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Wednesday, January 4, 2012


2011 seemed to be a GOOD year for BAD business decisions.  It also seemed to be a GOOD year for the consumer to yell "I'm mad as hell and not going to take it anymore".  Several companies (all household names) attempted to increase their revenue by increase our fees but consumers stopped them in their tracks. Think Bank of America, Netflix and  Verizon.

Bank of America was first when they tried to impose a $5 monthly fee to use their debit card for purchases. This was in addition to fees for using the same card at ATM machines. Those fees quietly crept up and perhaps BOA thought since consumers did not create an uproar over that, this new fee may be received the same way. But such was not the case. Announcement of the fee created a consumer uproar and competing banks, Wells Fargo, JPMorgan Chase and Sun Trust (all of whom had the same plan) decided the fee was a "no go" leaving BOA as the last man standing. Why did they change their minds? Although they never disclosed how many customers bailed at the announcement, "sources" indicated that account closures were "higher than usual" and smaller institutions said acquisition rates increased significantly during the days following the announcement of the fee.

Netflix had their own announcement and what a trifecta it was! They increased their fees, capped streams per household and lost the Starz contract. Their plan to split-up the company and have members need to access two websites was short-lived and Qwikster was "quickly" abandoned. Add the power outage plague Netflix experienced and well, movies and tv shows weren't the only thing streaming. Giving customers less and charging more (60% increase) does not seem to be a very sustainable business model. Just ask Redbox who saw a huge increase in sales when 800,000 Netflix customers "streamed" out the door.

Verizon had similar ideas when it announced it would begin charging a $2 fee for customers to make a one-time credit or debit card payment on the phone or online. This "convenience fee" (more on that later) was to be implemented on January 15, 2012 but once again customers said NO NO NO. Protesting customers used social media and online campaigns to make their voices heard so loudly one can only ask "can you hear me now" and clearly Verizon did.  With pressure mounting Verizon realized their new fee was a public- relations disaster and a bad marketing move. The company smartly dropped the fee Friday, citing "customer feedback."

Hire this woman: The campaign against Verizon was led by Molly Katchpole, of Washington, who can now add two successful campaigns against big business to her resume. Katchpole also led the protest that forced Bank of America to abandon their ill-thought out $5-per-month fee for debit-card use after she obtained 300,000 signatures on a petition.

*Convenience - [kuhn-veen-yuhns]  noun    1. anything that saves or simplifies work, adds to one's ease or comfort, etc., as an appliance, utensil, or the like.    2. Allows business to get their payment faster and with less human interaction and expense.

Speaking of fees, I decided this year I am going to save every credit card solicitation I receive in the mail just to see how many I actually get. I am pretty sure I get about five a week or at least it feels like that many. 
You ever wonder how much money it costs to write the text, buy mailing lists, lay it out, have it printed, stuffed and mailed? Well I have been wondering too. And then I wonder how much of the fees and interest and annual fees that I pay subsidize these excessive mailings. One would think that after years of sending me these applications which I simply shred, they would figure out their ROI (return on investment), at least when it comes to me, is negative. If I had an employee who called one lead five times a week for years with no sale - that employee would be long gone. What do credit card companies know that I don't? "Hello, this is Peggy".
 My one resolution for the new year is to try and reduce how much I spend on nonessential things like eating out. I'll let you know how I am doing by updating the amount each month. Sometimes dinner was my treat but here we are so far!

2011 = $1,865
2012 = $30

Oh and tax season has officially started!

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The correct answer to last month's polling question - "What do people most often do with a fruitcake they receive" is re-gift it! Congratulations to JG from Nicholasville who got the correct answer.

Disclaimer: Tax advice contained herein was not written to be used and cannot be used to avoid payment of taxes or to avoid penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. All information provided is for illustrative purposes only. You should contact an accountant, tax preparer or tax attorney for advice or information specific to your situation. This information is not to be used as a directive.

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