Friday, September 30, 2011

Bank of America fee backlash reminiscent of Netflix. Lesson to be learned?

You'd almost have to be living under a rock to not have heard the news that Bank of America plans to start charging its customers $5 a month for the pleasure of accessing their money via a debit card.  This fee would be the same whether or not you use your card at the register as a debit (inputting pin) or as a credit.  Customers are outraged, according to a WaPo article discussing the back lash. 

While $5 may not seem to be a lot in the grand scheme of things (and certainly not as much as the 60% fee hike that Netflix inflicted upon their customers), customers are pretty irate.  I have seen numerous Facebook discussions about this and you know, consumers are aware that it's a privilege for a bank to have their money.  Many (myself included!) are touting credit unions over a standard bank as a solution to avoiding potential fees since credit unions are user friendly and typically don't rake their customers over the coals fee-wise.

You just don't raise fees during a bad economy.  Didn't BofA read up on the Netflix debacle?  Customers were so irate over the price hike that they left Netflix and sought out other alternatives.  Note that Amazon offers free streaming to its Prime members (and that's only $79 a year ($6.58 per month), though they don't have the library that Netflix does.  Dish Network will soon be offering an exclusive Blockbuster option to its customers that has a plan of $10 a month available.  The lesson here is that customers who are already pinching their pennies as it is don't appreciate any fee hikes and they are willing to vote with their feet, while other competitors are more than happy to take someone else's unhappy clientele.

Recently, when Netflix CEO Reed Hastings sent out his email apology (followed up by his blog post on the Netflix blog), the backlash was almost worse than the initial 60% price hike notice that subscribers received.  Sure, he started off with "I messed up."  But that wasn't followed by a "Let me make it right."  Companies that spring fee increases that seem to do nothing but take money out of our pockets and put it into theirs aren't seen favorably anymore by their customers.  Times are tough and you know what, that means that a lot more people are willing to shop around instead of just eating a fee increase.
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