|Protecting Yourself Against a Bank's Misdeeds
(Part 2 in a 3-part Series)
In last month's newsletter, we told you about deceitful things done by some banks and their employees. In this issue, we'll tell you how to protect yourself and how to respond to bank misbehavior.
The first line of protection is not to sign any document that the bank hands you or sends to you, before you read it. ALL of it. (That really applies to any document you're asked to sign, regardless of whether it's from a bank.) Some agreements are purposely worded to make them difficult to understand and thereby discourage people from plowing their way through. However, the time and difficulty may save you more time, as well as money, later.
Ø If you're handed a document while you're sitting at the desk of a bank officer, don't be rushed into just skimming through it. Read it carefully. If necessary, tell them you'll take it home and review it there. If they refuse to let you take it home, don't do business with that bank.
Ø Ask about anything you don't understand. If the explanation is not clear to you, don't hesitate to say so: Get a further explanation.
Ø If an explanation appears to contradict what the document says, get a clarification in writing and over a bank officer's signature. Verbal statements by bank staff do not override what's on paper.
Ø Make sure that you get a copy of anything you sign. If you sign it, you're entitled to a copy.
In summary: Don't be intimidated or shamed into signing what you don't fully understand.
Next, what can you do when you’re not sure about something you’re told, or when you believe that a bank may be misbehaving?
(1) If you fall into the clutches of the bank's "Investment Counselor", don't make an investment without taking a day or two to think about it. Also, make sure that you have a full description of the investment, in writing.
2) If a bank employee cites a rule, regulation or policy in support of their request for sensitive information or to justify denying information to you, demand to see the cited rule, regulation or policy in print. If you're shown something that does not appear to justify the employee's stance, demand to see their supervisor. If the requirement does seem to be genuine, you can still request that they make an exception. That, too, may necessitate going to a higher level.
(3) Put your money only in banks that are insured by the FDIC (the Federal Deposit Insurance Corporation). It is an agency of the U.S. government, and it provides absolute assurance that you will not lose your deposit even if the bank fails. Any other form of insurance is private, and private companies can fail no matter how large they are, as we've seen quite dramatically in recent months. FDIC-insured banks display the FDIC logo (shown at left) prominently.
It is this author's personal opinion that you also do best by dealing with federally chartered banks (see the next issue of this newsletter) rather than state chartered ones. We feel that the federal regulatory agencies can be more effective in disputes.
(4) If you believe that a bank is holding your funds without good cause, go as far up the chain of command as necessary. If that proves fruitless, tell them that you intend to contact their regulator: Every FDIC-insured bank is regulated by a state or federal agency (but not always by the FDIC directly), and bank executives want to avoid their regulator receiving customer complaints. (In the next issue, we'll tell you how to find out who regulates your bank.)
(5) From time to time, verify that your CD or savings account is receiving the proper rate of interest. The calculation is not complicated, and it can be done using information you get on your bank statement. A mathematically-talented friend or relative will find it easy.
(6) Before signing up for any new service or feature being touted by your bank, find out all fees and other costs that are associated with it. Ask "Are there any other fees or costs? Will fees or costs increase or new fees be imposed, after an introductory period?" Get the answers in writing: Verbal statements have no force in law and, in any case, can be denied after the fact.
In the next issue, we'll tell you (1) how to find your way along the bank's chain of command, (2) what limits there are on FDIC insurance, and (3) how to get in touch with your bank's regulator.
W. A. Shapiro