BofA Deceptive Autopay Options

[corinneburger]

BofA uses extremely deceptive autopay options to trick customers into not paying their full account balance. Here is a link to a class action suit related to this issue: https://topclassactions.com/lawsuit...lleges-deceptive-credit-card-autopay-options/. When setting up autopay there are 4 options (these were the ones available at the time although they may have changed it): Amount Due, Minimum Amount Due, Account Balance, and Fixed Amount. I selected the Amount Due assuming that would be the amount owed on my card. However, it was actually the exact same as the Minimum Amount Due option which resulted in me not paying off my balance and being charged interest. Clearly I should have done more research when picking an option but I saw a post on a forum asking and the only response thought that "Amount Due" would be the statement balance plus any previous outstanding balances and this seemed to make sense. Having Amount Due and Minimum Amount Due be the exact same thing is clearly deceptive. Furthermore, by having Amount Due as the default, it makes it seem like the encouraged option.
When I talked to their customer service (escalated twice to their supervisors), they were clearly aware of this problem and had been instructed not to do anything if someone asked about it.

 

[Dwayne Coward]

I have a BofA issued card which I do not use very often. When I have used it, I normally pay the full amount manually on the website but do have the autopay set to minimum payment as a backup. Below is the explanation that the site gives for each of the options:



You will probably need to have this reviewed by an attorney who can provide you their legal opinion and whether they believe there are any legal remedies or join an existing class-action lawsuit. Unfortunately, It is not unusual for a company with an active lawsuit to maintain its position if they believe it is correct. It would be up to the courts to make a determination if there isn't an agreed-upon settlement first (which usually includes that neither side is admitting they are wrong).

The best advice I can provide is to be proactive with your finances by reviewing at least monthly all your obligations, reviewing/downloading all the billing statements, and double-checking that payment is actually scheduled as to your wishes, and payment is made/received. Doing this will ensure your finances are properly in order and help you to address problems and take corrective action promptly. Companies should be providing accurate information and usually provide the tools to make it easier for consumers (autopay, email alerts, access to your account), but in the end, we all still have the responsibility to ensure that we have met our obligations and/or address any problems promptly. This is easier than suing, which may or may not be successful, and even when they are successful, the attorneys seem to be the ones who get the most out of it.

 

[Bill___A]

When I set up a payee for either money transfer or paying a bill, I set it up, double or triple check for accuracy and then, long before anything is due, I send a "test payment". I note how long it takes to go to where it is going. Should I use any autopay, I always check to make sure what has happened so I know early enough if there is an unintended consequence. Regardless of any class action suits, it is imperative to trust no one and make sure what is happening is what you intend to have happen. The mobile bill auto pays, but I check it each time. Credit cards are done manually. But the thing is, when it comes to personal finances, don't trust what you think they are saying (or what they think they are saying). Check, check, and check again, then monitor. Personal finances are not "set and forget".

 

[Dwayne Coward]

If this was a one-time occurrence with your account, you may want to address this with the company to see if they will waive or reimburse the interest as a goodwill gesture. Keep in mind at this time they are probably not required to do so, but sometimes a concise and polite request will resolve this to everyone's satisfaction. The following post will explain how to best do this using our company contacts:

Resolving Consumer Complaints and Developing a Paper Trail

If you are reading this posting, then there is a good chance you are looking for suggestions or advice on how to address a consumer complaint or issue. The very first thing you should do is read the below-linked stories by our very own Christopher Elliot, founder, and publisher of...

forum.elliott.org

 

[VoR61]

Aside from a class-action lawsuit you can, of course, choose a different bank card. If you choose instead to remain with BoA, the other option would be to select Account Balance for autopay.

Normally, credit card terms allow one month's free interest. If the closing date for the current cycle is the 28th of each month, you would have until to 28th of the following month to pay the "statement balance" to avoid interest charges. Selecting Account Balance would eliminate that "grace period", but it would also eliminate interest charges. This would be the equivalent of a manual payment the day after the cycle closes.

That option is not ideal, but it is a viable one I think . . .

 

[SoCalTraveler]

I pay all of my credit card bills through the credit card site. I checked with my wife, who manages hundreds of credit card accounts. We have yet to see the problem identified by OP.

 

[mmb]

I pay all of my credit card bills through the credit card site. I checked with my wife, who manages hundreds of credit card accounts. We have yet to see the problem identified by OP.

Paying the bill in full using the credit card site‘s auto pay function is the safest way to avoid late payments, under payments and finance charges.

 

[Barry Graham]

I looked at the class action website. It's stunning that there are people who continued to let this happen month after month. Even if it was unclear the first time, at least they should have noticed and corrected the mistake for subsequent payments.

In the link above we have company contacts for Bank of America that I have used myself with success for other things. I encourage you to write using the guidance from Dwayne above.

 

[Skippy]

I'm not a lawyer, and I don't play one on TV; however, I would suggest that the definitions provided with payment options were covered in the original cardholder agreement -- that 20-page document full of fine print that a bank shares when a new account is opened but few people read.

If you join a class action lawsuit, you'll likely end up with a settlement that won't pay for a slice of pizza years from now when the payouts are made -- that is, if BoA doesn't fend it off. If you write a polite email or letter requesting a 1-time goodwill gesture, you might get your month's worth of finance charges back. (Do it in writing, not via a phone call. This way, it is more likely to be reviewed by someone empowered to respond accordingly.)

Regardless, always review every statement. Consider Autopay as a back-up to actively managing your accounts.

This applies not just to BoA but also every bank with it's own definitions, processes, pending lawsuits, etc.

Hope this helps.

 

[msmayor]

Not sure I would categorize this as "deceptive"...I think it real boils down to what one assumes is the definition of "Amount Due".

If I was presented with those four options, I would likely interpret "minimum payment" and "amount due" as the same thing automatically...I view that as the amount I have to pay to stay 'current'. "Account Balance" to me has but one meaning...the full open balance on the account. If I wanted to pay the entire amount and bring the balance to zero, this is what I would choose.

I think here, BofA defines "Amount Due" and "Minimum Payment" as the same thing. Curious as to what the OP thought when seeing "Amount Due" and "Account Balance" - would the OP view these as having the same meaning?

 

[CanuckMom8518]

Help me out. Can someone provide an example, using the B of A definitions provided by Dwayne in Post #2, of when Minimum Amount Due and Amount Due produce different payment amounts?

 

[Tonypitt]

I do think that some of these web payment systems are poorly designed, but I'm not sure if it is with the intent of squeezing more money out of customers. I had an argument with my bank a few months ago because when I went to pay my credit card I was presented with an option "Pay Card Balance $212.57" and I could pick the payment date. I did that and picked the date when the payment was due two weeks in the future. When the payment posted it was for a larger amount. I called the bank and none of the front line workers had any clue about this. I finally was connected with someone familiar with the system who told me that if I chose that option the dollar amount it would pay was based on the card balance on the date I indicated the payment was to be made. So even though the web site said $212.57, it might actually pay $425 if I used the card a few more times over the 2 weeks before the payment was triggered. They didn't understand why I thought that was really inappropriate--especially considering that the payment screen showed $212.57. Turns out the only way I could be sure that $212.57 was paid was to enter that as a custom payment amount. I consider this a really screwed up system that makes me trust my bank less. But I think this is more about bad design rather than a purposeful strategy.

It would be great if the banking industry had some standard definitions for these things that were universal, but I doubt that will ever happen.

 

[Rosebud]

Help me out. Can someone provide an example, using the B of A definitions provided by Dwayne in Post #2, of when Minimum Amount Due and Amount Due produce different payment amounts?

I recently had to explain this to my daughter on her American Express statement. My explanation involved interest rates and plan fees but in trying to simplify it here, I won’t get into that.

Several months ago she had a huge purchase that she decided to use the Plan It feature that Amex offers to make payments. She created a plan where she would make 6 equal monthly payments of $600 (I’m rounding).

So assuming she had no other balance before this purchase, month 1 minimum payment and amount due was $600.

During month 2, she charged an additional $100 to the card, so her statement said her Minimum Amount Due was $640 (the plan amt due of $600 + non-plan minimum due of $40 as calculated by Amex) and an Adjusted Amount Due of $700 ($600 plan + $100 total additional charges that month). She paid the $700.

During month 3, she didn’t charge anything else on the card, so her Minimum Amount Due and Adjusted Amount Due were the same, $600.

I don’t have a BOA credit card but I believe some of their cards have a feature similar to Amex’s Plan It or Chase’s My Chase Plan which give you the illusion that you can control the payments on large purchases. If you make additional small purchases on the card while the plan is in place, the minimum amt due is the plan amt plus the minimum due on the additional purchases made. The Amount Due (Amex calls it Adjusted Amount Due) is the plan amount plus the total amount of all purchases made during the statement period.

Sorry if this is confusing. This was so much easier to explain to her on a whiteboard.

 

[Neil Maley]

I have the same issue with using bill pay with my bank. There are three different options - I had to read carefully when I first started auto pay to ensure I chose the right option.

 

[mmb]

@CanuckMom8518 - x
minimum amount owed and amount owed really only pertain anything Involving a loan (where interest is involved)
Note> my husband jokes that his ‘loan has been approved) when he uses his credit card.

So, in terms of where these terms apply:
If you have a mortgage, the Minimum Amount Due is the Monthly Amount, but the real Amount Due is the entire balance of the mortgage at any given time. The papers always say that they can call the Loan Due whenever they want.(Essentially, as they make the rules and the rules can be changed at any time. )
the same thing applies to car loans and credit cards, both involving interest charged at a fixed rate.
Us old folks got used to paying our credit card bills in full as in the olden days there wasn’t an option for a minimum amount due payment, except in the case of AMEX.

 

[Comicman]

As the traditional American Express card is not a credit card but a charge card. I like the fact that there is no credit involved. You have to pay it off by the due date in full or get charged fees. There is an option through another of there products to add a Pay Over Time option ( this is a loan like product with interest and penalties, With an 18% or so interest it is an expensive option) .
But it is an option you have to turn on. So if not turned on the card owner is forced to pay the full balance due on that months billing or lose the right to use your card. It also has an option to pay off all that is on the card on the date you set payment. This include any charges you make after the current statement closes.
So maybe a change to American Express would help make it easier to have a zero balance and know you are doing it.

What is the difference between Credit Cards and Charge Cards?

Learn the difference between charge and credit cards and understand how they can help fund and grow your business.

www.americanexpress.com

 

[SoCalTraveler]

As the traditional American Express card is not a credit card but a charge card. I like the fact that there is no credit involved. You have to pay it off by the due date in full or get charged fees. There is an option through another of there products to add a Pay Over Time option ( this is a loan like product with interest and penalties, With an 18% or so interest it is an expensive option) .
But it is an option you have to turn on. So if not turned on the card owner is forced to pay the full balance due on that months billing or lose the right to use your card. It also has an option to pay off all that is on the card on the date you set payment. This include any charges you make after the current statement closes.
So maybe a change to American Express would help make it easier to have a zero balance and know you are doing it.

What is the difference between Credit Cards and Charge Cards?

Learn the difference between charge and credit cards and understand how they can help fund and grow your business.

www.americanexpress.com

I understand that Amex wishes to make that distinction, but I think from a regulatory point of view there is only open-ended credit (credit cards and charge cards) and closed end credit (like auto loans). Open ended credit is governed by the terms of its agreement, and nothing in the Truth in Lending law prohibits a grantor of open ended credit from requiring payment in full each month.

The question that OP raised is whether the terms B of A used in its payment options are confusing. Some terms may be defined in Truth in Lending, and, in the end, all terms will be defined in the very dense language of the credit card agreement (that very few people read.). In any event, it should be possible to discern from a credit card bill what sum must be paid to pay the bill in full, absent some accrued interest. (Interest accruing from the bill date to the payment date.)

 

[CanuckMom8518]

Thanks Rosebud, mmb. I was wondering if it had something to do with outstanding amounts, or a missed "minimum payment". Still not sure I fully understand: I try to keep my debts and finances uncomplicated!

One thing I can say: B of A is probably not unhappy when clients make the mistake of paying the minimum amount rather than the full amount by accidentally selecting "Amount Due" rather than "Account Balance". If a few percent of their many customers make that mistake, they are probably raking in thousands on finance charges.

 

[SoCalTraveler]

Thanks Rosebud, mmb. I was wondering if it had something to do with outstanding amounts, or a missed "minimum payment". Still not sure I fully understand: I try to keep my debts and finances uncomplicated!

One thing I can say: B of A is probably not unhappy when clients make the mistake of paying the minimum amount rather than the full amount by accidentally selecting "Amount Due" rather than "Account Balance". If a few percent of their many customers make that mistake, they are probably raking in thousands on finance charges.

About 40% of card holders pay in full each month. About 30% of card holders just pay the minimum play meant. The other 30% pay varying amounts.

Whenever my wife or I work with people who have been paying the minimum or near-minimum payments, they have no idea how they came to owe so much, nor can they readily identify what they purchased.

 

[jsn55]

Thanks Rosebud, mmb. I was wondering if it had something to do with outstanding amounts, or a missed "minimum payment". Still not sure I fully understand: I try to keep my debts and finances uncomplicated!

One thing I can say: B of A is probably not unhappy when clients make the mistake of paying the minimum amount rather than the full amount by accidentally selecting "Amount Due" rather than "Account Balance". If a few percent of their many customers make that mistake, they are probably raking in thousands on finance charges.

So true! That's why they skate right on the edge with the wording ... a few bucks of interest multiplied by tens of thousands of customers adds up and the banks know it. When I made the switch from AmEx to Chase Sapphire cards, it took me forever to grasp exactly what the amount of my bill was on the closing date if I looked it up before my statement arrived. You think you know what you're reading, but often you don't ... and the bank makes more money. Nothing wrong with this business plan for a bank, of course.