Bank of America fee retraction shows effect of consumer rage
— -- Consumer rage in an electronic age has corporate titans doing something few have so willingly done before: back-pedaling.
When Bank of America announced Tuesday that it was nixing its widely panned plan to charge consumers a monthly $5 debit card fee, it joined a handful of other familiar banks that also had back-pedaled. The unusual moves follow a recent, customer-instigated about-face by Netflix, which scrapped plans to split into two businesses and ultimately charge customers more.
"Every company is now sitting on electronic quicksand," says Howard Rubenstein, the famed New York PR guru. "It may look like solid ground, but one wrong move and you're up to your chin."
Some see it as the Occupy Wall Street of the no-longer-silent majority. Most corporations only become aware of the wallop of this emerging consumer power when they make a serious mistake and fall victim to it. This new, power-to-the-grumbler movement is only going to grow.
There's a considerable price to be paid in damaged reputation — and lost business — to companies that don't pay heed. Some $58 billion in transactions may be at risk from Americans who had a problem with a product or service purchased within the last year, estimates a study due out today from the W.P. Carey School of Business at Arizona State University.
"Most companies don't handle problems well," says Mary Jo Bitner, the business professor who oversaw the study. "And that only gets people more enraged." Behind the banter:
•Social media explosion. "For the first time ever, the volume of response is now visible because of social media," says branding consultant Martin Lindstrom.
For example, Consumer's Union reached out to 780,000 people on its opt-in list following the original BofA debit card fee announcement, and some 40,000 of them asked for a congressional investigation into the fees, says Norma Garcia, manager of the watchdog group's financial services program. "The bigger message is: consumers matter," she says.
•Frustrated consumers. The sheer number of people experiencing serious problems with companies, products or services keeps growing, says Bitner. The figure, which should be declining, she says, instead ballooned this year to 45% of consumers from 32% in 1976.
•A chance to matter. Many consumers are anxious about their jobs; angry about their salaries and increased workloads; upset about climbing health care costs and worried about their mortgages, notes Bitner. She says there's still one thing under their control: the chance to speak out.
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