After more than 300,000 outraged consumers nationwide joined a viral campaign on the Change.org website, Bank of America announced Tuesday, Nov. 1, that it will abandon its $5 debit card fee. The bank said it would add the fee last month, but the plan backfired and instead initiated a mass uproar including a threatened exodus of customers.
The online campaign was spearheaded by Molly Katchpole, 22, of Washington, D.C., who was a Bank of America customer. She said she was working two part time jobs, living paycheck-to-paycheck and could not afford another fee on her bank account. So she decided to act and took the cause to the Internet.
"I knew that if enough people expressed their outrage to Bank of America, they would have to listen to their customers and reverse their debit fee plan," said Katchpole in a statement. "The American people bailed out Bank of America during a financial crisis the banks helped create. Bank of America paid zero dollars in federal income taxes last year and thought they could squeeze more from the American people. The success off this campaign proves that ordinary people can successfully stand up to even the largest corporations."
At one point the online campaign was attracting more than 3,000 new supporters an hour and more than 40,000 a day. More than 21,000 people pledged to close their Bank of America checking accounts.
"It was a classic David-and-Goliath fight, fueled by the growing populist outrage against the nation's financial system," writes Ylan Q. Mui on the Washington Post. "The little guy won."
Bank of America's plan was announced just as the Occupy Wall Street protests were erupting across the country and gaining momentum, writes Mui. "Though Occupy supporters are motivated by a wide range of social ills, including climate change and income inequality, there seemed to be consensus that Bank of America's fee was a prime example of the banking industry run amuck."
The Bank of America retreat is a big victory for consumers and will go down in the history books, advocates note. The relatively small fee is symbolic of much more, they add.
The big banks in the past year have blamed their fee hikes on a new federal regulation championed by Sen. Richard Durbin, D-Ill. The law, which went into effect last month, caps the amount banks can charge merchants whenever customers swipe their debit cards. Banks are now prohibited from charging most overdraft fees, eliminating a previously lucrative practice. Banks claim the regulations are expected to cost them billions of dollars.
Durbin told CBS News the recent decision by Bank of America to nix the $5 fee is an indication that the consumers across America have a much larger voice in this process today than they did even a few weeks ago. Durbin had told consumers to start looking for another bank or credit union, one that treats them in the manner they want to be treated, "fairly and respectfully," he said.
"Well, the message got out," Durbin said. "And that message ended up creating a substantial move of customers from some banking institutions to others. What we have at work here is a very fundamental principle of our economy - the free-market economy: Transparency, so people know what they are being charged. So they have a choice."
Durbin continued, "It's working and it's long overdue. Customers are now saying they'll only do business with banks that care about serving them instead of squeezing them. It's a good thing."
Meanwhile Wells Fargo, JPMorgan Chase, SunTrust and Regions Financial banks have all backed away from similar debit charges, after each had threatened fees too.
As consumers continue to seek new bank accounts and alternatives, credit unions and community banks have reported a surge of interests in their business.
According to an action being organized by the Progressive Change Campaign Committee, roughly 51,000 people are signed up to move their money out of large banks next Saturday.
In a statement, Bank of America said it was scrapping its plan based on customer feedback.
"Our customers' voices are most important to us," said the bank's co-chief operating officer, David Darnell. "As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."
Activists fighting for jobs against cuts and for economic justice say the broad coalitions being led by the labor movement, faith-based, civil rights and community organizations also significantly impacted the decision by Bank of America.
Photo: Occupy Chicago. Pepe Lozano/PW.