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Consumers baulk at bank charges
(China Daily)
Updated: 2004-04-09 08:36
The Agricultural Bank of China (ABC), one of the country's top four
State-owned banks, had no idea that its decision to charge for the use of its
once free bank debit cards would engender a major public outcry.
Banks decision to charge its card holders has
encountered strong opposition fromthe customers.
[newsphoto/file] |
The protests were ignited on March 18, when the bank posted a notice in its
outlets across the country, saying that owners of its debit card would be
automatically charged 10 yuan (US$1.20) annually as of July 1.
Consumers who have deposit accounts at the bank were given debit cards free
of charge, and they had not been told that they were going to be charged for the
service.
Soon after, the China Construction Bank (CCB) and the Industrial and
Commercial Bank of China (ICBC) followed suit, separately announcing the dates
their customers would have to start paying for the service.
At a time when almost every urban dweller has a handful of cards issued by a
variety of banks, the charges will bring a considerable unexpected expense.
"The housing fund card of the CCB, the pay-check cards of ICBC and ABC, the
cards for water and power payment...," Ms Sun, who lives in the Chaoyang
District of Beijing, thumbed through the dozen bank cards that she owns.
"If every card starts charging annual fees, how much am I going to have to
pay?" she complained.
In some bank outlets in Guangdong, Shandong and Zhejiang provinces, consumers
have been reportedly lining up to have their less frequently used bank cards
cancelled.
What makes the public angry is not only that they have to pay, but that the
banks have broken their promises.
"It's like someone invites you for a drink, then asks you to pay," one card
holder said.
A lawyer in Changsha, the capital of Hunan Province, where the free bank card
service was terminated last year, has filed law suits against ABC and ICBC,
accusing them of deducting money from his account without prior notice or
agreement.
A local court in Changsha has accepted the case and the hearing will begin
soon, according to the court.
The China Consumers' Association has also registered a strong complaint,
describing the change in the two banks' debit card agreements as aggressive and
"peremptory."
According to Wang Qianhu, the complaint and legal affairs director with the
association, the fourth article of ABC's debit card agreement, made public in
July 2002, made it clear that the bank's card has "no expiring date and no
annual charge."
Now, without asking for its customers' consent, the bank has unilaterally
added the charge. "They have violated the Contract Law by doing so," Wang said.
The Consumer Protection Law stipulates that businesses should not set unfair
policies by simply posting a notice.
"The amended articles that ignore consumers' right to be treated fairly, to
know the truth and to choose, are clearly peremptory," said Wang.
He also drew attention to Article 15 of ABC's current debit card agreement,
which says the agreement has binding force, no matter whether card holders are
aware of the amendments to the articles or not.
"The agreement between the bank and consumers is a contract between two equal
civil parties, not an administrative notice as the bank seems to think," he
said.
Some critics say that the banks used to live mainly on the difference between
deposits and loans. In order to take a larger share of the market, they
scrambled to offer free card services.
Now that profits generated by the deposit-loan gap are shrinking, the banks
have changed their tune and betrayed their promises, according to these critics.
Statistics show ABC had issued 93 million debit cards by the end of 2002, and
ICBC 84 million by the end of last year. If each card is charged 10 yuan, the
two banks will have an additional annual income of 1.7 billion yuan (US$204
million).
Banks: We are authorized
The banks argue that charging 10 yuan a year for each card will barely cover
actual costs, let alone make a profit.
There are the costs of the cards themselves, the card-making machines, the
computer system for handling transactions, the automatic teller machines and the
personnel required.
"Actually, the annual fee of 10 yuan per card is far from enough to cover the
real costs," an official with the agricultural bank said.
Insiders say the banks began to charge partly to reduce the number of
so-called sleeping cards, which serve small deposits and are seldom used.
As each card's information has to be stored in the banks' databases, the
sleeping cards, believed to account for 80 per cent of all cards, occupy large
amounts of computer system resources, thus reducing the speed and quality of
transactions.
If a card account does not contain enough to pay the annual fee, the card
will not be cancelled, but its data will be stored in a special file so that the
computer system does not have to count it every time it searches the database.
"Whenever the card owner deposits more money into the account, the card will
be reactivated," a bank official explained.
The banks do not agree that their dropping the free service was peremptory.
They say it was authorized by the China Banking Regulatory Commission.
The commission and the National Development and Reform Commission issued a
banking service pricing guideline last year, authorizing the banks' right to set
their own prices for their services.
But Wang Qianhu said this makes no sense.
"The banks did not exercise their right to set a charge when offering the
cards to consumers. It's unreasonable they are now trying to make the consumers
pay for the consequences of the banks' own mistake," he said.
The China Consumers' Association will hold a press conference before July 1
to list the banks' violations of consumers' rights.
Liu Junhai, a researcher with the Law Study Institute under the Chinese
Academy of Social Sciences, pointed out the banks' mistake in legal terms.
"If the banks change their agreements with the consent of the central bank
but not of the consumers, they are only free from administrative responsibility,
but not the responsibility to uphold their contracts with consumers," Liu said
at an interview with CCTV.
He encouraged consumers to file a class action complaint to protect their
rights.
He also suggested that the consumers' association could negotiate with the
representatives of the major banks on the rights and obligations of both sides.
"Either side that wants to change the contract must get the agreement of the
other side," he said.
Consumers' triumph
The consumers seem to be winning in the ongoing battle, as the banks have
moved to make a compromise adjustment.
The bank will no longer "cut it through with one stroke of the knife,"
Beijing Youth Daily quoted an anonymous official with the agricultural bank's
main Beijing branch as saying.
They maintain that the policy to charge from July 1 will not change. But only
cards issued after that date will be charged. Current card holders will not be
charged for one more year.
Preferential treatment will be given to some special cards. Cards specially
designed for students, salary payment cards, and vehicle tax payment cards will
be exempt from the annual fee.
"The service fee for the salary payment cards and vehicle tax cards should be
paid by the entrusting parties, in this case employers and the tax authority,"
the official explained.
"The students have no income, so they will enjoy a free service."
Although the head office of the agricultural bank did not confirm such
adjustments, it did admit that it was pondering over some changes to the initial
plan, as the heads of local bank branches across the country are convening in
Beijing to discuss bank card business at present.
"We might consider different policies in different places, as each place has
its own social and economical conditions," an official with the bank card
department of ABC told China Daily.
ICBC is also reportedly considering grouping its customers and services into
different price categories, including a free category.
"The move is a good-will concession by the banks in response to its
customers' attitudes," commented Wang, from the consumers' association.
"Actually we don't think the banks should not be allowed to charge for their
services, but we need a fair and equal legal agreement."
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