Good Customer Confusion

Financial Institutions keep changing the metrics.

by Deedra Abboud in Consumer Advocacy

Financial institutions are resorting to every available legal strategy to protect themselves from customers, er, I mean financial scammers.

It would seem sensible and secure to make electronic payments straight from your bank to the credit card company’s bank.

According to Synchrony bank, not so much.

Paying off your store account, say twice a year, has become a reason for “fraud” concerns due to “unusual activity.”

Er… excuse me?

Yep, that’s what the representative at Synchrony Bank told me today.

After listing the reasons a credit card with a zero balance for the last seven days might still be on hold for future purchases… late payments, multiple payments per month, and bounced checks… none of which applied to me, she then went on to “explain” that by paying several hundred dollars a month (several times over the minimum) and then “suddenly” paying a couple of thousand to pay off the account every six months, raises a “red flag” and causes the bank to decline new purchases for seven days… to ensure the payment “clears,” despite the payment being an electronic payment from bank to bank.

[Note that paying an account multiple times per month, an accepted financial strategy for paying off credit cards faster, also causes a red flag on an account, according to the Synchrony rep. Color me confused.]

I asked if there is a better way for me to pay since electronic funds from bank to bank aren’t considered “secure” anymore.

The answer was “no.”

Sending a personal check, she said, “under the same circumstances” would result in a 21-day hold, and there is no more secure way to pay than electronic funds from bank to bank, “which is why we only place a seven-day hold on the account.”

“Only…”

I told her she made it sound like always paying on time, more than the minimum, and God forbid, paying off my account every six months was a bad thing.

She explained that whether the bank allows consumers to make charges is entirely at the bank’s discretion and internal policies. She kept reiterating that my seven-day “hold” would end at midnight, and tomorrow, I would be able to use the card.

She failed to understand how Synchrony’s metrics caused me to be confused about how to be a “good customer” if paying on time, more than the minimum, and regularly paying off the account disrupts my purchasing “privileges.”

And all of this is perfectly legal so long as the bank does not impose any interest or other fees during the hold.

Since credit card companies could previously receive payments AND charge interest and fees during the “hold” time, consumers can apparently thank the Truth in Lending Act and the Credit Card Accountability Responsibility and Disclosure Act of 2009 for this limited and logical “protection.”

The Federal Reserve is currently developing a real-time payment system that will allow for instant payments to be made across the country. This is planned to be operational sometime during 2023.

In addition, Clearing House’s Real-Time Payments system (RTP), which is owned by a consortium of large banks, claims to provide instant payments already.

RTP, in contrast to ACH, only accepts credit or “push” payments. RTP cannot “draw” or debit another bank account. Since it enables instant funds transfer, all payments are final when completed and cannot be reversed.

Theoretically, the fact that payments cannot be reversed means that financial institutions like Synchrony should treat them as “secure.”

However, the bank from which I made the payment is an owner and member of that private RTP system, so….

I can choose to close the account (bad for my FICO score), choose not to use the card (and forfeit the rewards I receive for using the specific card for purchases I will make at the specific store anyway), or simply accept banks will always have the upper hand in our economic system.

So, of course, I will choose the latter… while filing complaints along the way.