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article imageBank of America scraps $5 monthly debit card fee

By Leigh Goessl     Nov 2, 2011 in Business
Bank of America finally decided to retract their recently imposed $5 monthly debit card fee on customers. Competitors Wells Fargo, SunTrust and Chase had already scrapped their (lower) proposed fees, and now BofA is following suit.
The Bank of America had decided to impose these fees after the Durbin Amendment went into effect on Oct. 1, essentially passing on the fees they'd formerly charged merchants onto the consumer. Digital Journal had previously reported BofA would be tacking on the $5 fee to customers who paid for their purchases with a debit card. This occurred, despite the fact that one of the benefits cited of ATM and debit cards was they were supposed to save everyone time and money.
Earlier estimates indicated the new legislation would cause the Bank of America to lose about $2 billion in revenue a year.
Bank of America had previously said when they introduced the fee that the "economics of offering a debit card have changed." In other words, they needed a way to recoup those high swipe fees they could no longer impose on merchants due to stipulations made in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and instead of aiming fees at merchants, they looked to consumers.
However that decision didn't fly with consumers, not by a long shot.
As a result, the newly imposed $5 debit card fee decision has been reversed by the Bank of America. Consumers voiced their opinions and, if the bank didn't listen, they faced the risk of losing thousands of customers.
Over 300,000 people signed an online petition with the goal of stopping the monthly fee.
The petition was placed on a website called by Molly Katchpole, a 22-year-old Washington D.C. resident, and while the first day only garnered 100 petitioners against BofA's fee, by day three that number was up to 3,000 and day four jumped up to 75,000 and subsequently climbed to 300,000.
“The success of this campaign proves that ordinary people can successfully stand up to even the largest corporations,” Katchpole said in a statement published by The Washington Post.
The Post reported, “This is one to go down in the history books, I think,” said Norma Garcia, manager of financial services at Consumers Union, an advocacy group. “It’s just a $5 fee, but it really is symbolic of so much more.”
With the new fee 21,000 BofA customers had promised they'd be closing their checking accounts, and many flocked to other banks and credit unions who are not charging debit card fees and actually using the 'no fee' as a marketing incentive.
According to a Bank of America statement, “We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” David Darnell, co-chief operating officer at Bank of America, said Tuesday in a statement. “Our customers’ voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”
Over the month and a half, Occupy Protests have been emerging all across the globe as a protest against the perceived financial industry's focus on greed and mismanagement. The Bank of America's decision to pass along fees to consumers in order to compensate themselves, to offset the effects of the Durbin Amendment, is a good example of the type of thing causing united upset.
The Washington Post said about the protests, "there seemed to be consensus that Bank of America’s fee was a prime example of the banking industry run amuck."
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