Banks should cut fees, not pay for market research

Carole Krezman wasn’t sure what to make of a recent mailing from San Diego’s California Bank & Trust inviting her to participate in “a very important program.”

The letter said the bank wanted Krezman, 58, to visit her local branch at least once a month for the next year. She’d have to fill out a questionnaire each time detailing her experience. Each questionnaire would result in a $5 payment.

“Please do not contact the personnel at your branch office about this process,” the letter instructed. It said bank workers knew that a “mystery shopper” program was under way, but they shouldn’t know who was participating.

An accompanying form requested Krezman’s name, address, phone number, email address and favorite bank branches.

“My impression was that it was likely a scam,” she told me. “We frequently get things in the mail that look genuine but aren’t.”

Long story short: The program’s legit. California Bank & Trust really is enlisting the aid of customers in evaluating the performance of employees at its various branches statewide.

Steven Borg, corporate marketing director for the bank, said Krezman was correct to question the validity of the mailer.

“In this day and age,” he said, “you have to make sure that solicitations are real.”

But the bank’s mystery shopper program raises a few questions. Not least: What’s the point?

These sorts of things probably have some value when it comes to restaurants, hotels and other service-heavy businesses. But do bank customers really care that much whether a teller was friendly or the branch was spotless?

I don’t know how much money California Bank & Trust spent hiring an Omaha company called Customer Service Profiles to conduct this research. But I do know what bank customers really care about.

They care about interest rates and fees. They care about loan processes that are fair and transparent. They care about being able to reach someone by phone who’s actually capable of solving a problem.

In other words, they care primarily about the sorts of things you won’t learn by paying someone $5 to visit a branch and make a withdrawal or deposit.

As for California Bank & Trust, I can say with confidence that customers probably aren’t thrilled about the fact that almost every checking account comes with either a “monthly maintenance fee” or a minimum balance requirement. The exception is a basic account only for people 55 and older.

Then there’s the $5 “excessive transaction fee” for savings accounts if you make more than six transactions a month. And the $2 monthly charge if you want images of canceled checks (forget about receiving the real thing). And the $5 monthly charge to pay your bills online.

To be sure, most banks have similar fees — although this is the first time I’ve seen a charge for online bill payments. Bank of America introduced its own $3 charge in January for customers to receive images of canceled checks with monthly statements.

The point is that you don’t have to conduct reams of market research to discover what makes bank customers happy. Sure, it’s nice when tellers are pleasant and know their jobs. But what customers want first and foremost is a bank that’s not always nickel-and-diming you.

“We’re focused on that as well,” said Borg. “We want to remain competitive in terms of pricing.”

One quick thought: Instead of spending money making sure customers enjoy the quality of service at branches, use it instead to lower fees. Why be merely competitive in pricing when you can be a leader?

Jolted by fees

I write from time to time about what I call “pay to pay” — companies that charge you money so you can give them money.

The latest example of this practice is offered by Annette Halpern, 54, who insures her Ventura home against earthquake damage with Pacific Select Property Insurance Co., a subsidiary of GeoVera Holdings in Fairfield, Calif.

Like many other people, Halpern chooses to break her annual quake insurance premium into three payments to ease the financial burden, which for her is nearly $1,360 a year. Her first bill comes at no cost. The second and third bills, however, cost her $4 each.

That’s right: A $4 bill just to receive a bill. Halpern could forgo the extra bills and try to remember on her own when payments are due. But if she wants reminders from the company, that’ll cost her.

“That’s $8 a year for the service of receiving a bill,” Halpern observed. “Multiply this over the life of the policy and they will earn themselves a nice chunk of change simply for doing normal customer service.”

No one at GeoVera returned my calls for comment. But a service rep termed the charges for subsequent bills a “service fee” and said about half of GeoVera customers opt for the installment plan when it comes to quake insurance.

The rep said the pay-to-pay fees can be avoided if you set up automatic payments each month from your checking account or credit card.

That’s not good enough. Consumers should be free to pay their bills however they please. As long as they’re on time and submitting the required amount, there should be no additional charge.

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to david.lazarus@latimes.com.