It was a classic David-and-Goliath fight, fueled by the growing populist outrage against the nation’s financial system. On Tuesday, the little guy won: Bank of America announced that it was abandoning the fee.
“This is one to go down in the history books, I think,” said Norma Garcia, manager of financial services at Consumers Union, an advocacy group. “It’s just a $5 fee, but it really is symbolic of so much more.”
Over the past year, consumers have wielded the power of social media to battle companies over issues large and small. When a Chicago jewelry artist accused Urban Outfitters on her blog of copying her designs, her post went viral and the company pulled the item within a day. Netflix subscribers persuaded the company to halt plans to spin off its DVD-rental business by bombarding it with more than 27,000 comments.
Bank of America was not the only — or even the first — to float the idea of charging customers to use their debit cards. But its plan became public a month ago, just as the Occupy Wall Street protests began to gain national momentum. 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.
Take the online petition started by 22-year-old D.C. resident Molly Katchpole on Change.org calling on the bank to drop the fee. Though not affiliated with the Occupy protests, the letter tapped into the same vein of populist anger, recounting the bank’s role in the financial crisis and calling the fee “despicable.”
On Oct. 1, 100 people signed Katchpole’s petition. The next day, the number shot to 3,000. The day after, it was 75,000. By Tuesday, more than 300,000 people had joined, making it the largest consumer campaign ever on the site.
“The success off this campaign proves that ordinary people can successfully stand up to even the largest corporations,” Katchpole said in a statement.
Bank of America was quick to point to new federal regulations as the catalyst for the fee, saying that the “economics of offering a debit card have changed.”
Banks are now prohibited from charging most overdraft fees, eliminating a previously lucrative practice. And last month, rules went into effect that limit the amount of money banks can receive from retailers when consumers swipe their debit cards. The regulations are expected to cost banks billions of dollars.
But Washington fired back. President Obama called the fee “not good business practice.” Democratic Rep. Brad Miller of North Carolina, where Bank of America is based, introduced a bill to make it easier for consumers to switch checking accounts. Rep. Peter Welch (D-Vt.) met last week with the Justice Department after calling for an investigation into the debit card fee.