Is your bank out to get you? If you’ve paid any attention whatsoever to the financial world over the past decade, you’d probably answer “yes.” Though not every bank is actively trying to rob you blind, the big banks of the world are businesses. And businesses spend almost all of their time trying to do one of two things: increase revenues or cut costs.
Sometimes, these seemingly innocuous actions can blow up into full-blown scandals. Other times, they create mild annoyances for us in the form of new fees or charges. It sucks, but unless you’re willing to take your money to another institution, such as a credit union, things aren’t going to change. In fact, things are probably never going to change, so we might as well get used to it.
But it’s still surprising to learn banks will go out of their way to hurt their customers. And they will actively teach their employees to do so, in some cases. Take the recent scandal involving Wells Fargo, for example. More than 5,000 employees were taught to screw customers over by selling them products they didn’t need or even opening up bogus accounts in their names. (More on that in a minute.) Wells Fargo issued a report looking into its own rotten dealings, which said internal cultural issues were to blame.
That might or might not put your mind at ease. But know this: Had it not been caught, Wells Fargo would probably still be doing it. And that goes for all of the other banks out there that are manipulating interest rates, laundering drug money, or pushing to kill consumer protections.
So how are banks actively screwing over you and other customers? We’ll start with the opening of bogus accounts because that is still a relatively new revelation.
1. Opening bogus accounts
This was at the heart of the most recent Wells Fargo scandal. Basically, Wells Fargo employees were opening additional accounts under customers’ names, so the company could charge fees on those accounts. Employees reportedly created as many as 2 million fake accounts by the time the scandal came to light. It ultimately led to the firing of 5,300 employees.
2. Selling you unneeded services
In addition to creating bogus accounts, the Wells Fargo report also said the company’s corporate culture led to sales reps misleading customers. “The distortion of the Community Bank’s sales culture and performance management system, which, when combined with aggressive sales management, created pressure on employees to sell unwanted or unneeded products to customers,” the report said.
This, of course, is a pretty broad description. The truth is this probably happens at many banks and involves many products and services.
3. Steering you toward high-interest loans
In the ballpark of unwanted or unneeded products are high-interest loans — which are most certainly a product nobody wants or needs. But often, they’re what customers end up with. Obviously, banks have an incentive to charge more interest. When they do, they make more money. And consumers, conversely, want lower interest rates.
But people can be talked into signing up for high-interest loans — think payday loans, for example — even when they’re not in customers’ best interest. How else do you explain someone agreeing to a 182% loan?
4. Falsifying paperwork
You’d assume once you get everything in writing, you’d be in the clear. But what if someone doctors the paperwork or forges your signature? That’s exactly what’s been happening in some cases, where bank employees have falsified paperwork or denied refinancing applications for mortgages, so they could foreclose on customers’ homes. In this case, the bank was Bank of America, and the employees who managed to send customers to foreclosure were rewarded with bonuses.
5. Instituting ‘bank protection’
You might be familiar with “overdraft protections” or something similar. Though it’s marketed as a way to protect customers’ money, it seems these “protections” are actually just a way for banks to rake in more fees. A 2013 report from the Consumer Financial Protection Bureau found customers who opt in to these protections are actually taking on a greater risk of being hit with fees than those who don’t.
“Many financial institutions market their overdraft services as a protective measure that offers consumers greater peace of mind and security,” said Richard Cordray, the bureau’s director, according to a McClatchy report. “What is marketed as overdraft protection can in some instances put consumers at greater risk of harm.”
6. Targeting the most vulnerable
Bankers and salespeople are like sharks. When they smell blood or weakness, they go in for the kill. And that’s often exactly what happens in the financial world. If you’re poor or struggling, you’re at a big disadvantage in many ways. But you’re also the target of many banking goods and services. Payday loans are one example, as stated earlier. But so are things, such as “minimum balance fees.” Things like this make banking difficult for the poor and are one reason so many people on the low end of the economic spectrum have given up on banks altogether.
7. Charging fees for anything and everything
We’ve mentioned fees. What about those fees? Well, they keep growing and multiplying. These days, banks are charging fees for anything you can imagine. Low balance? You might get hit with a fee for that. Using a debit or ATM card? It’s not uncommon to get hit with a fee for using it. ATM fees have been around for a while, and they’re as frustrating as ever. But don’t forget about fees just for having a checking account, foreign transaction fees, and myriad others.
8. Making up additional fees
Sometimes banks are just inventing new fees out of thin air. Ever hear of a “paper statement fee”? That’s a relatively new one many banks and financial institutions have started charging. Or how about “maintenance fees”? This sounds suspiciously like a fee that’s being charged for no apparent reason — and typically it is. But all of these other seemingly bogus fees pale in comparison to the “human teller fee,” which is literally a fee for speaking with a bank employee.
9. Insisting you sign away your right to sue
Banks don’t want you to sue them. And they certainly don’t want a whole gang of customers to sue them in a class-action lawsuit. For that reason, banks have begun inserting language into their contracts that forbid that sort of thing. Essentially, when you sign up for a service, you’re waiving your right to a lawsuit. Instead, you’re agreeing to go to “forced arbitration” if your bank screws you. And it’s not just banks who are using this tactic. It’s becoming a popular form of legal jiujitsu in many industries.
10. ‘Losing’ or delaying payments
We touched on falsifying or lying on paperwork. The coincidental “loss” of payments or proof of payments is also tactic some bank employees use to screw customers. In some instances, a payment that’s mysteriously missing can result in a home foreclosure, which has happened to some people. Or, the bank might not put your deposits in on time, resulting in overdraft fees by “shuffling” payments.