- Cobalt TiNor
- #$14 Million Refund #$140 Million Refund #$25 Million Penalty #American Express #Amex #Big Business #Capital One #CFPB #Consumer Financial Protection Bureau #Credit Card #Credit Score Tracker #Deception #Discover Bank #Discover Financial Services #FDIC #Federal Deposit Insurance Corporation #Fines#Identity Theft Protection #Mastercard #Money #Refunds #Regulation #Telemarketing #Visa #Wealth
I’m glad that I caught this piece of news, because to me this is something that hits close to home and that I know first hand. I used to work at a credit card company an international one, a bank who is relatively well known in wealthier segments of the population and especially outside of the USA.
While I worked for this company they decided that they were going to start “adding value” to their customers, or in realistic terms; they were going to start pushing what I call “do-nothing subscriptions” onto their cardholders.
I read through all of the literature as I typically like to do, in order to know what my job is and perform it to the best of my ability. I personally could not see a point to these programs/subscriptions even if they worked the way they were supposed to work. I didn’t want to even offer these programs in the first place because I am not a salesman and second because of what I understood about the programs, unfortunately it got to a point where my job hung in the balance. The task was to sell these subscriptions or lose my job. For these sales, not only was my offer rate (to the customer) tallied but also my conversion rate (actually getting an acceptance from the customer), and as I understand from most if not all sales jobs, you must sell a certain percentage, irregardless of the product or the economy or the situation, they don’t take into consideration that the product is absolute nonsense.
So I made every attempt to just scrape by with the minimum percentage needed to keep my job, I made every attempt to make sure customers knew what they were being offered and I doubled that effort to warn them when they said that they would actually take the program. At that point it was no longer in my hands. The company was not satisfied with the offices offer and conversion rate, they kept on doing these contests to persuade the employees to offer more and the convert more. As it was we were already making commission off of these sales, so people were already trying to make as many sales as they could. With the contests, the prizes, additional money, DVD’s, games, lunches, whatever they could do to entice employees to sell these subscriptions to customers it got worse. With that competition the lying increased, coworkers would sign customers up for these programs even when the customer had blatantly said no. As well the percentages required for us to offer and convert (into sales) kept increasing as the contests “proved” we could do better than we were doing.
The company claimed that every single sale was listened to and audited to ensure that customers were actually acknowledging their approval to get the subscription. I can say with full confidence that hose calls were never listened to. How do I know? First, there was never one sale ever rejected or “kicked back” to a representative legitimate or illegitimate. Second, our call volume increased and a good chunk of our customers started calling up even more irate than usual in order to demand us to remove these programs and in some cases credit their accounts. I would say upwards of 1/5 of our calls became these “subscription removal” calls so to speak.
Time after time I heard stories about how the length of time to send in documentation was too short for the insurance. Even in the rare case that a customer somehow managed to get the documentation in every month on time, the program would only pay your minimum payment which at that time was 1% of your balance or a minimum of $10. Often times your finance charges were multiples of your minimum payment. And on another note sometime after, that the government had cracked down and made card companies/banks change some things, and our company started making the minimum payment either 2 or 3% of the balance.
I did the calculations one time and I don’t remember it exactly but even at two percent of you balance you would take a 50 payments or 4 years and 2 months to pay off a balance. But let’s not forget you’re not taking into account interest that is charged daily and in the case of some banks like the one I worked for, that interest was also compounded daily, meaning that your interest from yesterday was figured into the equation and your interest today was charged on top of that. So it was fairly complicated math you had to do. Between minimum payments and finance charges, you would literally wind up paying for a balance twice over (or worse) without EVER noticing.
So here come these programs promising to pay your monthly minimum in the event of you getting sick or hospitalized, or losing your job, etc. These programs wouldn’t give you enough time to get the documentation in and then in effect you would have a late fee of $35 which mind you is probably 2x more than your minimum payment. Yet you have been paying $7 a month or whatever the current rate was for this “payment protection” or this “insurance”.
I had made many comments to supervisors and managers about the negative effects of these programs and they shrugged it off saying that my facts and experiences with customers were untrue or not indicative of the normal experience. Eventually they all started to ignore me and eventually we got a new Vice President of our section and he sent a “Nice to be here” message to us all and prompted us to email him back with any questions or concerns, you know the typical “open door policy” spiel.
I didn’t realize that he was our new VP and decided to email him my concerns regarding the program, and gave him a brief synopsis of the issues and my experiences with supervisors and managers. I asked again as I always had, for proof that my experiences were not the norm’ and that we were actually helping people so that I would be confident to do this part of my job from then on. He shot an email to my manager and a few other people in authority and my manager did not like that too much, I remember a piece of the email verbatim… “why has this rep’s concerns not been addressed?”
Maybe a four days later my manager told my supervisor to have me come to his cubicle, he showed me this two sheet half page printout of some statistics of these programs. It showed how many hundreds of thousands of people had signed up for these programs and how many had actually attempted to use the program and how many had actually saw success with the program.
If my memory serves correctly, about 13% of people enrolled in the program had actually tried to use to program to keep from being delinquent etc. Of that 13% about 0.035% of those people had been successful in avoiding late fees and default APRs. I wish I remembered or still had the paper I wrote down the information on or even a copy of the document. It was something like 118 people who had benefited from the program (mind you we had well over 3 Million customers). In other words it was a cash cow for the company and despite knowing that abysmal usage and success rate, I was forced to offer and sell this program still.
I have been out of that international company for about 4 years and change. These fines and refunds took way too long to get truly noticed and regardless of what they fine and have to refund, I believe that these “protection” and “added value” programs etc should be banned completely. A measley average refund of $57 for 3 months of a program they have often had for years. As far as I’m concerned that is still no where near enough.