Monday, Nov. 23
Written 10:30 a.m. EDT
FEE FRENZY: You're not paranoid if they're really after you.
In 1999, my credit card company changed its envelopes. The monthly bill no longer had "MBNA" printed on the envelope. It was disguised as junk mail, which I threw out. It seemed clear to me that MBNA wanted to trick me into making a late payment. The tactic succeeded once, and then I got wise to the envelope switcheroo and learned to look for a particular piece of faux junk mail.
It turns out that I'm not the only consumer who has identified the envelope camouflage trick. The New York Times' consumer columnist heard from a reader who went through similar frustration.
When you buy a car, you expect the salesman to try to take advantage of you -- to deploy an arsenal of tips and tricks that have been honed and practiced over the years. Over the last decade, these unfair practices have migrated into financial services. Twenty years ago, I don't recall wondering what tricks the bank would pull on me when I opened a checking account, or even when I got a credit card.
But these days, it's foolish to ignore the fine print. The smart consumer pulls out the magnifying glass and looks for the "gotchas."
The mortgage industry has been fighting and complaining about tighter regulations, even after lenders helped to send the economy over a cliff. In the pursuit of what the industry calls "financial innovation," lenders have fought to continue offering loans that defy the understanding of the average consumer. They're doing this even though we're about to undergo another wave of foreclosures, this time due to the recasting of hard-to-comprehend option ARMs.
As Digby says in this blog post: "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 it's all perfectly legal --- or at least there's no visible accountability for it."
I probably would have bought more than four cars in 31 years if I didn't dread car dealers so much. Ultimately, the tricks and gotchas are self-defeating. Will banks learn that lesson?