Tuesday, May 4, 2010

Yesterday I received my wife’s New York & Co credit card statement and I noticed a charge that caught my attention. It was for $1 and had “Processing Fee” for the Transaction Description. I was a bit confused by the charge so I started reading the bill a bit more carefully to find out what it was for. What I learned was a bit shocking and, in my opinion, wrong.

A bit further down the statement there was more of an explanation: “A one-dollar processing fee will be charged on every paper statement. We will waive this fee if you choose to receive paperless statements” and then there was a URL to tell you how to sign up for paperless statements. Don’t get me wrong, I’m all for saving the environment and against cutting down trees. Every week, my family and I do huge amounts of recycling and my kids are taught what the different recycling symbols mean on plastic containers and such.

What bothers me about this charge is the fact that it is actually a fee. I know plenty of other companies like my bank or my cell phone provider that offer the same type of paperless statement service. However they do it differently, they offer more of a positive reward than a negative one to convince you to switch to paperless statements. Sometimes these rewards come in the form of a slight discount or a one-time credit of some sort, and most often talk about some additional benefits you would receive if you switched to paperless statements, like the ability to see more statements, or having the convenience of not having to store physical statements. But never is there a mention of an additional charge to “have the luxury of paperless statements.” Some companies even say that they will donate to a Nature Conservation organization if a customer switches to paperless.

In my opinion, charging a customer to force them down a path that is, in the end, more profitable for you, is a form of extortion. Basically, “Bruno the Bruiser” at this credit card company and other companies that employ a similar strategy are saying, “you will now sign up for paperless statements otherwise every month I will come by and collect and keep charging you until you do switch!” Sure, it is only $12 a year but there are some other things at play here. For starters, what if you don’t have access to the internet? Do you get to charge them for your internet access so that you can get your $1/bill waived? Seems like “lack of internet” discrimination to me!

But let’s also think about this from a monetary perspective. It costs to have statements printed and mailed out every month. I understand this. I’m not sure, however, that the costs add up to $1 per statement. Ink and paper are not that expensive. The bills are also bulk mailed so do not get hit with a first class postage charge (probably not bulk either – so someone should correct me about that). Regardless, even after all of that, they are coming ahead in the end. It does get a bit more tricky if the customer is mailing back a check. There is the manual (?) processing involved there so I could understand that added cost. Here is actually an interesting read about the whole “save a tree by going paperless” initiative – let’s not forget about the Paper Industry, going paperless hurts that economy.

[click to continue…]

{ 2 comments }