This editorial will appear in Wednesday’s print edition.
When several banks announced plans to start charging customers monthly fees for using their debit cards, the outrage was almost palpable.
But it wasn’t mere consumer anger over the latest bank fee that got the attention of Bank of America, JPMorgan Chase, Wells Fargo and other major banks. It was consumer action. Apparently scores of bank customers said something like, “We’re mad as hell, and we won’t take it anymore,” and closed their accounts.
Now the banks are changing course, saying they won’t charge the debit card fee after all, that they’re heeding “our customers’ voices,” as a BOA spokesman put it. He might just as well have said, “our customers’ really loud, ticked-off voices.”
The banks that had planned to charge the fees must have forgotten that consumers do have choices. They can move their money to another financial institution – a community bank or credit union, for instance. They can cut up their debit cards and pay with cash, check or credit cards (and earn points at the same time).
Of course, banks have figured out ways to charge consumers for just about everything, from upping the cost of checking accounts to charging higher ATM fees. At least one big credit card company actually charges customers an interest penalty even if they pay off their entire balance every month.
Much the same kind of consumer revolt that jolted the banks hit Netflix recently. It raised costs by as much as 60 percent on some subscribers and then botched the spin-off of its ill-fated Qwikster DVD-by-mail service to focus more on streaming video.
Millions of subscribers either canceled or downgraded their accounts after perceiving that what was once a simple, convenient, economical entertainment-delivery system had become complicated and pricey.
Redbox, with its ubiquitous DVD rental kiosks, is in danger of following in the same path. It has increased its easy $1 per day fee to $1.20 just when it was positioned nicely to take advantage of Netflix defectors. Competitor Blockbuster has a better idea, offering free trials and discounts to disenchanted Netflix customers.
The lesson here for business is to recognize that in a gloomy economy, it doesn’t take much to lose a customer to another, more attractive option. And consumers should realize that they have more power than they know; they just need to exercise it more often.