Odds are you've seen an appeal from your bank or credit union to switch from paper statements to electronic statements. But for customers on the wrong side of the so-called "digital divide," paper statements remain an essential tool for managing their accounts, according to a new report.
E-statements are aggressively pushed by the industry as a way to reduce the cost of servicing checking accounts, with many banks going so far as to make it a condition for receiving free checking. Indeed, the report cites bank analytics firm Novantas' finding that 25% of banks that offer paper statements impose a fee to get them.
But the National Consumer Law Center has a new report out suggesting that banks' quest to leave paper statements behind may be causing significant hardships for consumers, and calls on the Consumer Financial Protection Bureau to ensure paper statements remain an option for all consumers.
E-statements get lost in digital divide
E-statements may be more environmentally friendly than paper ones, but they aren't much use to people without reliable Internet access, and those numbers are larger than you might think. Overall, 33% of Americans households don't have broadband Internet access at home, according to Pew Research Center figures, and that figure rises to greater than half among:
- Seniors 65 and older.
- Households with incomes under $20,000.
- Consumers with less than a high school education.
That, in turn, can make it difficult for Americans in these groups to stay on top of their accounts, potentially causing them to miss stray charges on credit cards and debit cards, overdue balances and other issues.
Serious consequences when statements disappear
Even for those who do have good Internet access, paper statements still have some benefits, according to the report. They're tangible, easy-to-read reminders to keep tabs on your account, as well as an important document when things go wrong.
In the report, the law center cites a case where electronic statements contributed to serious damage to the credit score of a consumer identified as "A.B.":
The emails got buried in her inbox and she did not make these payments. After she became 60 days late, she no longer received emails that her card was due and received only two further emails indicating that her statement was available. She never received an email indicating that her account was past due. The credit card lender never called or sent mail to identify the problem. Without further notice the account was closed by the credit card lender. It was only several months later when A.B. tried to use the card that A.B. learned that the account had been closed and that the late payments and closing of the account had damaged her credit score. Despite having no debt beyond a mortgage that had always been current, she ended up with a credit score in the low 600s -- which is considered subprime -- and was denied another credit card.
Other consequences of lost statements included in the report:
- Inability to keep track of payments made and interest accrued on debts.
- Issues resolving tax disputes.
Statements key in cases of fraud
One issue that can also result from missing statements not mentioned in the report?
Determining who pays for debit card fraud.
Banks usually have to reimburse debit card customers for fraudulent purchases, but there is a loophole. If a consumer waits more than 2 business days but less than 60 calendar days after a statement is sent, the bank can force them to eat $500 worth of fraudulent purchases. After 60 days, consumers may not get a dime to cover money take out of their checking account by fraudsters. So when and how a customer receives a statement could come into play big-time in determining how much fraud they end up paying for.
What do you think? Do you like receiving paper statements? Would you be upset if you had to get e-statements instead?
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