Bye Bye, Citizens Bank

By | November 8, 2010

Last July, when we were preparing for our trip to Israel, I called Citizens Bank and asked this simple question: “What is the least expensive way for me to get Israeli sheqels out of my Citizens Bank checking account?”

In response, the customer service representative told me the following:

  • The fee for withdrawing currency from an ATM in Israel is 2%.
  • The fee for exchanging currency at a bank branch is waived because I am a “Citizens Gold” customer, so this is cheaper than using an ATM in Israel.

Unfortunately all of this is incorrect:

  • The fee for withdrawing currency from an ATM in Israel is actually 3%, not 2%.
  • While the “exchange fee” is indeed waived for Citizens Gold customers, the bank charges a hidden fee by marking up the exchange rate by around 10%, so in fact exchanging currency at a bank branch costs 7% more, and is thus 233% more expensive, than using an ATM.

Relying on the misinformation, we exchanged $3,200 worth of sheqels. In addition, based on the misinformation that the ATM fee was 2%, we made thousands of dollars in ATM withdrawals for purchases in Israel which would have been cheaper if we had used our credit card (3% fee – 1% cash back = 2% net cost). In total, the wrong information provided to us by Citizens Bank’s customer service department cost us a little over $300 in unnecessary fees.

Aside from the telephone customer service representative, I dealt with several tellers at the branch where I did the exchanges. I mentioned to them that I was exchanging a lot of cash in Boston because I was told that it was the cheapest way to get sheqels from dollars. None of them felt it appropriate to point out that using an ATM in Israel would be cheaper.

When I discovered that I had been ripped off on the exchanges done in Boston, I sent a letter to the branch manager demanding a refund of the excess fees. He never responded.

When I later discovered that I had been misinformed about the ATM fee as well, I sent a second letter, this one to Stephen Woods, the Massachusetts President of Citizens Bank, demanding a refund of all the unnecessary fees. I also informed him that the bank’s failure to correctly disclose fees constituted unfair and deceptive trade practices under M.G.L. Chapter 93a, and that my letter to him constituted a 30-day demand letter, after which, if my complaints were not addressed, I would file suit against Citizens Bank not only for the unnecessary fees, but for triple damages as permitted under Chapter 93a.

Let me take a brief intermission in the story to remind readers of the cardinal rule of good customer service:

Mistakes happen. It’s how you deal with them that distinguishes you from everybody else.

Citizens Bank was already treading on thin ice because of the branch manager’s failure to respond to my first letter. Nevertheless, a frank admission of error and prompt refund of the disputed fees at this point could still have wiped the slate clean and left me feeling like the errors really were unintentional and the bank felt remorse.

I’m sure it will not surprise you to hear that this is not what I got.

About six weeks after I sent my letter, I received a response from an “Executive Services Senior Advocate” at Citizens Bank. She said that the bank hadn’t done anything wrong. She said that it was impossible for a customer service representative to tell me the cheapest way to get sheqels out of my bank account. And she said that since I was apparently upset about having been charged fees at all for currency withdrawals in Israel, she had “as a courtesy” refunded all of the ATM fees (which was about half of the refund amount I had asked for).

I sent Ms. Advocate a second letter in which I explained that (a) she had apparently conflated my two complaints and misunderstood both of them, since I was not upset about the ATM fees per se, but rather about the fact that I was charged more than I was told I would be; (b) it is ridiculous to claim that a Citizens Bank customer service representative is incapable of telling me that 3% is cheaper than 10%; and (c) if Citizens Bank didn’t refund the rest of the fees, I would sue, and there was little doubt that I would be awarded triple damages.

Ms. Advocate then sent me a second letter, in which she acknowledged that I had been misinformed about the ATM fee (wonder of wonders! an admission of error!) and then reiterated in more detail her fantastic explanation of why the customer service representative did nothing wrong when she claimed that exchanges in Boston would be cheaper than ATM withdrawals:

“As I mentioned in my previous response, our employees would not have knowledge of what method of conversion of a particular foreign country’s currency would be least expensive for our customers since there are numerous currencies and exchange rates of these currencies that may vary daily and other financial institutions may or may not have additional fees that you would be subject to. It is the customer’s responsibility to conduct transactions that they feel are in their best interest. Our employees do not function as financial advisors nor in a fiduciary capacity and thus are not responsible for ensuring that your voluntary transactions are the most financially advantageous.

“At Citizens Bank, our rates typically cover the costs associated with handling foreign exchange transactions on behalf of our customers while maintaining a competitive market pricing structure. We periodically survey the foreign exchange market in our foot print and find that our exchange rate are indeed competitive with other institutions and exchange houses for like transactions.”

In other words, “We mark up the exchange rate as much as we can get away with, and we think it’s perfectly reasonable for our telephone customer service representatives to fail to disclose this when explicitly asked to compare the cost of in-person exchanges vs. ATM withdrawals. Oh, and by the way, our lawyers wrote these two paragraphs.”

Ms. Advocate is obviously correct that there are other factors to consider, e.g., fluctuating exchange rates and ATM fees charged by local banks in foreign countries. However, the fact that these other factors exist by no means eliminates the obligation for Citizens Bank to accurately disclose the ones under its control. To suggest otherwise is patently absurd.

Ms. Advocate then informed me that the bank had refunded (again “as a courtesy”) the rest of the money I had demanded, but that, “The credits that have been applied to your account should not be construed as an admission of any wrongdoing or error on the part of Citizens Bank.”

In other words, “What we did is sleazy, but we don’t want to admit it, and we also don’t want it to end up in court where a judge might order us to disclose to customers that we mark up the exchange rate, so we’re going to pay you off.”

If we wished to give them the benefit of the doubt, we might hypothesize that if the bank were to admit an obligation to disclose their exchange rate mark-up, it would open then up to a class-action lawsuit on behalf of everyone who has ever done a currency exchange there. The only problem with this hypothesis is that I did not complain of a failure to disclose to anyone who walks in the door, but rather of failing to disclose to someone who specifically requested disclosure, which they are surely obligated to do.

If I thought the Massachusetts Attorney General’s office might actually do something about stuff like this, I’d file a complaint with them. As it is, because this is the last (and worst) in a series of bad experiences with Citizens Bank, we have decided to move our accounts to another bank as soon as possible.

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5 thoughts on “Bye Bye, Citizens Bank

  1. JREmily

    Stay away from Financing/Refinancing with Citizens Bank Nighmare/Fiasco
    My husband and I are middle aged citizens and we’re trying to refinance our home with my husband working full time and me as a part tine worker were offered by Citizens bank a refinancing option to our current home. Since we maintained accounts with Citizens bank, we trusted their offer and began

    the loan processing in July, 2012. I’ve to let the world know that, It was nothing but a nightmare process and now after six months, still they didn’t close the loan and we lost the deposit $450.00. Citizens bank’s loan dept literally taken us for a ride.

    We’ve submitted all the long list of documents within two weeks of the initial processing. Then started following up…2,4,6,8,12 weeks passed by…After 4 months they started asking the same documents we’ve submitted earlier…We’re helpless and the worst part about this was, there was no

    explanation from the Citizens bank side, why it took so long for responding and queries and what they were doing with our files…For them, the customer satisfaction has no value in it.

    We did not understand how such a huge mistake could have happened. Almost six months later they started requesting the same documents and other list of verification again…we kept on requesting them really humbly to stop this processing fiasco and refund our hard earned $450.00. The Citizens bank simply replied NO…We lost our deposit money as well as 4+ months of reduced monthly mortgage payment. The Citizens bank dragged us to this nightmare went with no remorse or apology. It’s hard to imagine such bank can do to the long standing customers.

    If you are considering Refinancing/Financing loan with Citizen Mortgage, our humble request to run away from them and don’t ended up a prey like us. Please stay away from them for loan purposes.

    1. jik Post author

      Just be clear, is this the “Citizens Bank” you’re talking about? I’m asking because there are actually multiple banks throughout the country named Citizens Bank, and I want to make sure the one you’re complaining about is the same as the one I am complaining about. 🙂

  2. Victor

    I had the same experience but I lucked out by using an ATM card issued by Chase with 3% charge plus ATM fee.

    Interested to find out the end result from the Small Claim Court! If you don’t mind to reveal it.


    1. jik Post author

      I’m not sure what you mean about small claims court. I didn’t end up suing them, since they refunded all the fees as I had demanded.

  3. Nikki Best

    Hello Jonathan,

    I have been contemplating exchanging my USD at a Citizens Bank branch in Pawtucket. I travel very often and I began to assume that exchanging my money at a branch instead of using my card would be much cheaper. I would like to thank you for posting this blog. It has been very helpful and I am more cautious with my banking transactions.



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