Bye Bye, Citizens Bank

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.