So the other day I looked at my bank statement and thought to myself, "How did I get to this point where my bank is charging me money at an increasing rate just to hold my money?". I am seriously considering using my mattress as an alternative again... I now have fees for monthly services, fees for paying bills electronically, fees based on the monthly balance I maintained, and a much lower (returned) interest rate than I had when I opened my account. This bank account which I speak of had been opened by my father in the early 1980s at a bank named "Equitable". That bank mysteriously changed names several times since then and now is owned by one of the largest banks in the US (not me) - Since then my account had been purchased, transferred, and merged about 4-5 times by "new" banks operating under new rules, and the rules on my original account had changed several times since it was started. The original account was created in a time when 32 inch tube televisions were cutting edge, when the Internet was not even a word in a dictionary, when checks and cash were the primary way in which things got paid, and when debit cards/ATMs didn't exist for consumers like us.
The original contract (terms) I signed to/held with my originating bank (for my account) years ago was changed numerous times, and often illegally, because I never had an opportunity to agree to new/changed terms on my account when my account was acquired by other banks. my account fees increased while the interest rate paid to my account decreased over time. I didn't keep track of it and complain, totally my fault, I know... But I was busy living life.
Each time my personal bank account changed hands to a new holding company, the benefits gained for the (new) bank were increasing, while my benefits and rights for having an account decreased far from the promises of the bank I first signed to. This is the Slippery Slope I speak of, because this practice is on the rise, even in many other industries, increasing overall costs to consumers, and it's only going to get worse based on this increase as monthly payments become the norm (while no-one is putting up a resistance to these practices).
Though I wasn't even yet a teenager when my father and I set up my first bank account, I knew then by sitting down with my dad and the bank teller (way back then) that my (deposited money) would earn money (a few nickels at the time) on a monthly basis, I also knew that I had an overdraft allowance of 800$ on the account, I also knew that there were no account fees, because back then, depositing money into my account increased money to the bank that they could in turn make profit off of by lending the same money to carefully screened applicants who would (more often than not) repay their loans at a much higher interest rate than the bank paid to me, and from that the bank made profits they could live and thrive off of. All of those promises disappeared between then and now through mergers and acquisitions. You'd think that bank profits would have increased for the new banks over time, which would have sustained their business with more investement and loans to an increased number of account holders, but no, apparently they needed more profit by charging fees, and by paying less to depositors...
Fast forward to now, I now pay my bank fees to hold my money even though the same banks lend it at higher interest rates than any other point in history. There is now a scandal with how LIBOR rates are calculated, There was a massive Mortgage Market Meltdown including illegal foreclosures, and qualifying to borrow money to buy a house or car as a consumer or investor is now more complex (paperwork and requirement-wise) and expensive than ever. My, how far we've come! If you would have told me this when I was a kid starting my first account, I would have buried my money in a tree in the forrest instead of putting it in a bank.
This my friends, is the direct result of a "breach of contract", not a breach by you, but a breach practiced by big business.
This concept of breach of contract details the process in which a business (slowly) and (often illegally) modifies and changes the promissed terms that they and other companies once forged with their customers through acquiring other companies, merging with other companies, going bankrupt, and even by brute force. Companies often take total advantage of our inability and/or ignorance in reading their complex (written) agreements and disclaimers, and it's an increasing trend in almost every industry as the costs of living soars. This all ties into an increasing lack of ethics in business, as well as a lack of enforcement and attention from policy makers to the laws which hold business to ethical standards, and an overall lack of respect for consumers by large companies. The integrity of the contracts that consumers make with large companies in the US is becomming a MAJOR point that will need to be addressed in increasing Consumer Confidence and in improving our struggling domestic economy overall. It's just one example though, and seeing how an unbalanced breach of contract scale is spreading as a practice in many industries, I'll present you with a few more examples;
When you, as a customer, sign a contract for anything (from a mobile phone contract, to flower delivery, to an agreement for life insurance) a company has to assure you that your investment is sound, and that they'll provide you a quality product or service within the time specified. Because companies can be sued by individuals, they provide lengthy paperwork detailing the boundaries to your agreement and wording based specifically on what they also need to do to satisfy the agreement you both enter into.
In today's business world, this type of (sales or service) contract agreement is written by attorneys and then signed by us (as consumers) genrally within less than 5 minutes of reading, as consumers, who don't have the time or money to finance a lawyer of our own to read and properly evaluate these agreements. It usually doesn't matter anyway, because we're often buying goods that we absolutely NEED, and we OFTEN CANNOT BUY them WITHOUT SIGNING THESE CONTRACTUAL AGREEMENTS, even if we pay outright in cash. These agreements are now longer and more wordy than they've ever been, but a simple statement (an escape clause) in them basically can "invalidate" any promise a company makes of responsibility to uphold their end of any bargain or promise they make to you. If a company specifies that their terms are "subject to change at any time", you as a consumer, are a their mercy. A lot of companies also require commitment from consumers for a set period of time for services like cable television and mobile phone services. Then, of course, price increases for their services (after the end of that term for consumers) come after the end of the term (naturally), while service level agreements (quality or warranties made as initial promises to you as a consumer from the company's perspective) simply "vanish into thin air".
Let's take the mobile phone industry as an example; Many phones are sold with a 1 to 2 year minimum commitment for the wireless service they require to operate. Most of these companies will not even sell you a phone without activation to their service providers, and most of these phones are tied to a specific service provider, preventing you from using the phone on an alternate service (Completely monopolistic behavior mind you). I originally started an agreement with a mobile service provider in 2001, I have been with the company for over 10 years now, long before cell phones could display web sites and install apps. As mobile Internet technology became prevalent, I naturally jumped on board by getting a BlackBerry. This trend also expanded with iPhones and Android devices. My old cell phone plan (where I used to just pay for voice and text services and mysteriously unexplained taxes and fees) begun to become more cryptic, costly, and boundless than the great new technology found in the new phones I was buying... In other words, the costs on my bill soared just for adding Internet service. I was paying for new services on top of the older ones, the cost of using a cell phone wasn't decreasing, it was rapidly increasing over time. At least my service was unlimited though. This would be considered fair if those same costs didn't again increase every time I bought a new phone. But instead, I began to encounter price increases for services that were "included" before. Suddenly my mobile service provider instituted limits on my downloads on my UNLIMITED account, they then told me I could pay more to raise the level I was capped at for 30 extra dollars a month... The ENTIRE cost of what my first cell phone bill was monthly just for 3 GB extra of data above my current data cap of 2GB. Silly.
This sort of fare increase happened often during the course of my contract; Just last month, Tethering on my phone was arbitrarily turned off, by the same mobile service provider, on my account, for a new charge -
"Tethering" allows users to connect their mobile (Internet Connected) device to their computers to access the Internet in areas where there are no other available Internet connections present. If you don't have wi-fi, or if your home cable/fiber Internet service goes out for whatever reason (i.e. a power outage) you'd be able to connect to the Internet via your mobile phone, over a mobile network so that you could temporarily function online, a vital service that I was promissed by a company when I bought my current Android phone for the life of my 2 year contract.
This service was turned off in July 2012 "en-masse" for customers on this particullar mobile service provider's network, and a $14.99 charge was instituted while still within my 2 year agreement. How? Because their terms are "subject to change at any time" in our contract agreements - While my commitments to them (i.e. payments, functionality, and cancellations) are not, I'm getting the raw end of the deal...
This type of thing represents a clear breach of contract by a large company, by brute-force, allowing a company to demand an increased cost for service which was provided as part of the original contract they made with their customers. When you buy the device, ask your salesperson what costs will increase and they'll promise you that prices are fixed, just to make the sale. It happens, every time. How can they get away with this? Because a company can simply claim plausible deniability for the promises of their employees and reps? Perhaps because Government believes that companies don't need to be regulated for Consumer Protection? Or perhaps that government sees big companies as individuals with enough money and tax/campaign contributions to skirt the law?...
Another example of breach of contract can be found with many online sites and services like Social Networking Sites. I know what you'll say, for example, "They're a free service, so you have no rights" or simply "You can never trust the Internet anyway" but in order for sites to gain the large networks of users that invest time in setting up profiles and posting information that makes thes same sites popular, they make promisses about security, safety, reliability, and more to establish their trustworthiness so that they can thrive. The alarming trend in signing up to any Internet site these days is that people now pretty much EXPECT their privacy on any site to be trampled upon by default. Why should I ever then trust any business that presents itself as reliable? How do I determine what companies I can trust when they "rate" themselves? Should we eliminate the process of signing any agreements at all, just throwing ourselves at the mercy of "fate" with business agreements? Companies wouldn't eliminate contracts, because they still want and need to bind you to agreements, so they need to be held accountable as well - These are the things that big business should consider in simplifying our current business landscape, and what Government Agencies, that are responsible for Consumer Protection, should take a hard look at when making policy.
Ethics and Accountability in business 100 B.C.-2012 - R.I.P. ? -
Should the concept of "businesses succeeding based on a firm foundation in reliability and trust" die in 2012? Is the way of the future "every company for themselves"? Should we (as consumers) become increasingly wary of who's going to bind us into an agreement and "milk us like a cow" for our commitment and money? No wonder why our domestic economy is in shambles; customer service has declined, we don't get 5 minutes of respect from a bank for a loan or our accounts unless we currently have lots of money around, and give it away freely... These days people can go from rich to broke faster than a Lamborghini Aventador can get to 100MPH, partially because we, as consumers, are surrendering our rights and because legislators and courts are continually turning a blind eye to corporate accountability. Actually, just last year, there were limits placed on our ability to file class-action law suits against large companies:
http://www.economist.com/blogs/schumpet ... n-lawsuits
In a major way, this prevents us from ensuring that companies honor their sales and service representations to us. Most of these class action lawsuits generally net big payouts that are often gouged by legal fees, but they used to be valuable to us in ensuring that companies kept honest in order to prevent financial losses if not for ethical obligation in the first instance.
Our costs of living are rapidly rising, while contract agreements that we make with companies (including banks) are eroding to the point where those same contracts only protect and increase profits for big business, while doing nothing good for us as consumers. The more we (as consumers and legislators) allow companies to get away with arbitrarily changing their terms of service, and by allowing them to forge lenghty contracts full of escape clauses in their favor, we skate on a slippery slope, full of traps that will undermine our future and power of choice as consumers. We're fostering and enabling collusion between companies to fix pricing and to reinforce monopolies by being passive.
We're also allowing ourselves to be fleeced by retailers after they promise us "fixed rates" and "no charge" for services and products that they then simply add as new account charges once we commit to open ended commitments in favor of their profit. By signing to open ended but fixed-term contracts, we're also killing competition, signing our rights away to choose a competitor's better priced goods and services for the length of our commitment. This behavior by the companies that serve and rely on us is contrary to our individual success, we need to start holding companies accountable to the first contracts and agreements that we sign, as well as to their promises and claims. Secondly, we need to expect Legislators and Courts to hold companies accountable to ethical pricing, commitments, and representations, despite whatever escape clause that they may "fall back upon" in attempts at breaching, hiding clauses in, and "post-signature alteration" of contracts with us that they create.
This editorial is written as an affirmation of bringing business back to it's roots in terms of "delivering on promises, practicing ethical behavior, and providing a valuable and useful product or service as promised, all for a fair price". Can anyone as a consumer (honestly) say (outside of people holding an interest in these large-scale business enterprises) that big businesses are adhering to that principle at this particular point in time in our history?
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