This post is insightful. I would like, no wait, love it if I could find similar information about cellular phone bills. My banking fees are pretty nominal (I use a somewhat local credit union) but the fees and charges and taxes and fees and charges on my Verizon Wireless bill is what has me contributing quarters to the “swear bucket.” If I wasn’t such a gadget freak and I didn’t “need” the service, I’d happily ditch it.

Any dirt on these types of services in the future would also be of interest.

I’d think that the long term effect of breakage is loss of a customer, but if that were true, why would rebate companies and gift card vendors talk about it as a positive thing? Is it just short-sightedness, or are they banking on the idea that people will not follow through on acting on frustration if they partially blame themselves for the breakage occuring? It seems to me that this is exactly the strategy of breakage — set up the consumer with requirements that are clear but burdensome, and assume that some percentage of them will not follow through. When that happens, you can easily say, “But sir, the terms were clear…” even though they know full well that the terms are not required.

In this case, I do believe that it is enough in the interest of the very largest banks not to refund every fee a consumer calls to complain about, and to set up scripts for call center representatives that forward those consumers to branch offices for any refunds. Whether the intent is breakage or something else, the effect is that another hoop appears before the consumer, and breakage occurs as a result. Not only that, the consumer will often blame themselves since they did have a path they could follow, and for whatever reason they did not.

My message to consumers is this: (1) look out for the appearance of hoops that would slow you down; and (2) don’t blame yourself if you have an unfair fee — instead, blame your bank for making resolution unneccesarily difficult. If consumers take those two steps, they can reverse a great many of the fees in their life, which I believe are an undeclared tax on business services they can get elsewhere at lower or no cost.

In my experience, banks simply don’t have the capabilties to design business processes in such a way that they could create “breakage” situations as you describe. They have enough trouble getting an address change to work across multiple systems and channels.

That such poor customer experiences exist is beyond dispute. But they are more likely to have evolved over time by accident than be any part of a grand design to maximise fee revenue.

In any event, surely the long term customer impact of “breakage” is losing a customer? Given the costs to acquire the customer in the first place is likely to be orders of magnitude greater than the disputed fee, surely making a one-off reversal simple would have a strong business case?

I love the posting! My wife and I just got a new mortgage with WaMu. They’ve been sending us a ton of requirements related to her name change as well as some totally random information regarding transferring the property into a trust. I think that Washington Mutual’s bureaucratic red tape is especially bad.

Best,

James