Banking

Bank customers are stuffing the complaint box

When bemoaning the banks, there's no lack of topics.

People grouse over losing their homes and about $8 service charges. They've got bones to pick about late fees, mortgage terms, rude customer service reps, lower credit-card limits and higher credit-card rates. “How can these corporate thugs (just out of the clear blue sky) decide to triple my rate for no reason other than greed?” wrote one bank customer venting about credit card terms.

National banks have already been beaten up this year by shaky investments and rising defaults. Now, consumers' official grumblings against them are also on the rise.

Complaints filed with the Office of the Comptroller of the Currency, which regulates national banks, rose 40 percent in the first half of this year, compared to the same period a year ago. Complaints against Charlotte's Wachovia Corp. more than doubled. Charlotte's Bank of America Corp. fared better, with complaints rising just 7 percent.

Still, Bank of America accounted for a sizable portion – 22 percent – of all bank complaints filed with the OCC in the first half of this year. Consumers filed 4,191 complaints against Bank of America, the country's largest consumer bank. They filed 1,214 complaints against Wachovia, or about 6 percent of all complaints.

The OCC and other federal regulators use consumer complaints to troubleshoot problems in the banking industry. Lately, the agencies have been under pressure to provide more services to consumers, and last summer the OCC launched a new Web site, www.helpwithmybank.gov, that helps people file complaints. Last year, the OCC helped return $8.8 million in fees and other charges to customers of national banks.

A bill that's pending in Congress would streamline the griping process by creating a single toll-free phone number to accept complaints meant for any of the banking regulators – federal or state. The Financial Consumer Hotline Act, which passed the House and is in committee in the Senate, would save consumers the hassle of figuring out which regulator to take their burdens to.

Complaints filed with the OCC are public record, though information that identifies the consumer is not. Through a Freedom of Information Act request, the Observer obtained a sampling of complaints filed in the first quarter against Charlotte's two banking giants.

In a complaint filed in March, an N.C. man trying to pay down his mortgage more quickly complained that Wachovia wouldn't let him change his payments to twice-monthly. “I work two jobs so that I can faithfully pay off this loan and one day own this house, and I resent emphatically their position,” he wrote.

Another consumer, in a complaint filed in January, was upset that Bank of America didn't flag a purchase that exceeded the credit card's limit, then upped the card's interest rate to 32 percent as a penalty. “When I called to complain and ask them why they didn't deny the charge when we hit the limit, they said they do it as a courtesy,” the customer wrote. “Boy, that is great.”

Bank of America

Bank of America is the country's largest credit-card issuer. In the first quarter, about 42 percent of the complaints against it involved credit cards, and another 34 percent involved checking accounts. Credit-card customers groused about their minimum monthly payments being raised, their credit lines being lower, and the bank tucking the changes into the fine print.

“Of course the ‘Change in Terms' was snuck in with the usual bill statement gibberish; and of course was not read by myself as I am not an attorney or financial specialist,” wrote one unsatisfied customer.

Many complained about their interest rates being raised even though they had never missed a credit-card payment. That practice, known as universal default, means that a bank can raise customers' credit-card rates if they default on loans to other companies or do anything else that might lower their credit score – even if they never miss a payment.

The Federal Reserve is currently considering stricter rules for credit card companies, though universal default isn't on the table. A bill that passed a House committee Thursday, the Credit Cardholders' Bill of Rights, would prevent card issuers from applying universal default to existing balances.

One customer said her rate was hiked to 29.99 percent from 9.9 percent when she retired. Another person said their rate was hiked to 31 percent when their payment was posted one day late, and they had to cash a life insurance policy to pay off the bill.

Another customer in New York wrote they couldn't figure out why their credit-card rate had been upped to 17.99 percent from 13.99 percent. “My payments have always been on time and … over the minimum requested,” the consumer wrote. “I can only conclude that they know my age and income and believe I am a bad risk (unjustifiably). Can they do this for no other reason? Have other seniors been targeted?”

Bank of America spokeswoman Diane Wagner said, “We are continually listening to our customers and learning from their feedback – both positive and negative.”

The bank has said that universal default is meant to help customers, because less risky accounts can receive a lower rate. Bank of America notes that it's trying to help customers avoid fees; it launched a campaign last summer to teach people how to avoid late fees and over-limit fees.

Wachovia

About 45 percent of the complaints against Wachovia in the first quarter centered on checking accounts, while another 15.5 percent were about mortgages. Mortgage customers complained that they were given contracts they didn't understand, or that they thought their rates were too high, or that they were promised one rate over the phone and given another in the paperwork.

Wachovia has a longstanding reputation for stellar customer service: For seven straight years, it has ranked No. 1 among big banks in the University of Michigan's highly regarded American Customer Satisfaction Index.

But the bank's 2006 purchase of Golden West Financial Corp. has hurt it in many ways, and perhaps in customer service as well. Many of the recent mortgage complaints against Wachovia mention Golden West or World Savings, which was another name for the lender. Golden West had a reputation for making exotic loans, including so-called Pick-A-Pay mortgages.

“No one from Wachovia (and/or World Savings) has responded to my written or verbal question … and apparently has no interest in addressing the matter,” wrote a consumer in January who said the lenders reneged on a promise to waive a $2,172 prepayment penalty.

Previously, Wachovia has said that it conducts regular check-ins with Pick-A-Pay customers to make sure they understand the terms of the loan. Wachovia recently stopped making most Pick-A-Pay loans.

In July, the bank said it would reassign 1,000 employees to help customers restructure mortgages. At the end of June, Wachovia said it had helped about 18,000 homeowners over the past 12 months to stay in their homes.

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