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Hullabaloo


Sunday, November 22, 2009

 
Consumer Populism

by digby

I honestly believe that this is the kind of thing that affects people every day and is leading to a populist backlash. People not only blame those who do these things, they blame those who have the authority and power for failing to step in and stop it:

Three years ago, the Haggler’s credit card bill seemed to stop showing up in the mail. Another month went by — no bill. The month after that, still nothing. Each month, the Haggler would call the issuer, Bank of America, and pay over the phone, then ask the same question: "Why did you stop sending me a bill?"

We’re still sending you a bill, came the company’s reply each time.

Guess what? The company was right. It just was sending the bill in a restyled envelope, with no trace of “Bank of America." In other words, it looked like junk mail, and the Haggler kept throwing it away.

Now, the Haggler can’t prove it, but this seemed like a brilliant, low-cost way to pocket a fortune in late fees.

“We are not trying to fool people, and we don’t change our envelopes on a regular basis,” said Anne Pace, a company spokeswoman. She explained that the change in envelope design was prompted by the 2006 acquisition of several credit card companies, after which the envelopes of all customers were left blank “for the sake of consistency.”

Consistency? It would be consistent, as far as B. of A. customers are concerned, to leave the envelope unchanged, no?

Seriously, the person who dreamed up the envelope switcheroo must wake up laughing. Ever since, the Haggler has held a grudging, vaguely appalled respect for credit card companies.


The same thing happened to me. The plain brown envelope looked like it was one of those car dealership "checks" that were all the rage before the credit crisis hit. And because I didn't realize the first month that I hadn't gotten my bill, it created a black mark on my credit for a late payment which resulted in a cascade of raised rates on several cards.

It was clearly a sneaky trick. Yes, it's my responsibility to know when my bills are due, but I had been in the habit of putting the bill into the "to pay" file and paying it on the following Monday. It didn't occur to me that the bill would suddenly come in an envelope with no return address or label on it that didn't look like a bill and so I tossed it into a junk pile and didn't look at it right away.

And that's what people are dealing with all the time as consumers, with their health insurance, their credit cards, their mortgages, their pensions --- overwhelming complexity designed to trip them up and cost them money or deny them benefits to which they believed in good faith they were entitled. And its all perfectly legal --- or at least there's no visible accountability for it.

The late fee tricks we are seeing all over the news is apparently going to go on unabated for as long as they can get away with it. And it goes back to the same central problems that created the financial meltdown in the first place:

The backdrop of this boo-boo is an industry that for the last 10 years has been refining the low art of late-fee shenanigans. Edmund Mierzwinski, consumer program director of the U.S. Public Interest Research Group, says that starting in 1999 — when the repeal of the Glass-Steagall Act allowed commercial and investment banks to merge — credit card companies started looking to late fees for profit.

“It began with regulators allowing banks to say that if a bill arrived on the due date but after a certain time on that day — like noon — then it was late,” Mr. Mierzwinski said. “Now, how many people know when a bank checks their mail?”

Some banks started moving up due dates without notice. Others required that payments sent via overnight mail use a special address, so that if you sent a payment by FedEx to the regular address, you were late.

Getting the picture? In May, Congress passed the Card Accountability, Responsibility and Disclosure Act, which curtails some of these practices. But critics predict that the elimination of some fees will give rise to new ones.


As we know, they are already doing some unbelievable tricks in advance of the law taking effect --- and the Republicans have put an inexplicable hold on efforts to stop them. All people see is more trickery, with the government spending vast sums on the bailouts and failing to enact meaningful reforms in a quick and forceful way.

The Democrats should be the consumer's best friends right now, valiantly and openly fighting these huge enterprises and demanding that they answer for their previous bad behavior. There is some action on these fronts in the congress, as with the credit card bill, but they are so slow-moving and opaque that hardly anyone knows about it. And when the Republicans stand in the way as they did with both the extended unemployment insurance or the necessary credit card reforms, the Dems don't bother to use their obstructionism to build a narrative that will stick with the Republicans come election time.

I just don't get this. This is a populist moment and with the exception of a few liberal economists and professors and a couple of Democratic congressmen, the whole field is being left to the teabaggers. This populist fever doesn't just affect the rural working folks, it affects people in the big urban centers and the suburbs just as much. Everybody's getting screwed. Somebody needs to address that or the wrong people are going to be blamed.


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