In the recent Gartner report: “Social Banking: It’s All About the Money and Customer Focus,” Stessa Cohen and Alistair Newton say banks ought to plan on providing greater transparency to customers, especially around pricing.
Interesting that this comes out about the same time as a BusinessWeek article on the way banks, and mobile phone providers, reserve the right to change contract terms in mid-stream. Sprint was one of the worst offenders in the phone industry, while Chase and Citi seemed to rank near the top in banking.
BusinessWeek: In a November 1997 memo, Duncan MacDonald, then one of Citi’s most senior lawyers, warned against adopting Providian’s strategy of “penalty pricing,” which involved charging consumers who made late payments steep fees and hiking their rates. “I was asked to resign three days later,” he recalls.
Then there’s Chase, which lured borrowers who transferred balances with low rates, then added a $10 monthly fee and doubled the minimum monthly payment, leading one borrower,  featured in the BusinessWeek piece, to start a web site about the topic.

His site links to another, www.chase-sucks.com, which the bank is trying to shut down. It makes for pretty interesting reading, including the emails from the bank’s attorneys.

Quoting from a “Post From An Anonymous Chase Manhattan Bank Employee” (as seen on Chase-Sucks.com), here is what appears to be an explanation of the current reward system at Chase:
The reason the bankers at Chase are so pushy, and recommend specific things are because we make what are called “Personal Value Credits” or PVC’s. That is our commission. We open a checking account: 5 PVCs, we sell a Debit Rewards card: 7 PVCs. Credit cards: 17.5 PVCs. Loans and investments pay the most. Loans are 0.7 PVCs for every $1000, so a $100,000 loan = 70PVCs. This is why customer service is horrible … there is a tremendous amount of pressure for each banker to make at least 1150 PVCs. That is 100% payout  … Chase Bank will do anything, at any cost to acquire their business… Ethical or unethical. It isn’t the banker’s fault. We have our jobs threatened unless we push the products they say, when they say. If we don’t food is taken off of our tables, and we can’t earn commission.!

The bank faces consumer lawsuits in five states and has promised to refund fees under an agreement with NY Attorney General Andrew Cuomo. Of course, it doesn’t admit to doing anything wrong.

Congress is looking at legislation and the banks, naturally, say they need to have all this flexiblity to extend credit to consumers and that any regulation would limit the amount of credit available to people with risky profiles.

And would that be a bad thing?

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