Seeing Through Data

“We don’t do fraud,” said financial predator Elizabeth Stevenson, a self-described employee of PNC Bank when answering a question about a brazen, overt violation of the CARD Act.

PNC allowed a one-time, non-recurring debit card transaction to push a bank account $18.62 underwater, then went on to demand and collect $214.99 in overdraft fees, paying nothing except the $18.62.

Even that amount was triggered by the misuse of that same debit card for a series of questionable nickel-and-dime purchases by Internet vendors; the carcass of this account was well picked-over by predators.  But PNC, the bank that was supposed to protect the money, is by far the worst offender.

Stevenson’s co-worker, who goes by the nom de plum Alex “Jones” (Stevenson was appalled I had her real name) brazenly lied that the Federal Credit CARD regulation, which allows consumers to opt-out of debit-card overdrafts, only applies to checks.

Depending upon one’s interpretation this overt screw-you by PNC to Congress, the Federal Reserve, and banking regulators, either represents $214.99 in illegal fees — taking out the charge that should never have been processed — or 233.61 dollars, in that if these thieves this bank had followed federal law the charge would never have been processed.

Processing debit card transactions that have opted out of “overdraft protection,” which every consumer should, to push a balance to fall below zero, then assessing late fees, is absolutely, unequivocally banned by the Credit CARD Act.  There is no ambiguity on this matter; this was one of the key provisions of the CARD Act.  Despite Alex’s unsolicited legal advice to the contrary PNC is outright ignoring the law.

I some ways Alex’s advice was helpful, in that he verified charging overdraft fees on opted out accounts is a recurring “problem,” showing this is not a mistake but, rather, an pattern of overt fraud.

If PNC wishes to actually address the issue but doesn’t know Alex’s real name his direct dial phone number is 412-762-5638.  Somebody from the legal department might want to call and have a chat with him, or maybe the Federal Reserve, the CFTC, and FBI, the OCC, or any mildly hungry class-action plaintiffs litigator.  If anybody takes up the challenge, please tell Alex and his supervisors to preserve their all audio tapes in anticipation of regulatory action and litigation.  They’re in enough trouble without adding destruction of evidence to the list of wrongdoing.

Some schmuck at PNC probably believes the 1,155% ROI they brought in from this scam is brilliant.  Elizabeth sure did: she laughed at the notion anybody would sue the bank for “a little over $200.”

Luckily Congress thought the cost-benefit analysis better than the scam artists at PNC; the stunt will cost them $5,000 for each violation.  If the class-action is filed in a loser-pays state a plaintiffs firm can net tens of millions of dollars with not much work than PNC did the $215.  You see, PNC’s own computers will do most of the work;  I’d be happy to help show how.

PNC received $7.6 billion in bailout funds, which you’d think would make them grateful, or at least vaguely law-abiding.  Instead, they’ll probably ask for another bailout to cover their fraud costs.

PNC has obviously taken their cue from the Obama-Geithner Doctrine, the doctrine that anything that inflates a bank balance sheet, including outright criminal behavior, is good public policy.  It’s clear that the Panderer in Chief sees these behaviors as a net positive, because they increase bank balance sheets.

Given the actions of the Federal Government in the MF-Global fiasco — they’ve done nothing — it’s clear that simply stealing deposits is included in Obama’s list of acceptable banking activities.  It’s only a matter of time until banks start stealing deposits, PNC/MF-Global style, and label the behavior a brilliant business strategy.  I can just hear a bank executive testifying, “who would leave their money just sitting there, in our depository .. the depositors should take more personal responsibility in protecting their own funds,” they’ll sneer.

It will be interesting to see if the Consumer Financial Protection Bureau (CFPB), which was set up to address exactly this type of scheme, does anything.  This violation is so egregious, so illegal, and so well documented it will serve as a canary in a coal-mine.

Just to be clear, this was not an ACH payment, nor even a recurring debit-card payment; this was an ordinary debit-card payment, on a verified opted-out account, that resulted in fraudulent overdraft-fees vastly larger than the amount charged.  Enabling small charges on opted-out accounts then assessing steep fees is  exactly what the Credit CARD Act was created to prohibit.

Predatory PNC appears to be following a pattern from their thuggish older cousin Citi.  Not long ago an alleged Citi whistleblower who sent me what they claim is a Citi collection script, as well as their internal settlement guidelines.  I’ve been working to verify the authenticity of that chilling document which looks and sounds authentic.

If accurate then Citi routinely steers debtors into raiding their retirement funds, despite that every low-level collection agent has authority to wipe-out 2/3rds of credit-card debt, and up to 90% with further approval.  To enable Citi to steer American’s into raiding their 401K’s Citi received $45 billion in bailout money, plus a government guarantee on the pile of junk debt they’re siphoning out of retirement accounts.

Once upon a time people traded in gold and silver.  That was dangerous since thieves could see the bulky gold and silver then easily rob the person.  In response banks sprang up, and issued private notes to be used in place of gold and silver.

That is, people once put their money in banks to keep it safe from thieves.  Now it’s become apparent the thieves are in charge at many of the banks, allowing them to skip the inefficient mugging process.

Back in the day you had a literal fighting chance, you knew you’d been robbed, and if caught the robbers faced harsh justice.  These days, computers enable thugs like PNC’s Elizabeth and Alex to do the same, then have the gall to label their practices “business.”

Thanks to the Obama-Geithner Doctrine the US has transformed from a place where banks had to earn the trust of people to where people are entirely at the mercy of lawless banks.  Timmy’s sneer makes a better Sheriff of Nottingham than any actor I’ve seen play the role.

Needless to say, allowing these banks to operate in this manner, much less thrive, is terrible public policy.

Not long ago Elizabeth, Alex, and whoever their crime boss is would have been thrown into a dank dungeon, joining Jon Corzine who would have been hanging by his wrists for months already.  It’s long past time we returned to those good old days.