Ex-Credit Card Bankers: "Every Customer Who Calls In Is A Mark. It's A Great Big Con."
CNN has an interview with two former credit card bankers who are admitting that their job was to get consumers to max out their credit cards and take on as much debt as possible, regardless of the customer's ability to afford it. They both worked for MBNA at their "sprawling consumer call center in Belfast, Maine." The bankers say that they were told to aggressively push cash advances, and were trained to convince consumers that they needed the maximum amount of debt at the highest interest rate.
"Every customer who calls in is a mark. It's a great big con," said Colombo, who estimates that she alone sold almost a quarter of a billion dollars in the four years she worked for MBNA before it was bought in 2005 by Bank of America."
The bankers told CNN that their job was to convince people that they needed to borrow more money than they thought they did. They were trained to look for "trigger words" -- mentions of difficulty making car payments or college tuition, for example. They were even trained on how to get around the law -- if someone called in to try to get a cash advance for a down payment on a house (not legal) they were told to say:
"I cannot give you money to use as a down-payment on a home. However, what I can do is, I can deposit some money into your checking account, and once it's there, the funds are there, it's yours to do with what you please."
Most disturbing of all is the fact that the bankers say that the vast majority of people didn't want to take on that much debt:
"I would say 90 percent of the time, people were pragmatic. They would say, 'I don't need $100,000,' and we would find a way to convince them they needed the money," Ellingwood recalled.
They also said they were pressured not to let the stockholders down -- and were chastised for letting people get away without maxing out their available credit.
Bank of America, which now owns MBNA, says that these accusations are "inaccurate."
"Our call center associates are focused on serving customer financial needs and responding to questions about their accounts," said Bank of America.
Luckily, one of the former bankers provided her performance review to CNN.
"You cannot sell what you don't offer," it reads. "Understand the importance of selling at the highest possible rate."
This is a test using rich text formatting and html links. It's the generic "company" ad that should appear on all posts with the Company category if they don't have an ad attached to a specific company.
Post a comment
Comments:
Why lend someone money if you KNOW they CANNOT pay it back? That does not make any sense.
@Mfalconieri: hope they move the balance to another card to pay it off, thus making it a complete win for you. also, add up the interest received before the person gives up, and it might be more than the amount loaned, anyway
These thieves got me to sign up for a credit card my first year of college. I had just turned 18 and they were giving away a huge bag of M&Ms with sign up. I can't believe I signed my life away to get some free M&Ms.
@Mfalconieri: It's a numbers game. Sure, some will default, but the majority will just make payments for the rest of their lives.
Normally I'm on the consumer's side for these types of things, but I don't see any problem with this. People try to upsell us constantly and you have to learn to say no. Simply say, "no, I don't want a cash advance or a higher limit." If you have trouble controlling your spending, this might be the best place to stop yourself.
Question- have people been successful at lowering their limit? I'd rather not have to deal with the temptation. (Yes, I get it- I could just not spend the money, but I'm looking for tools to help me with that). Does lowering your limit impact your credit score (pos. or neg.)?
@ARP:
Yup I found out when I lowered my limit years ago to stop my usage of a card it blew my score. I had an HONEST mortgage broker walk me through some steps to improve my credit after buying my house. He showed me where closing unused credit cards hurt my score and lowering the limit caused my used/available ratio on the card to cause issues as they see you as maxing the card NOT paying it off. So lowering a card from 10k to 5k with a 3k balance is bad.
What the credit card company was doing is pretty evil, but not surprising at the same time.
However, I see this as slightly different than trying to upsell someone a computer or cable TV. If a person is convinced to max out their credit card and doesn't pay it off, I would wager that the consequences of that are far more long-lasting than merely having a more expensive computer-- i.e. bankruptcy or something much worse.
If someone gets upsold a computer and can't or doesn't pay for it, what happens? The box gets repoed or the person is sued.
That's not going to force someone into bankruptcy (or even lead them to suicide, as has happened in some cases of extreme credit card debt), something that deeply effects the unfortunate person for much longer than having to deal with the inconvenience of not having cable or a computer.
Cheers!
Like anyone who has a 30% interest rate card doesn't know these guys are rip off artists.
(Thankfully I don't)
@ARP:
I know someone who had their credit limit lowered (which, yes, is a bad idea for the reasons vdragonmpc talks about). A few months later, the company raised the limit again. They went back and forth like that for a few months before the customer finally gave up and kept the higher limit.
I cringe everytime I get a replacement credit card in the mail (often for no apparent reason) because I know I'm going to have to call in and activate the card, which means I'm going to have to hear the dreaded "while we wait for your card to be activated, let's discuss some of our exciting new offers".
Then I'll have to say "no thanks I just want to activate my card, please" about a dozen times.
I think the lady on the left used to work in my building in NJ. Luckily I was in facilities, and only dealt with "internal customers".
@BoomerFive: MBNA had VERY good collections called the CA dept, which stood for Customer Assistance. There were internal competitions between the departments at the different locations, and their "success" rates were very high.
The problem is that I think alot of management salaries are bonused based which leaves them chasing the bait ie higher sales goals more aggressively.
Even in the stores I've noticed a very aggressive tone to sales pitches for things like credit cards.I mean just look at your monthly statement.I keep on getting these rewards things but you still wind up paying 5$ for shipping which of course goes on your credit card.
And if you call for a question on a bill you have to endure a sales pitch on a number of 'products'.
It's the used car selling approach that is one of the main reasons people push for things like the credit card holders bill of rights.
@CarlR:
You don't have to activate those new cards. Assuming the old card hasn't expired yet, you can just shred the new card and keep using the old one.
Ah, Bank of America -- Home of the 24.99% APR Visa!
The problem with this is that people in general give in to impulses of the moment all the time. Yeah, it makes sense to say "No I don't want that much money". But there will be some people who do and some who take all they can get on credit. And it's usually done at the spur of the moment. But in the end people are still responsible for their own decisions.
MBNA sucks. Their service sucks, their policies suck, and their credit cards suck. High fees, high interest, and NO HELP when it comes to making payments other than a minimum mailed in.
I had them in college, they scammed me (tried to, anyway) and I transfered my balance to Chase as soon as I could.
They will bleed you dry and then attempt to sell your corpse.
@Mfalconieri: Why lend someone money if you KNOW they CANNOT pay it back? That does not make any sense.
In two words, legalized slavery. Or to put it another way:
If you owe somebody ten thousand dollars, they own you.
If you owe somebody ten million dollars, you own them.
The goal of these bastards is get you on the hook for enough that you can make the minimum payment, but never pay off the principal. They want to own you permanently. Keep them on the hook with supportable debt.
Let's take a lesson on how to say "no" okay? I get that these bankers are slime, and they shouldn't be allowed to go after people with as much ferocity as they do. But at the same time, people need to learn to say no because MBNA banker isn't looking out for your best interests.
I guess I don't see what the big deal is. The purpose of a business is to maximize profit. The business does this by selling as much high-margin product as possible. This is Business 101.
So these call center people were just salespeople, no different from the local car salesman or furniture salesman who tries to convince you to buy more than you wanted to and who tries to get you to pay more than you wanted to.
All anyone had to do was say "no thanks". If people got themselves in financial trouble because of this, it isn't anyone's fault but their own.
@Zlund: I don't understand how you "signed your life away" for free M&Ms.
Credit cards are not inherently bad, improper usage of them are. If you have problems from credit cards (not saying that you do, but your post seems to indicate that), I'm not sure how that can be the card's fault.
Regardless of how MBNA may have pushed folks into more credit than they needed, they were the ones who ultimately spent that credit. Remember, they could have paid that money back immediately if they didn't spend it.
@Canino: The problem is, shady sales people don't explain things in black and white. They use obtuse terms. And they are vulturing on people in a distressed state of mind. Since these people were calling in with financial issues, they saw a solution rather than a growing problem.
@Canino: I'm at a car dealership, and they try to upsell me on things, it's fairly easy to get on the internet and look it up to see if I really need this feature, or if it'll help resale value, or whatever. Financial matters are notoriously fuzzy for a great deal of people. Combine that with the naive notion that the person on the other line is there to benefit YOU in some way is just recipe for disaster.
@IHaveAFreezeRay: Financial matters are notoriously fuzzy for a great deal of people. Combine that with the naive notion that the person on the other line is there to benefit YOU in some way
The consumer is the one who must educate himself in such matters, just as he must educate himself when buying a car. It isn't the job of a bank to explain personal finance, budgeting, or Econ 101 to consumers. Just like cars, you can find tons of personal finance info on the intarwebs.
@MameDennis: Stephen Snyder who has lots of materials for improving your FICO score says that the best strategy for improving your score is to keep asking for HIGHER limits on your cards, but don't max them out, pay them off. Having lots of available credit on cards that have been active for long times is very good for your FICO score.
@CarlR: You mention repeating the phrase a dozen times. I made the mistake of ordering something off a TV Infomercial over the phone vs. on the website, and WOW, they would just keep hammering you for more offers - you wanna buy two? Three? How about some accessories? Chrome wheels? Stereo? on and on and on. Never again.
@ARP: "Normally I'm on the consumer's side for these types of things, but I don't see any problem with this."
Umm.... you don't see a problem with banks going belly up requiring a bail out of billions of taxpayer dollars?!
The fact is that banks should be the ones who are fiscally responsible. Driving people into bankruptcy (with the nation along with it) is certainly not fiscally responsible.
Can I say "duh" to this without catching flak?
They're basically the same as those payday loan companies, only institutionalized. I try to avoid debt like the plague, even if it means spending a bit thin. I have a Global Payment Mastercard, which is basically a debit card I can use online - no bills, no fees, draws straight from my account when I make a transaction. Interest just isn't worth it unless you're desperate - and then the easiest loans come at the highest price - and then you fall deeper in debt paying off all the loans.
I've noticed recently that I am getting cash advance checks for my cards at least once a month. I tear them up immediately.
@Zlund: They got me to, so does that mean that the collection for the card that is on my credit report will get taken off because they are EVIL?
@GMFish: Here's where I'm a fan of personal responsibility, you don't have to accept the cash advance or increased limits. Banks are at fault for securitizing bad debt and overextending the reserves, but we're responsible for paying for what we can afford. Its a microcosm of the mortgage problem. But I think its different in that we strongly encourage home ownership and mortgage loans are much bigger so both sides have a serious responsibility to evaluate ability to pay. Here, upping your limit isn't that kind of transaction and there's no public policy about getting an xbox or Rock and Republic jeans. Lest you think I'm a troll, look at my other comments where you can see I'm generally pro-consumer. Also, I think their interest rate bumping, due date reducing, etc. policies suck.
@Marshfield: Yeah, that's what really gets me...when you are already giving them money and they're still trying to get more out of you. I usually stick to ordering online for that reason. When I call to order out of a catalog, I hear, "Now, while I'm processing your order, let me tell you about our other exciting deals..." and it really sucks because you can't buy the thing you want without listening to advertisements for things you don't want. A simple, "No thank you" should be enough, but it NEVER is.
Wow - banks are not acting in your best interest with the advice they give you?
I'm honestly a little shocked the government hasn't stepped in with a feel-good thing where they have to slap a disclaimer on every piece of paperwork etc like the cigarette disclaimers: "THE ADVICE IN THIS COMMUNICATION IS FROM A FOR-PROFIT BANK THAT MAXIMIZES SHAREHOLDER PROFITS BY SCREWING PEOPLE."
sure you need personal accountability. say no if you can't afford it. But why are we so accepting and even almost a little bit in defense of really really bad, deceptive and occasionally borderline illegal business practices?
are we so far gone that we now say it's ok for businesses to run this way because "gosh golly" that's what businesses do.
These people (the former MBNA employees) were simply acting according to protocol for their office - it's FAR from an isolated case. This is simply how business is done when your ENTIRE national economy is based on the selling, buying, and trading of debt and it's associated fees.
I worry about the cash advance cheques that they ALWAYS send me (MBNA is the worst, but I also have a President's Choice Mastercard that is pretty bad). I don't want to just recycle them because it basically seems to me that I'm throwing out blank cheques. Does the bank ever actually look at the signature and try to match it to a specimen in my file. I doubt it. And I don't have a shredder. And when I called to ask them to stop, the CSR said that it was all automated and everyone gets them and would I like to make a balance transfer, they've got a very excited introductory rate for me...
@Segador: "This is simply how business is done when your ENTIRE national economy is based on the selling, buying, and trading of debt and it's associated fees."
When you find such a national economy, let me know. As this certainly does not describe the US. The economy of the US might be partially based "on the selling, buying, and trading of debt and it's associated fees." It may even be largely based. But it certainly is not entirely based.
Of course you'll say you were merely exaggerating your argument, which is another way of admitting you were wrong under any reasonable set of facts based on reality.
@Canino: If the person was financially educated, they wouldn't be calling a credit card company for possible options. Remember; this is about cash advances, not new cards.
@Canino: Yes, fiscal responsibility is important. But people are not born with innate fiscal knowledge, which they should "naturally" know better than to deviate from. Consumer math has to be taught - starting in grade school.
For adults, it's hard to separate the wheat from the chaff online or in bookstores. What if you make the mistake of following Kiyosaki instead of Jane Bryant Quinn?
And also, while it is not the job of a bank to explain those things you listed, it is the job of a bank to prudently seek out borrowers and customers who will keep the bank healthy in the long run. There is nothing fiscally responsible about drumming up business from immature, close to tapped out borrowers.
Basically, the problem is that banks are not monoliths. They're staffed by people just like you and me, who were just as likely to get sucked into our culture's short-term greed.
@krom: They outsource the check printing and mailing to a third party, and I'd wager they pay a commission against any cash advances used via the checks. I had to call Chase up several times and opt out of those before they finally stopped coming to my house. Opt out early and opt out often and they'll eventually stop coming.
The only time I ever use cash advances is when they offer 0% interest rates for some period of time. I get them from Bof A, Capital One, Discover, all of them. When I use their offers, I divide the amount advanced by the number of months I have to pay them off at zero % and insert that information into my Web Bill Pay system. If it isn't Zero %, I shred the checks. I then use their money, at no cost to me, to pay off something that either I wanted or a bill that I want to spread out the payments on. Their cash is being used and I'm earning interest on mine. More recently, I've taken to cutting up the cards and returning to the Bank (mostly Discover) via Certified Mail. Just be responsible for you actions and say NO, I'M NOT INTERESTED. Hang up.
I am sure I will be attacked for this but I worked at MBNA for 15 years. I was your basic middle manager but not in any of the sales areas. I was in a technical area. Yes, we did sell things to Customers and we did indeed encourage our reps to sell things such as balance transfers, credit insurance, etc, etc. Our motto in lending anything was stability, ability and willingness to pay. If the customer did not have a stable job and did not have the ability pay then we would never give them more than they could handle. We were incredibly proud of our low delinquency and low charge off rate. If we gave people more than they could handle then our charge off rate and delinquency rates would be high.
Yes,people should be responsible for their own actions. But lets us not forget that their are plenty of weak and timid(the elderly come to mind) that simply cannot stand up to those who sound like they have authority. This has been documented in study after study. I mean,I'm sure I can go around ripping off little old ladies for trumped up "services",does that mean I should be allowed to?
Which brings me to my other point:they have admitted the company gave out advances for mortgages,why are they not being shut down and investigated? It is against the law,they knew it,and instead simply went around the law to maximize profits. Shut them down!
Above someone said why would you give someone credit when they couldnt afford it? and that it didnt make sense. It actually makes perfect sense.
Bankers made bets in the market that companies would fail. These were called credit default swaps. They are a type of insurance policy for stocks. Here is the problem, a lot of the same people making these bets were shareholders in these mortgage and credit card companies. So they bet that their companies would fail, and then set out to ensure that they would fail. How did they do that? By handing out more credit then their customers could afford to pay back. At first it made the company look good on paper, in the result though the long run is what we are seeing now.
This $700 billion bailout is to pay off the people that bet that all of these companies would fail.
@krom: You can call the CC company and have them stop sending the checks. I did this with Capital One and Chase.
"Our call center associates are focused on serving customer financial needs and responding to questions about their accounts," said Bank of America.
I'm laughing so hard I'm sobbing. This statement was made by BofA spokesenabler Betty Riess, spelled wrong as "Reiss" in the CNN piece.
She's also the spokesenabler you'll see quoted on Wired.com in the piece about B of A and identity theft. She says there that B of A has "multiple layers of security."
Boy, don't I know it. B of A TELLERS, on SEVEN separate occasions, gave away a total of $12,000 of my money to thieves with ONLY a fake driver's license in my name with the wrong expiration date. The signature was not verified to be mine. No bank card was required. No PIN was required. Multiple layers of security, huh, Betty? I like to joke that that means asking the thieves "Would you like Amy Alkon's money in $10s, $20s or $100s?"
Not every spokesperson is a spokesenabler. There's the lady from Metrolink who told the truth about the Chatsworth crash and was chastised for it by the honchos above her, and then quit. You actually can be in P.R. and be ethical. A pity we don't see more of that sort of thing.
Alot of these Wall Street types are wondering why the public really isn't for the bailout.
Do you think it might be that not only is public tired of being gouged by the same industry or company asking for the bailout but the public is tired of being slammed with used car sales pitches.I hear tactics that should've been extinct by now.
This week I had a door to door salesman come trying to sell a cleaner.He would not accept no,kept on saying it's not your average cleaner.It was obvious that he was trained not to accept no,no thank you or we don't need any.He stood at the door for almost another minute after no thank you I don't need any-that is rude,inconsiderate,ignorant and a wast of my time.
I thought consumerism was dying until I discovered this site.At least there are some fighters for consumer rights out there.But too many accept aggressive selling tactics as the norm and it shouldn't be.
I saw this on the news this morning. Nothing too surprising about this, other than the fact that it's being openly talked about.
Most sales call centers are like this though, from Cable TV to Dell, they're always trying to upsell.