Several weeks ago, Bank of America announced its plan to charge customers a $5 monthly fee for using their debit card. This move has angered customers and the Consumers Union, the public policy and advocacy division of Consumer Reports. The Consumers Union called on Congress and federal regulators to investigate the fee and noted that this new fee could cost customers on average an extra $60 per year at a time when families are hard pressed to pay additional charges.
Bank of America has tried to justify the fee by arguing that under the old rules, debit card fees typically amounted to 44 cents per transaction, but under the new rules (that went into effect on October 1st) fees are capped at 24 cents per transaction. On average, a consumer has 25 debit card transactions per month and if you multiply the 20 cents by 25 you get $5.
Many commentators are opposed to Bank of America’s monthly debit charge. In a recent New York Times op-ed article “Charging For Debit Cards Is Robbery” the bank’s statements were described as “simplistic statements [that] are merely an attempt to rationalize and obfuscate one of the largest illegal transfers of wealth from consumers to banks in American history.” The article pointed out that debit cards were developed by banks to replace paper checks and when a consumer uses a debit card, instead of a check, a bank saves money. According to the article, in the 1980s, Visa calculated the savings at 55 cents – $1.60 per check and today the savings are much higher. The Consumers Union wrote to Senators Johnson and Shelby that the “fee appears to be unreasonable and unrelated to the actual cost of processing debit card transactions.”
Do you think Bank of America has made its case for charging this fee or will it lose many of its customers to other banks?
Abbey Spanier, LLP is located in New York City, is a well recognized national class action and complex litigation law firm.