Discover Faces FDIC Action – Zacks.com

On Wednesday, Discover Financial Services (DFS – Analyst Report) revealed in a regulatory filing that The Federal Deposit Insurance Corp. (FDIC) is planning to take enforcement action against its banking division, Discover Bank in relation to its marketing policies for fee-based products.

Since December 2010, Discover has been facing several lawsuits which accuse it of keeping customers uninformed about their buying decisions pertaining to the company’s services.

According to the lawsuits, Discover made deceptive telemarketing calls to consumers offering them several optional, fee-based products, including an identity-theft protection plan, a credit-score tracker and a payment protection plan.

However, after informing consumers about the products, the company’s telemarketers used misleading and confusing terms, read scripts quickly, and also omitted disclosures related to the product, leaving consumers confused and misguided.

Amid the confusion, customers failed to realize that they were agreeing to buy the product and the telemarketers refrained from informing them about the purchase.

via Discover Faces FDIC Action – Zacks.com.

Bank of America Site Crashes, Day After $5 Debit Fee Rule – ABC News

A day after news that Bank of America would hit some debit card customers with a $5 monthly fee, the bank’s home page went down on Friday morning through the evening.

Many users reported not being able to access their accounts after logging on through the home page. By evening on the east coast, the home page was still experiencing sporadic problems.

A Bank of America spokeswoman said some customers were experiencing issues, but that the site was running in the afternoon.

She added, that while the bank doesn’t comment on specific technical issues, this “had nothing to do with yesterday or hacking or anything to do with customers information being compromised.”

But some visitors to the home page encountered a message that stated some of its pages were “temporarily unavailable.”

via Bank of America Site Crashes, Day After $5 Debit Fee Rule – ABC News.

Regulators Close Texas Bank, 74th Failure in 2011 – ABC News

Regulators on Friday closed a small bank in Texas, boosting to 74 the number of U.S. bank failures this year.

The number of closures has fallen sharply this year as banks have worked their way through the bad debt accumulated in the recession. By this time last year, regulators had shuttered 129 banks.

The Federal Deposit Insurance Corp. seized First International Bank, based in Plano, Texas, with seven branches, $239.9 million in assets and $208.8 million in deposits. Houston-based American First National Bank agreed to assume the assets and deposits of the failed bank.

The failure of First International Bank is expected to cost the deposit insurance fund $53.8 million.

via Regulators Close Texas Bank, 74th Failure in 2011 – ABC News.

VISA And Mastercard Plan To Hike Debit Card Fees On Small Items For Merchants

VISA and Mastercard are planning to sharply raise the debit card transaction fees for small purchases for merchants, according to an analyst note. A $2 cup of coffee incurs about an 8 cent fee currently, but under the new policy, the fee will hike to 23 cents.

The Federal max cap on debit card fees is 24 cents. So banks are effectively treating the ceiling as the floor.

The move will “kill the economics for small ticket debit purchases and influence a shift back to credit cards,” Janney Capital Markets analyst Thomas McCrohan wrote in a note to clients, as reported by the AP.

Credit cards are not covered under recent regulation that put a cap on the fees merchants can be charged by banks to process debit card transactions.

McCrohan warned that if the price jump goes through, it “will almost certainly lead to a merchant revolt against the card networks.”

This should encourage the proliferation of more signs mandating minimum purchase amounts when using a plastic card. And you can be sure the overall transaction costs will get passed on to your wallet.

The Retail Industry Leaders Association told Consumerist that the Federal Reserve’s 24 cent fee cap is almost double what the Reserve had initially proposed, and was six times higher than what the Reserve’s own data showed was the actual transaction processing cost.

“Unfortunately the Federal Reserve ignored its own data when it finalized implementation rules, weakening the congressionally-approved reforms and giving license to Visa and MasterCard to raise — not lower — the fees some merchants face,” said RILA President Sandy Kennedy. “RILA will continue to fight to fix the broken swipe fee system and bring transparency, competition and relief to all retailers and their customers.”

via http://consumerist.com/2011/09/visa-and-mastercard-planning-to-hike-debit-card-fees-on-small-items-for-merchants.html

Citibank Jacks Up Monthly Fees On Checking Accounts – The Consumerist

Citibank sent customers a letter informing them that starting in December, they’re raising monthly fees on checking accounts, in some cases by double.

EZ checking will run you $15 a month, up from the current $7.50 a month. Previously the fee would be waived if you kept a minimum balance of $1,500. That threshold will increase to $6,000.

The monthly fee on basic checking will go from $8 to $10. The minimum balance required to get rid of it is $1,500, or signing up for direct deposit and online bill pay.

Premium accounts remain a $20 monthly cost, but the minimum balance to waive it will go up to $15,000 from $6,000. That amount can be the total among all Citi accounts, like investments, mortgages, and credit cards.

via Citibank Jacks Up Monthly Fees On Checking Accounts – The Consumerist.