Why Chase is unconscionable
First let me state that if Chase had not taken public bail out money, and had not gotten such a great deal on buying Washington Mutual (2.5 billion for a company with 250 billion+ in assets), I would not find their current policy on check processing as objectionable. However, for a company to take public money, and then continue with a policy that appears deliberately designed to generate more fees for them seems unconscionable at best, and would be illegal if Congress was not such a corporate lapdog.
The policy I’m referring to is the policy of processing debits to an account from highest to lowest. What this does is ensure that if an account is going to over that the most NSF fees possible will be generated. For example, if an account has $100 in it, and three checks for $125, $10, and $5 are processed, Chase will process the $125 debit first. The account is then overdrawn by $25 and then the next two will be processed each one incurring another NSF charge. Thus in this example Chase charges the account three NSF charges, for a total of over $90 in fees. However, if the processing order was reversed, there would be only one NSF fee, as the first two checks would clear without overdrawing the account. This would generate only one NSF for Chase for $39.
The fairest thing would be to process the checks in the order that they are presented to Chase’s system; however Chase has made the ludicrous claim that they do not have timestamps for some types of transactions (see below). Yes, transactions may enter the system in a batch, but there is still an order in which a batch is processed, and a time associated with that processing. I’m an IT guy; unless it’s deliberate almost EVERYTHING on large scale systems is logged with a timestamp. In fact, from a security standpoint it would be asking for trouble not to timestamp and log every transaction. From what Chase is saying it appears they take a batch, sort it, and then process the sorted transactions further. They could easily leave out the sort part (or even better reverse the sort order!)
I’m not trying to dodge personal responsibility, but mistakes do happen, and Chase has set up their policy to make sure that these mistakes cost the public as much money as possible. When Chase accepted public money, they should have been forced to change this policy (jeez, they only received a paltry 25 BILLION+ in bailout money).
I will be changing banks shortly due to this policy (probably the same at most banks!), so I will be asking around. If anyone knows of a bank with a different policy, please share it in the comments below.
I’ll be curious to see what the actual Rules and Regulations say when I receive them – stay tuned.
Below is a transcript (account numbers etc. removed) of my recent interactions with Chase around this policy:
———-From Chase——————-
Dear NOT A NUMBER INC D/B/A NOT A NUMBER,
Thank you for taking time out of your busy schedule to
contact us here at Chase. Chase strives to provide the
highest level of customer service to our customers and it
is disappointing when we hear that we have not lived up to
your expectations.
Our records indicate that most of your transactions are
submitted as a check and ACH withdrawal. This type of
transaction posts to your account between 12:00am –
6:00am. Unfortunately, there is not a time stamp for
these types of transactions.
Please note that ACH debits, non-teller processed checks,
signature transactions without authorizations will post to
the account from highest to lowest.
As you requested, we are sending you a copy of the Rules
and Regulations regarding our posting order. Please allow
five to seven Business Days for this request to be
processed.
Kindly accept my apology for any confusion or
inconvenience you may have experienced.
Chase Online(SM) offers a wide range of services to help
you manage your finances, including free Account Alerts*.
Account Alerts help you monitor your account balances and
transactions. You can have alerts sent to your e-mail
address, mobile phone, pager, PDA, and voice phone number.
To get started with Account Alerts, please visit the
Customer Center and click “Account Alerts” on the
left-hand side of the page.
*There is no charge from Chase, but message and data rates
from your wireless provider may apply.
If you require further assistance, please contact our
Business ServiceLine at 1-800-CHASE38 (1-800-242-7338).
Representatives are available to assist you 7:00 a.m. –
9:00 p.m., seven days a week.
Thank you,
Felecia M Bailey
Internet Service Center
Original Message Follows:
———Response from me———————
CIGPROFILEID :72666169
If it is indeed the policy to process items as they are
presented to your system, please send me the timestamp for
all of our recent NSF transactions (last 3 weeks), as it
sure appears that they where processed highest to lowest.
I look forward to receiving this data.
—–ORIGINAL MESSAGE – response from tChase—————–
Dear Not A Number Inc DBA Not A Number,
Good afternoon and thank you for contacting the Internet
Service Center. It will be my pleasure to assist you.
Delivering quality service to our customers is among the
highest priorities here at Chase.
Beginning on February 17, Business customers will begin
receiving letters notifying them of some key changes that
will be effective on their accounts April 1. Some of
those changes include fee changes to standardize and
simplify fees.
Posting Order – Effective 3/29/2010 (All Markets /
Products)
Items processed throughout day (e.g. ATM withdrawals,
debit card transactions, deposited checks drawn on us,
online bill pays, outgoing transfers, outgoing wires,
teller cash withdrawals, teller cashed checks on account,
etc) post at time transaction completed. Before 4/1/2010,
items posted from highest to lowest dollar amount at end
of business day. This may help customers avoid negative
balance situations.
To avoid possible negative balances in the future, you can
have Overdraft Protection set up on your checking account
through a savings account, credit card, or Home Equity
Line of Credit. Transfers are made in increments of
$50.00. There is a transfer fee of $10.00 each time this
is used. If you are interested, please contact us at the
number below.
To apply for overdraft protection, you may visit a Chase
branch or contact our Telephone Sales Center at
1-800-CHASE24 (1-800-242-7324). Telephone Sales
representatives are available to assist you 24 hours a
day, seven days a week.
Here at Chase providing excellent and efficient customer
service is our goal. I hope that I have provided you with
such service today. It has been a pleasure assisting you
and do have a great day.
If you have any questions or require further assistance,
please e-mail us via the Secure Message Center or contact
our Internet Service Center at 1-877-242-7372.
Thank you,
Joanna Lynn Trevino
Internet Service Center
Original Message Follows:
———-My original Message—————
TYPE:BUS
ACCT TYPE:CHK
Can you please tell me from a policy manual would be
great what your policy is on the order checks are
processed. It appears that your policy is to process
checks from the larger amount to the smaller. Is this
indeed the policy? And if so, why? The obvious answer is
because it generates your bank more money. For a bank that
took public bailout money that seems unacceptable. If it
is the policy, you could easily do the reverse resulting
in less fees for you, but a more satisfied client base.
The most fair policy would be to process them in the exact
order in which they enter your system. If this is the
policy, please provide me with the exact time stamp of all
the NSF checks I have had in the last month. Please be
aware that I am currently a VERY dissatisfied long time
Wamu customer for 20 years customer, and I m seriously
considering switching banks. For your bank to have taken
public money, and then continue what appears to be a
policy designed to continue to charge customers extra fees
is unconscionable at best and unethical at worst. I look
forward to your reply. Please be sure that your management
knows my views, and be aware that an unsatisfactory
response i.e. not refunding at least some of the fees,
providing time date stamps and/or at the very least
providing the written policy will lead to my leaving your
bank, and publicizing why to my many Twitter and Facebook
followers/friends. Thanks for you time and attention to
this matter.