Wednesday, August 1, 2007

My Bank's Customer Representative Must Be Channeling Judge Easterbrook in Hill v. Gateway 2000 - "But You Agreed To It..."

Posted by Jeff Lipshaw

I'm not going to identify the bank because I suppose it's possible we will still have an amicable resolution of this terribly trivial but annoying little problem of a $67.65 finance charge on a credit card.

Pig We have had a "BANK" Mastercard for years, with fairly high volumes, and we have never run a finance charge.  That is to say, we pay the entire balance every month.  Last month we had a $12,000 balance, mainly because we charged the cost of the moving company that transported us from Indianapolis to Cambridge.  For reasons too complicated to explain, my wife paid all but $385.  As I read the fine print in on the back of the statement, which no doubt reflects the agreement (which of course nobody ever reads), BANK waives the finance charges if the balance is paid off.  But in this particular situation, we missed by $385, thus incurring a $67.65 charge on all $12,000, or roughly 210% interest on the unpaid $385.  I'm sure the reason is that if you are paying minimum balances, the additional interest on the small amount you paid shouldn't be a big deal.  But nobody in his or her right mind would run up a $12,000 balance and then pay all but a trivial amount (i.e., $385) so as to lose the waiver on the finance charge for the $11,615 that was actually paid. 

After going through all the alternatives with a "supervisor," the bottom line is that nobody can simply waive the charge. (Getting my APR reduced from 18% to 13% on balances I never run just won't cut it.)  I then posed the following business proposition:  either waive the charge, or I will pay it and then immediately cancel all of my BANK credit cards, the impact of which is that BANK will lose a lot more than $67. 

The person on the telephone must have just read Hill v. Gateway 2000, Judge Easterbrook's paean to the efficiency of unread consumer agreements, because more than once she told me "but you agreed to the finance charge when you signed the agreement."   Being the legal scholar I am, I said, "let's not debate the metaphysical issue whether I ever agreed to pay 210% interest because of the flaw in the way your agreement matches my use of the card, but let's just look at this from a common sense standpoint.  Your choice:  do you want my $67, even if I owe it to you technically speaking, or do you want my future business?"  All of which was lost on this particular supervisor.

I left a message for the media department and tried sending an e-mail to the general counsel of BANK, but it got bounced.

UPDATE:  I did get through to the GC of BANK, and he/she did get the problem corrected almost immediately!!!!!  I take back everything I said.

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I once had a similar problem with HSBC, I contacted the Office of the Comptroller of the Currency and it was resolved in less than a week. I think these companies just play the odds that the customer either won't pursue it, or isn't bright enough to make a cogent argument to the appropriate authorities.

Posted by: Anthony | Aug 13, 2007 10:18:37 AM

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