I recently had a situation where one of the cheques I wrote bounced. Happens. But what I discovered as a result shocked and upset me.

They’re charging me $42.50 for a bounced cheque!

For starters, I wanted to know who I could contact about my bank. I visited the OBSI website and discovered that my institution decided it just simply didn’t want to participate anymore. According to OBSI, this means:

Unfortunately, some financial services providers are not covered by an ombudsman service.You may have to contact a government department or regulator if you are dealing with a mortgage broker, insurance broker, financial planner or other service which is not covered by an ombudsman.  Some resources to help you can be found in our Useful Websites.

Didn’t help much except to give me the TD Ombudsman’s email address. So I shot off an email:

Hello Mr. XXX,

I’ve recently managed to run into an NSF situation with my chequing account due to an error on my part. I noticed that the NSF fee has been increased to $42.50, a sum I don’t recall ever being informed about. In regards to NSF fees, I have a couple of questions and a complaint to make:

Questions

1. How does BANK determine the fee of $42.50? This value seems incredibly high and fairly arbitrary considering most of the clearing process is completely automated (it would seem that the only costs incurred would be for the electricity consumed and perhaps the decreasing cost of the computer equipment involved).
2. What is BANK’s responsibility in informing customers in NSF fee increases? And what are the repercussions to BANK for simply arbitrarily setting any fees it likes – what laws govern this? I’m presuming the standard placations that BANK “wouldn’t do that” (a need to retain customers, fairness, etc. etc.), but given that this is precisely what is being done, not to mention my own experiences and knowledge working behind the scenes at financial transaction networks, I would appreciate a forthright explanation.

Complaint

Banks, including BANK (I believe), currently charge the depositor for NSF as well ($20 is my understanding). This fee seems exceptionally egregious since the depositor has absolutely no control over what funds may or may not be in the cheque issuer’s account. This is similar to mobile phone companies who had been charging customers for receiving text messages – when there is no option or ability to refuse – or even know about impending charges — the courts have found such behaviour to be unlawful and has resulted in large fines. From my point of view, the banks seem to be engaging in this practice as well, and it becomes worse when it’s done by a bank where both the cheque issuer and the depositor both have an account – the bank is in the sole position to know that a cheque will be returned NSF and allows for no recourse, thereby seemingly simply taking money from account holders as it likes. And after exacting such exorbitant fees, the bank does not see fit to offer any services that might benefit their customers in such situations, seemingly chalking up the money extracted as nothing more than profits to be shared among shareholders. Is this accurate? And if it’s not, please offer an explanation.

I have a few other points of contention with bank operations but I would like to start with these.

Thanks for your time and attention.

 

Sincerely,
Patrick Bay

In hindsight I realized I’d unintentionally fibbed a bit — I do get notices that my bank account is being changed, by mail — but it still seems pretty unsavoury that they can just up their fees (note how they never go down), at any time by simply telling you they’re going to do it. It’s kind of like making theft legal so long as the robber lets you know he’ll be dropping by next Tuesday.

And I do feel pretty strongly about calling it theft based on the escalating NSF fees that banks charge, not only to me, but more to the person on the receiving end. Seriously, $20 for receiving a cheque that bounces? As I point out in my letter, mobile carriers did this to consumers with text messages, and the law wisely said that we can’t possibly held accountable for something that’s completely out of our control and even knowledge.

In any event, I can’t help but feel jaded by the knowledge that even though we have a Consumer Protection Act, financial services and banks seem to be completely omitted from it (a.k.a. they’re the only business that the CPA doesn’t really want you to know about). And, sadly, the Bank Act doesn’t do a whole heck of a lot on protecting customers either, though it does spell out all sort of insane rights that no individual would ever have.

Yes, it’s true that I did work behind the scenes at a financial transaction network and saw exactly where most of the bank fees go — into the bankers’ pockets. I sure as heck didn’t get rich working there, and on an average night, a financial institution would walk away with between $1000 to $2000 in pure profit (after I’d been paid, rent was covered, etc.) And this was a tiny side-network of small credit unions that were connected to Interac and decades ago; I can’t imagine the level of skimming on just standard transaction on any given day on something like the whole Interac network or Plus today.

Do you remember what the banks promised to everyone when ATMs were just starting to be rolled out to the public? “Oh, it’ll make things cheaper! Now you won’t have to pay for a teller and all of your transactions will be much smaller!” Yeah, $1.50 to $3.00 a transaction — MUCH cheaper. That was just the beginning of the wholesale lie.

When banks complain that they’re the most regulated industry out there, maybe it’s because they need to be. Maybe because they’re the most crooked, the most in need of control. Maybe as consumers we need take control back since the government seems only too happy to give it away, and the banks are only too happy to abuse it.