5 Dick Moves Your Bank Pulls (You Won't Believe Are Legal)
Some institutions get more hate than they deserve. Most lawyers and police officers are just doing their jobs, and most businesses really are simply trying to make a profit. But banks ... well, banks make it really hard to defend them. They are the middleman in every transaction (you simply can't function in modern society keeping your cash in a coffee can buried in your yard), and goddamn do they exploit their position in the shadiest ways imaginable. Let's take a moment to examine some of the perfectly legal ways these guys screw us on a daily basis:
(And if you think banks are sleazy, wait till you see the dating website in Cracked's new Rom.Com series.)
They Can Arbitrarily Manipulate Your Payments to Create Overdraft Fees
We understand that banks aren't kindly rich uncles who can dole out money when they feel sorry for us. They have to charge some kind of fine when we try to take out more money than is actually in our accounts, otherwise it'd be a free money festival forever (or until the whole system came crashing down hours later). But where banks take it to the next level is when they carefully arrange things so that, with one mistake, they can keep stomping you with what amounts to a 1,000 percent interest rate. They can charge anywhere from $20 to $35 for every transaction you make while over the limit -- even if that transaction is itself for only a few dollars. But hey, it's all about teaching the customer not to make that mistake in the future, right?
So they're like that other uncle then. The one with the belt.
Nope! Once the banks saw how much cash they could make from the fees, the next step was to carefully trick their customers into overdrawing their accounts more often. They do this by quietly manipulating the order in which your purchases are charged to your account to nail you with the maximum number of overdraft charges. We're talking "half of your goddamn money straight to the bank" numbers here.
Here's how it works. Let's say you have $100 in your checking account and you purchase the following items over the course of the day:
A pack of gum: $1
Two dildos (one for each ear): $15
Some gas: $10
The "Best Actor" Academy Award Steven Seagal won for Under Siege, bought from a street vendor named Handless Bob: $25
That still leaves you with $29. Hooray, you can manage your money!
"Oooo, just enough to buy the actual Steven Seagal."
Ah, but you forgot to note that you had a $100 phone bill due the next day. Well, shit, that means one of those transactions will put you in the red, costing you a $35 fee. That's what you get for losing track of due dates, right?
But you're not going to pay one fee. See, the bank doesn't have to process the charges in the order they came in. What they'll do instead is start with the $100 phone bill -- even though it came in after the other purchases. Why? Because that immediately brings your account down to zero. Then they can process those previous, smaller charges so that they can nail you with a $35 overdraft charge for every fucking one of them. Even that goddamn pack of gum sets you back the price of a tank of gas. Now your account is $175 in negative territory, and until you pay all of that back, every single purchase will cost you another $35 surcharge. This is when a bunch of Nigerian princes start lining up to ask your bank how they pulled that off without you stabbing them in the face.
"They used to stab us with our pens. That's why we added chains."
If you're thinking that it's a clear scam, the government actually agrees with you. The Federal Deposit Insurance Corporation has been all over that shit in recent years, and their actions have caused about 40 percent of banks to drop this particular practice. What actions did they take, you ask? Why, the FDIC wrote the banks a letter and asked them to stop.
Well, that's what happens when one of us gets caught scamming millions of dollars out of people, right? The government writes us a sternly worded letter and requests that we stop doing it?
They Can (and Will) Seize Your Money
If you, say, don't pay your bar tab, your local barkeep has to take several infuriating steps to try to get his money: He has to locate you, chase you down, smash your knees, and empty your wallet. Slightly more respectable bill collectors have just as many obstacles between themselves and unpaid invoices, the most severe step being to sue to have money taken directly out of your wages. But even then they can only do it in certain amounts, and by law there is some money they can't touch. For instance, they can't garnish funds out of Social Security checks. That shit is strictly earmarked government money, not to mention that taking it would be monstrous because those checks go to some of the poorest, oldest, and most disabled people in society.
Banks, however, can do whatever the hell they like, because they already have full access to our money.
"Eh, you got cats. You can eat those."
You're keeping it in their building; they can just reach right in. They could be in the vault right now, rubbing their dicks on it. So while nobody can garnish money from a Social Security check, once it's deposited into a bank, it joins the pool of money that the bank considers free for the taking. So if you happen to owe the bank money (like those overdraft fees mentioned above), they just poke in a straw and slurp that money right out.
Think we're exaggerating in order to make banks out to be mustache-twirling villains? OK -- take the story of this Cleveland woman, who fell for a check fraud scam that left her account deep in the red. Her bank promptly notified her that they were going to take her Social Security check to cover the overdraft. "But why doesn't she close the account and go to a different bank, Cracked?" Hey, good idea! She did that, then quickly found out that banks talk to each other. She was immediately blacklisted and unable to open a checking account elsewhere.
So she went to a store that cashes checks, and then she got mugged.
Of course, there are some cases where this practice is deemed too evil even by bank standards: Between 1993 and 2003, Bank of America gleefully seized over $280 million of Social Security funds for assorted bank fees from the accounts of their elderly and disabled customers. A California jury eventually awarded the customers damages in the ballpark of $1 billion, but we're guessing that's not a huge source of joy for the poor people who woke up to find they had far less money for food than they had counted on.
Hey, speaking of screwing the elderly ...
They Sell Old People Services They Can't Use in the Hope That They Will Die
A man visited his local Bank of America branch to do some routine financial muddlin' about. He was referred to a financial consultant and eventually force-sold an annuity that would only be beneficial if it could be maintained for a bare minimum of seven or eight years. Otherwise, it would only be beneficial to the bank.
So what's the problem? That man was 86 years old, and presumably not a Highlander.
"I don't even use the free toaster they gave me. Who has that kind of time left?"
When his daughter learned what the bank had done, she tried to find a way out of it for him. Sadly, the only way to undo it was to pay a whopping $25,000 to the bank. Hey, just consider it extra incentive to stay alive, old timer!
There's a reason the elderly are the most frequent targets of scammers -- they have money and can be easily confused with enough doubletalk. They often have a hard time admitting that they do not understand something, or maybe they just quit giving a shit 20 years ago.
"Bitcoin? No, thanks. I'd like the whole thing."
The banks figure that if it works for everyday con artists, why wouldn't it work for massive financial institutions? Thus, they take products that don't pay off for the customer unless they hold them for several years and specifically sell them to the elderly, rolling the dice on the customer dying before they see any benefit. Of course, the danger is that a fiscally savvy grandchild will find out what has happened and raise hell, so you make sure the contract includes terms that make it impossible to back out. At this point you picture Gordon Gekko shaking his head and saying, "Jesus Christ, how do you people sleep at night?"
They Can Repossess Your Home Despite Telling You Otherwise
Even the most trustworthy person can fall on hard times and miss some mortgage payments. Luckily, the banks know that it would be foolish to kill off a decent cash cow for a momentary setback. That's why, in cases like this, they sometimes offer you a short-term mortgage modification option that helps you get through the rough patch, instead of straight up taking your house.
Or, they can tell you they're working with you on the mortgage, then randomly sell your house out from under you while you're doing the paperwork.
"The paper's made of wood from your dining table."
That's what happened to a Minnesota woman who initiated steps for mortgage modification in 2012. The bank was totally cool with it: She only needed to wait until she was behind on payments, then fill out some paperwork and wait for them to accept her request. All along the process, the bank gave her friendly smiles and enthusiastic thumbs-ups, even taking the time to tell her not to worry about all those foreclosure notifications she kept receiving in the mail -- they were totally just automated routine notices. And then, out of the blue, she found out that her house had been sold at a sheriff's auction. The bank had given her no notice whatsoever that the house was repossessed and sold to a stranger -- she found out when she called the bank to check up on the mortgage modification request. Two guesses as to whether it was ever approved.
The reason this happened is because in most states, banks are legally allowed to continue foreclosing on your home no matter what else they tell you. Regardless of the fact that they are technically working with you to let you keep your place, they're totally cool with selling your home out from under you while you're too busy with the paperwork to notice if they happen to think that will bring an extra dime into their vaults. The practice is called dual tracking, and, unsurprisingly, banks abused the shit out of it during the mortgage crisis.
It was the only way they made money in 2008.
Last year the government finally jumped in and created new rules demanding that banks actually wait until the loan modification has gone through before seizing and selling the house, although it doesn't apply to all banks (only large ones) or borrowers who waited too long to ask for the modification. But at least they didn't settle for writing banks a strongly worded letter.
Their Staff Is Obligated to Actively Screw You
There are precious few chances to deal with a human being when banking these days, and pretty much every single one of them involves a teller. The bare minimum of civilized interaction banks offer in the middle of all the bureaucracy is welcome: Sure, the tellers are working for the bank, but at least you know they're regular Joes and Janes like you -- schmucks earning a paycheck. They're just delivering the orders of the giant money machinery; it's not as if they're personally screwing you over.
If you prick them, do they not bleed? (Do not try this.)
Bank tellers are constantly, actively attempting to talk customers into meeting with various consultants and signing up for services that A) they probably won't ever need and B) can in fact be harmful for the customer's financial situation. The practice is known as cross-selling, and tellers are often motivated with cash prizes and other incentives to do as much of it as they humanly can. For example, in 2010, the government made it illegal to automatically sign customers up for those pesky "per transaction" overdraft charges we mentioned earlier. Unless, that is, someone specifically opts in. Cue your teller, who, aided with some handy marketing tricks, can and absolutely will convince people to opt in, using such convoluted language that more than half of the customers who choose these newly branded overdraft "protection" fees actually have no goddamned idea what they signed up for.
"Debit card protection fee" = "Cash gift from you to bank"
To be fair, though, it's not as if the tellers have too many options themselves. One teller says her bank not only set strict cross-selling quota requirements, but sent over 50 emails a day demanding that they be met. And if they're not, that's too bad for the employee -- the bank tellers' base pay is so laughably insufficient that a third of them are on welfare. Yes, on top of everything else, your tax dollars are helping pay the bank's labor costs, which it uses to hire employees whose job it is to screw you. Gosh, we really do wonder why banks have such an awful reputation.
Please feel free to email Spencer with any related comments as you see fit!
Related Reading: While we're on the subject of evil banks, did you know BCCI has their own SWAT team. It's enough to make us not feel bad at all about insane heist stories. And by the way: screw debt collectors.