by: John Caddell

A funny thing happened to me at the end of April. While I was on a business trip, our personal checking account with M&T Bank dipped below zero. I didn't get back from the trip till late Friday, then the weekend came. At any rate I didn't find out about the problem till Monday, when I checked the balance on line.

During the time we were below zero, Ten checks and auto withdrawals came in, totalling about $500. On my online statement were ten insufficient funds notifications (NSFs). The first charge was $18. The second through tenth NSFs were $32.


I have a business account with Graystone Bank. When this same situation happened a few months ago, they called me immediately and alerted me that I didn't have enough in the account to cover a check that had come in. They offered to hold the check till I made a deposit. Which I did. That day. No NSF fee, and my undying gratitude.

As soon as I learned that our M&T account had dipped below zero, I rushed to the bank with a check. I told the teller my situation, and she saw that it was a very unusual case for us. I asked if they ever forgive NSFs for customer goodwill purposes. She said I had to call the manager of the branch where I opened the account in order to discuss any credits.

It took me a while to think about which branch we opened the account at, since we have been customers of M&T for almost eight years and have visited many local branches in that time.

When I finally remembered which branch, I called and spoke to the manager. He told me company policy is to forgive the first NSF. The others would stay. I told him how displeased I was with this, especially since M&T hadn't bothered to give me any notification of the low balance (as Graystone had) so I could have made the deposit before more checks came in.

The manager said: we are a big company, and that is the policy.

Here's how that response sounded in my ears: "F--- you. Go somewhere else if you don't like it."

This episode reminded me of the great article in the June 2007 Harvard Business Review: "Companies and the Customers Who Hate Them," by Gail McGovern and Youngme Moon of Harvard Business School. The article begins:

One of the most influential propositions in marketing is that customer satisfaction begets loyalty, and loyalty begets profits. Why, then, do so many companies infuriate their customers by finding them with contracts, bleeding them with fees, confounding them with fine print, and otherwise penalizing them for their business? Because, unfortunately, it pays.

Regarding my experience with M&T, here's a most salient excerpt:
Companies can also profit from customers' bad decisions by overrelying on penalties and fees. Such charges may have been conceived as a way to deter undesirable customer behavior and offset the costs that businesses incur as a result of that behavior. Penalties for bouncing a check, for example, were originally designed to discourage banking customer from spending more than they had and to recoup adminstrative costs. The practice was thus fair to company and customer alike. But many firms have discovered just how profitable penalties can be; as a result, they have an incentive to encourage customers to incur them - or, at least, not to discourage them from doing so.

Which is my perspective in a nutshell. Shame on you, M&T. You have earned the hate of at least one customer.

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