Feeling Fee Phobic

The fee watchdogs are out there--and they don't miss much. Whenever you increase your prices or add a fee, they notice it and denounce this latest gouging of the customer by a profit-crazed industry. This unhappy state of affairs is the subject of this month's cover story (p.32), which chronicles the effects of changes in service-charge strategies at several banks. The subject brings mind again several of the findings of the Gallup consumer research that ABA released last year. In response one question, about half of the 1,000 bank customers surveyed thought it was appropriate for charge fees for various services, while the other half did not. The first half, when asked why they thought it was appropriate, cited such factors as banks are a for-profit business, to cover costs/overhead, and to pay for their services. The second group said it was inappropriate because banks charge too much already, my money, and services should always be free. What this suggests is that some extent, people's attitudes toward fees and service charges depends on the understanding they have of what it takes provide a service, what do, and, more broadly, how a free-market economy operates. In other words, there is an educational and communications component at work here that could be addressed in numerous ways: advertising, direct customer contact, seminars on financial options, media backgrounder sessions, and speeches civic groups. No one speech or ad will cause measurable impact, but the cumulative effect of many such steps could counterbalance the negative comments so often seen in the press. Consumer activists are hardly going strike their tents, however, and set up camp on somebody else's doorstep. They know a good target when they see one. Banks can at best dilute the negative effect. * * * Two factors compromise attempts by individual or the industry at large do such educational work. The first is that themselves are not of one mind on what constitutes a reasonable fee or service charge. One example from our cover story is deposit item return (DIR) charges. Some bankers make a sound economic case why they should charge their customer a fee for handling a deposited item that is returned for insufficient funds. Obviously it costs something handle these items. Other bankers think a DIR charge is a bad idea. Not because it's immoral, or unethical, but because it's hard for customers swallow--because they feel they're paying for someone else's goof. …