Working to improve Chase’s Overdraft Opt-in Solicitations
Posted by Lauren at 06/14/10 12:22 PM

As we highlighted back in April, Chase Bank has engaged in some misleading practices in its effort to get consumers to sign up for the bank’s expensive Debit Card Overdraft Program. This effort is in response to the new Fed Rule which requires banks to get consumer affirmative consent (Opt-In) before charging a fee for covering an overdraft.

In March CU signed onto a number of letters which were sent to all the major bank regulators in response to the marketing campaign that was underway by Chase to persuade its customers' to opt-in. Chase’s initial solicitation letter was alarming and misleading, using fear to convince consumers that they needed this program. The solicitation was highlighted in the NY Times and the online opt-in form was highlighted by the Consumerist.

1. Read Chase’s initial solicitation letter.

In response to notifying the banking agencies about the solicitation, Chase requested a meeting with the consumer groups who signed onto the letters. The meeting was set for mid-May and the Center for Responsible Lending, Consumer Federation of America, National Consumer Law Center, Consumers Union and National Association of Consumer Advocates met with four Chase representatives in Washington DC. Chase sent it’s General Counsel for Retail Financial Services, General Counsel for Consumer Banking, the CEO of Consumer Banking, and the EVP/Head of Consumer and Corporate Responsibility Strategy. Prior to the meeting, CU drafted a short letter summarizing the main aspects of their solicitations with which we had concerns, obtained sign-on by the other consumer groups and sent it to the Chase representatives to review before the meeting.

2. Read the pre-meeting letter to Chase from the consumer groups.

Chase began the meeting by handing out a newly revised solicitation letter, which was toned down from the original. We had already seen this letter because a couple of CU employees received them in the mail just the day before. Chase said they appreciated our concerns and made changes, reflected in this new solicitation. Though the new letter was a big improvement, as it did not use fear to the same extent, there were still things that were misleading about the solicitation. We continued the meeting by going through our other concerns, as laid out in the most recent group summary letter. We hammered in the need to put the most essential piece of information on the front page of the letter, the $34 fee amount, which was currently relegated to the back Q&A page. We debated the legality of their claiming to clear check deposits faster for consumers who opted-in than for those who did not sign up for the program. We also talked to them about recent decisions by their competitors, Bank of America, Citibank, and US Bank, to end these programs or greatly reduce the amount they charge. The overarching goal here is to get Chase to end the program altogether. We followed-up with another group letter to the same Chase representatives, summarizing what came out of the call.

3. Read the post-meeting letter to Chase from the consumer groups.

Just last week we received the response from Chase. In their letter they addressed each point that we brought up following the meeting. The most promising new change that Chase agreed to was to add the exact amount of the overdraft fee on the front of the solicitation, in future mailings.

“[W]e appreciate your suggestion to include more specific fee information on the first page of the mailing and we will do so in our next mailing.”

This is a small but important success for consumers if Chase follows through on their promise. If you get something from Chase, we'd love to see it so send it our way. Email money@consumersunion.org.

Unfortunately Chase will not be ending their Debit Overdraft Program anytime soon, but we will keep monitoring their practices for obtaining consumer’s opt-in to ensure that only those consumers who really understand the program and think it will be beneficial to them, will sign-up.

4. Read Chase’s response to the consumer groups.