Banking on Higher Checking Fees

Within a week, W.H. Mack, a San Gabriel Valley resident, received two messages from the Bank of America, announcing changes in the terms of his savings and checking accounts.

On June 30, he was notified that the minimum balance he needed to maintain so that he could avoid savings withdrawal charges if he had more than three withdrawals a month was being increased, effective Aug. 1, from $300 to $1,000. The charges would be $2 a time rather than $1.

Then, on July 7, he was told that his interest-bearing free checking account would, effective Sept. 6, carry a $10 monthly fee, plus the customary $2 for canceled check returns, unless he maintained a minimum balance of $2,000.

Mack was informed that, if he accepted a “standard” checking account, paying no interest, his fee would be $8.50 a month, plus the $2 returned-

check charge, unless he maintained a minimum balance of $1,000, or an average combined balance in all accounts of $5,000.

Mack was disturbed by the end of his free checking and new restrictions on his free savings withdrawals, and he feared this was not the end of it.

In an e-mail to me, he wrote: “All of this is probably just a start. Eventually they will raise the fees for check enclosure to an exorbitant amount to eliminate the problem. We like getting our checks back. I don’t want to have to pay a fee to photocopy. That rate will also go up. Eventually, there will be a fee to store our canceled check information beyond a certain date to have computer space. No thank you.”

Mack said he and his wife went to their Bank of America branch to discuss the announced changes and encountered a bank employee who “asked why we bothered to keep a credit union relationship.”

“I told her, that’s my alternative if you guys continue to raise your rates,” Mack said.

Based on his accounts--and on correspondence I received from Robert Coppola, a Carlsbad resident, about his struggle to keep his free checking at the Bank of America--I asked Cary Walker, a spokesman for the bank in Los Angeles, for comment on its plans. I asked whether the state’s largest bank (6.3 million households) is contemplating the kinds of fee increases my correspondents anticipate?

“We have no plans to increase the fees suggested by Mr. Mack,” Walker replied. “That’s not to say we never ever will, but right now those fees are not even up for discussion.”

In numerous conversations we had about Bank of America plans, Walker spoke mainly, however, in corporate generalities.

“Customers won’t put up with one-size-fits-all service,” he said. “They want options. What we’re trying to do is to provide an unparalleled combination of choice, convenience and value. Our company offers plenty of different products and competitive pricing options that seek to reward customers who bring us more of their deposit, borrowing and investment business.”

He insisted I report this response, although I suggested to him most readers wouldn’t be impressed.

Questioned about past statements Bank of America had made on fee increases pursuant to its merger with NationsBank of Charlotte, N.C., Walker declared, “We never said we wouldn’t raise fees. No company would say that.”

Meanwhile, however, in the Coppola case, Bank of America has backed down on its plan to begin charging him a monthly fee for his checking account.

The reason was that Coppola was able to provide a copy of a Dec. 22, 1995, letter from a Bank of America vice president during a previous dispute over an attempt to institute charges on his account.

“I have reversed the service charge of $9 which was imposed on your checking account,” the VP wrote. “A permanent waiver has been placed on your checking account to ensure the account is free of monthly services charges for the life of the account.”

Coppola asserts he was assured when he opened his account in 1975 that it would always be free, but he doesn’t have documents, as he does in the case of the 1995 letter, putting such a promise in writing.

On Aug. 16, the bank gave way. A letter to Coppola from Nancy Lundgren, vice president for executive customer relations, declares, “We were unaware of the letter from 1995 with the commitment of a waiver for the life of the account.

“Mr. Coppola, while it is true that we have never had a ‘free for life’ account plan, we recognize the exception made by [the VP] and have reinstated the service charge waiver to honor the prior commitment made to you.”

Walker, meanwhile, said that in June and July of this year, Bank of America did notify about 130,000 of its customers in California who had free checking accounts that it was going to charge a monthly fee, unless they agreed to maintain a $1,000 minimum balance or an average combined balance of $5,000.

“Generally, customers received fee waivers in one of two ways,” he explained. “The first was through marketing promotions. In 1994, our company offered free checking until the year 2000. Note the limited duration. Bank of America has never offered lifelong fee waivers through a promotional campaign.

“But, it is also true, second, that bank employees have sometimes waived fees arbitrarily for certain customers . . .

“We believed we’ve honored all contractual obligations to customers who had received monthly fee waivers. We very carefully reviewed all relevant customer documentation and only when our records clearly indicated that an account waiver had expired did we remove it.

“So we made every effort to err on the side of our customers. Anyone who can show that Bank of America or one of its predecessors promised them lifelong free checking should approach their local banking center managers, and we will make good on our word. That’s exactly what we’re doing in Robert Coppola’s case.”

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Ken Reich can be contacted with your accounts of true consumer adventure at (213) 237-7060 or by e-mail at ken.reich@latimes.com.