get a job or rent an apartment for the rest of your life.
And a settlement will require a guilty plea on your part.
Nobody risks cage time when big business steals a million fold what you did, corporate execs lose exactly nothing personally, and the company does not even have to admit wrongdoing. Best of all, they get to keep most of the ill gotten gains so long as they gi
Chase kinda suspicious (Score:1)
They closed my card for not using it enough (fair- I was only charging $400 a year on it).
Now, after 4 years without any prompting on my part, suddenly they send me a new card.
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While I'm here anyway...
Yesterday I went to Walmart, and after paying and after warning the grandkids about how dangerous self checkout is at walmart, the machine borked and wouldn't print the receipt.
No biggy, two employees came over after a couple minutes and messed with the machine, opening it up like a xerox machine and flippin
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You went inside Walmart? Why would you do that? Just order it online and have them bring it to your car. You get a receipt in email, and they can't accuse you of stealing in self-checkout.
As for Chase, I have dozens of their credit cards. Well, ok, a few as they gobbled up other banks I had cards from. They simply require you to use your card once a year. In my experience if I charge $5 once a year, their computer is happy and they keep sending me new cards. So, I figure more than a year must have pa
They were doing what they were told! (Score:1)
When you work for a big bank like that, there are impossible quotas to hit, and if you do not, you are FIRED!!!! You are fired for not hitting the quotas, but those to cheat and make their numbers are rewarded and promoted and held as examples of how it is done in company meetings. Those who make those orders are rewarded and promoted and applauded at stockholder meetings.
It is likely this is still going on because what B.O.A is not nearly as afraid of the Feds are they are not making their next quarter's n
we should have let them go under (Score:2)