A survey of 392 bank branches in 21 states conducted by the US Public Interest Research Group (PIRG) revealed that fewer than half fulfilled their legal duty to fully disclose fees, while one in four provided no fee information at all. Only 38% of branches in the study complied easily with the first request for fee schedules as required by the Truth In Savings Act. Only after two or more requests did a total of 55% of banks provide fee schedules as requested and required.
Nearly one-quarter (23%) surveyed failed to comply at all. Others provided often weighty piles of useless other brochures. One in five banks thought they were providing a fee schedule, but only provided brochures for checking, overdraft protection, privacy policies, legal terms and other product offers — but no fee schedules.
Among banks’ insufficient responses on fee schedules:
- Massachusetts bank: Fees are “listed on the wall.”
- Georgia bank: Bank staff said they didn’t have one. “I don’t even have a list. Let me see if I can think of some off the top of my head.”
- New York: “No copies, come back tomorrow.”
- Massachusetts bank: When asked for a fee schedule, the bank said they didn’t have any pamphlets. They said the only option was to sit down and “discuss your personal situation.”
- New York bank: “We don’t usually give these out.”
Key Question: Are these financial institutions obstinate, confused, ignorant or just plain lazy?
Reality Check: If consumers don’t get straight answers when they inquire about fees, they will assume you’re trying to hide something. “What are they ashamed of? They must be really greedy.”
“You can search on the web for information about PAC donations, the price of televisions, and movie rankings,” PIRG noted in its report. “But there are few aggregator sites where bank fees can be compared. Nor do most banks provide decent explanations of their fees on their own sites.”
Credit unions generally have fewer and lower fees than banks, but PIRG says their account disclosures are even murkier than most bank disclosures.
The results of PIRG’s study are consistent with those in a similar report the organization published in 2001.
The US Government Accounting Office (GAO) conducted its own study in 2008, but also concluded that consumers shopping for accounts may find it difficult to find account terms, conditions, disclosures and fees. Out of 185 branches visited, 40 (22%) did not provide the legally required information. At 61 of the branches (33%), researchers were unable to get information about when deposited funds would become available, nor any details on how overdrafts were handled. The GAO also looked at websites for banks and credit unions, and was unable to obtain a comprehensive list of all checking fees.
Despite the difficulty in obtaining full fee information, PIRG found that free checking was available at half the branches visited, and that an additional 29% offered free checking conditional with direct deposit.
Truth in Savings Act
Passed 20 years ago, the Truth in Savings Act of 1991 requires disclosure of fees such as overdraft fees, maintenance fees, monthly service fees, ATM fees and account-closing fees. Commonly known as Reg DD, it established uniformity in the disclosure of terms and conditions regarding interest and fees when giving out information on or opening a new savings account. On passing this law, the US Congress noted that it fuel competition between depository institutions and allow the consumer to make informed decisions.
The law has four parts:
- The law requires banks to pay interest on all the money in a consumer’s account, and calculate and disclose it accurately as an Annual Percentage Yield
(APY). Banks may require a minimum balance to earn interest or avoid fees, but interest must be paid on all the money in a consumer’s account, not reduced either by not paying interest on reserves held by regulators or not paying interest on the amount below any minimum.
- The law prohibits misleading us of the term “free.” Banks cannot use “free-asterisk” gimmicks – a free account can have no monthly maintenance fees. An account that allows fees to be avoided by meeting a balance requirement cannot be advertised as free (with an asterisk pointing to the fee if the balance is not met). The law does not restrict other fees imposed on so-called “free” accounts, such as fees for overdrafts, ATM or debit card usage or return of checks or check images.
- The law requires that all account-related fees be compiled in a fee schedule.
- The law requires that schedule to be made available to prospective customers on request.
In its study, PIRG did not examine compliance with item 1. They found that nearly all banks were in compliance with item 2, but there was widespread violations of items 3 and 4.
The chief national bank regulator, known as the Office of the Comptroller of the Currency (OCC), issued instructions about deposit fees to its enforcement examiners back in 2010. They said that financial institutions must provide full account disclosures — including complete fee schedules — to any consumer upon request, whether or not that person is an existing customer or a prospect.