Say it ain't so, SunState CU
Posted by Trey Reeme on June 12th, 2007
From Consumerist (if you’re a nerd like me, you know just how widely read that site is) in a post called Credit Union Charges $2 Fee For Not Having Your Deposit Slip Ready At The Drive Thru.
(Yes, you read that correctly.)
So, this is weird. A credit union in Florida charges a $2 fee if your arm isn’t hanging out of your window with your deposit slip in hand as you pull up to the drive-thru window. And that’s not the only fee that SunState Credit Union charges. They’ve got a $2 fee for coming in more than 4 times a month, and another charge for not using the telephone banking system.
Look, I understand fee income – but a no-arm-hanging-out-fee?! Do they think this policy is really helping business?
I guess so, as here’s a quote from the CU president:
As consumers are expecting to pay less in interest charged on loans, banks and credit unions need to find other sources of income…. I think that if you look at our competition, you’d see that the fees we’re charging are fair based on what’s going on in the market right now.
Were I a member, I’d leave; were I not a member, I’d never join. And I’d be sure to tell all my friends how ridiculous that one fee in particular is. Scratch that, local media and blogs like Consumerist already are taking care of that. (Note: The local news article does point out that the three fees in question were recently removed by the credit union.)
Brent and I just so happen to be speaking on social media at the Florida CU League Annual Convention this week. Now our presentation has a new example to go along with VyStar. Thanks, Denise, for emailing this already en route to the same conference.
I “get” that credit unions can’t make much money on margin these days. But it seems like they are sitting in a conference room viewing the member as the enemy and trying to figure out how to hurt them.
A logical move would be to increase NSF fees. If you have a member that shops around for the lowest fee to bounce a check…well…...probably don’t want them.
Why doesn’t this credit union elminate deposit slips entirely?? My credit union has. The drive-up window is a breeze. Instead they penalize the member for not following THEIR rules.
I bet they don’t give doggie biscuits either…..
I hate fees, but love Weezer.
Wow. It would have been interesting to sit in on the meeting where this idea came up.
@Michael – I bet it went something like:
CEO: I had to wait on a car to move so I could get in the parking lot today. The drive-thru line was too long and my space was blocked. That’s unacceptable.
COO: Good point, sir. We need fewer members to use the drive-thru. Maybe a fee would help cut the traffic jam out there.
CFO: I love the sound of new fees. Only our most efficient members should be in line in the drive thru. I propose that we force the least efficient members to pay a fee if we notice that their window is not down with deposit slip in hand.
CEO: What about a fee if a driver chats on their cell phone during the transaction?
COO: Good thinking, sir. Or how about a fee if they turn their car off in line and have to restart the engine?
You guys are being way too hard on SunState. Did you check out their Web site? You can get free e-statements!
Oh. My. Goodness. Ron, you got me digging around their website.
I downloaded their current fee schedule, and there’s no mention of the “arm out the window” fee. Glad to see that’s cleared up.
If after joining the CU, however, you find that you don’t like it, you can always close your account. But you’re going to pay a $20.00 Account Closing fee if you leave within 90 days of opening it.
Instead, you could just let your account sit dormant trying to avoid that charge. But you’ll eventually get hit with a $30.00 per quarter dormant account fee.
I wish I were joking about this, but I’m not.
Are they crazy, doesn’t this destroy the image of credit unions.
I am just amazed by this.
This is all it takes to undo decades of hard work by the credit union leagues and all the good folks who serve their members well.
This is the type of stuff that is fodder for local news “funny guys” or morning DJs. What about a “Hamburger Fee” for those who eat in the car? What about a “Greeting Fee” for the time it takes the teller to respond to your “Hi, how are you doing today?”
About 7 years ago a bank had a series of commercials about fees. It was great. The one that stuck out was as the teller was calculating up the fees for saying hello, a 12-word explanation fee and so on… This is where the customer says “WHAT?!?”
The teller responds “Ooooh an outburst fee – those are pretty steep!”
It’s sad to hear that some credit unions are moving backwards into “Bank” territory.
I remember the Danish banks implementing a number of service charges that were never in place before. The cartoon in the paper showed a bank employee giving the customer the time from her watch and then saying that the debit to the customer’s account would be 2 kroner for the service. They never did charge for giving the time but the joke never went away. There is always the ‘cost of doing business’ and in that are all the unordinary expenses that may not be normal but you have to live with them. People will put up with a lot of stuff but if they see what you are doing as a money grab you had better duck because they will come out swinging. Whoever comes up with these ideas should have their own mothers try them out. They will get the honest answer very quickly.
In addition to the steep Dormant Account Fee, a $1.75 fee for non-CU ATM cash withdrawals (plus surcharges), and several ATM card servicing fees.
In addition to some surprisingly high fees, SunState’s pays NO dividends at all on Share Account balances less than $500 (in each individual share account). Share dividend rates on higher amounts are lousy. High service charges and low savings rates are not an attractive inducement for someone to join a credit union.
OK, at the risk of being scorned, I’m going to go out on a limb and offer a devil’s advocate point of view – for the sake of healthy debate. While from a member perspective this is certainly oppressive, from a brand standpoint I can see some merit in it…in a funny way. Think of it kind of like those restaurants we all know, where the service is rude or at least super slow. There are several restaurants that hang their hat on that shtick – intentionally bad service. And while it’s not good customer service, for some reason lots of people like it. It’s like S&M for customers.
So what if this credit union built its whole brand around ruthless measures of maintaining efficiency? In addition to this $2 fee, they could have lots of other egregious (but noteworthy!) policies to prove their story of ruthless efficiency: transaction time limits with loud buzzers, pie-in-the-face with every overdraft, etc. Just like any good brand, it certainly wouldn’t be for everyone, but it might be JUST RIGHT for some.
In any case, it’s food for thought (I like to stir things up, anyway) from a brand perspective. I like what a distinct approach this could be. In a way, it’s almost like the WTF Credit Union we analyzed last week. If they had taken the WTF thing and ran with it, it could have been awesome. I see these SunState people as having a similar opportunity. Remember, the key to a powerful brand is to TRULY stand for something…
Jeff Creative Brand Communications
@Jesse – Spent a lot of time looking at the data over on Swivel – great resource you’ve set up there. By the way what is up with this
I sure hope something was miskeyed on NCUA’s end or Evangelical Christian CU is charging $1700 per member in fees.
@Tony: Couldn’t agree more: stories like this about one lone CU change perceptions about the whole industry.
@Gene: “Whoever comes up with these ideas should have their own mothers try them out. They will get the honest answer very quickly.” Haha!
@Ron B: Good point about the paltry rate – and I get into this below even more:
@Jeff: If they did that, I believe they’d have to offer rates that made the arm-hanging-out-fee and the others well worth it. I’m talking 10% on a MMA or Share Savings. (That’s not happening.)
Doesn’t ING Direct do this? “You can’t call us! That’s part of the arrangement. But here’s that kickin’ rate we told you about.”
Like you hinted at, they might be able to take a grumpy approach. One such restaurant chain is called Dick’s Last Resort. But they offer (what I hear is) great food and a sassy atmosphere – with the grumpiness being part of the charm.
But I believe that for an FI to succeed with that attitude they’d have had to start out that way. Otherwise the members who’d been there since the beginning wouldn’t take it.
I just don’t see that approach working for SunState. Good comment as I enjoy looking at this from a different perspective – I just don’t see many CUs who could pull that off.
Jeff,
I’ve always said, brand must ooze from every pore of your organization. I like the “Dick’s Credit Union” idea. Abuse me, charge me, make me beg. There’s definitely a target audience for that.
Imagine what the employee dress code could be?
I love the spin involved with “Dick’s Credit Union.” I’m not going to touch your dress code question, though, Denise.
In Sunstate’s defense, their members seem to do a lot of business with them. In several articles on the CU Journal Web site, the CU was in the top 20 in Callahan’s Return to the Members rating for members’ use of services.
The problem with making this part of your brand is when people don’t “get” that it’s part of your brand. I first heard about this as I was researching BoA’s “A little knowledge is a powerful thing” campaign designed to help their members avoid paying some $22 billion in fees annually. Ed Mierzwinski, Consumer Program Director for U.S. Public Interest Research Group (U.S. PIRG) was quoted in the source material I was reviewing, so I checked out his blog and found the story at http://www.uspirg.org/html/consumer/archives/2007/06/more_on_stupid.html
I was so dismayed that it was about a CU that I almost didn’t include Ed’s quote in my newsletter article for fear that someone might find his blog post … but clearly the cat was already out of the bag.
I gotta agree with Tony M. that it’s these kinds of things that harm all the good work we all do … it’s distressing.
Per Sunstate FCU’s NCUA FPR Ratio Analysis:
Net worth to total assets: 12.05% (peer average 11.53%)
Return on Average Assets 1.56% (Peer Average 0.70%)
Gross Income/Average Assets 8.63% (Peer Average 7.18%)
Fee & Other Op. Income/Avg Assets 2.34% (Peer Average 1.41%)
Sunstate’s business model is quite profitable; it would not be attractive to me.
Remember my recent critique of “Latteland Credit Union” and its coin counting machines? Well, here’s how “Latteland” compares to SunState:
Net Worth to total assets: 9.69% (Peer average 11.53%)
Return on Average Assets 0.36% (Peer Average 0.70%)
Gross Income/Average Assets 7.42% (Peer Average 7.18%)
Fee & Other Op. Income/Avg. Assets 1.39% (Peer Average 1.41%)
“Latteland Credit Union” might be charging members for coin counting, but they offer ALL of their members with checking accounts FREE check printing, free domestic wire transfers, and no CU ATM usage fees. Oh, and NO “excess visits to the teller” transaction fee!
Is SunState for all intents and purposes operating as a bank?
How Timely…
A credit union in our town just lost 5 accounts totalling 15 services (yes, an average of 3 services per account) because an MSR told a member “It’s the program that does it, there is nothing I can do about it.”
Here is the background – one of our team members (Michelle) has been a member of the same credit union for almost 16 years. She joined because her mother was a member. Her brother is a member. I am a member. Her fiance, who just moved to the area uses the CU as his branch though he is a member of a nevada credit union – he was likely going to transfer his accounts.
Today she had her overdraft protection triggered for which she charged a fee. The reason was that she made a purchase of a gift using her Visa checkcard. The vendor put a hold on the funds, the credit union processed the transaction but did not release the held funds for 48 hours. This caused the overdraft. The MSR told her that the funds would not be released until the next day – a huge inconvenience.
The MSR handled this incorrectly. Even if the CU were in the right, and this were part of policy and all the cards were in favor of the credit union – the lack of compassion, comprimise or just plain service had her tell the MSR that she would be closing her account. Our friend and team member called her mother to tell the story. Her mother said “You know, their service has just been going down hill for years. I’m done. I am closing my accounts too.” and like that the CU lost 2 mortgages, 2 auto loans, 3 savings accounts 2 checking accounts and a retirement account.
This is where it gets worse for the credit union.
We are family here. When she decided to close her account – I decided to close my account. The credit union has been nothing more than a money depository for me for years. The tellers are indifferent and the atmosphere is bleak. I guess this was just the motivation I needed to move. Goodbye to my auto loan and savings account. By the way, her brother and fiance are on their way out as well.
The sad thing – we were a SEG for them – and, they were a client of ours. As their service declined, their income declined. Then to save money – they turned to their internal staff to maintain their marketing, and with no bias, with horrible results.
To those out there reading this: Your brand is EVERYTHING. If your tellers, loan officers, MSRs even the maintenance staff are not living the brand that you have laid out then you will fail. All it take is one small $25 fee and a lack of followthrough by your team members – to lose years of membership income. You will lose credibility in your market because now this is a story about customer service that will be passed on in conversations for YEARS! You lose all referral memberships. Everything.
Just to squeeze out $25
Michelle said she was even thinking about opening an account at WaMu instead. Bad credit union. No soup for you.
@ Tony M: Oh, so painfully true!
Egads Tony, what a horrendous story but one that is universally becoming less of an exception for our industry.
I believe problems like this are 50% lack of brand identity and 50% lack of good old fashioned CU philosophy. When a CU acts like a bank (brand) and trains their front-line staff to be unthinking automatons (lack of philosophy) there is no room left for quality member service.
If Jane Q. and John Q. Member don’t care about being an owner, or care that they get to vote, or think that a CU is just another type of bank, service is all that’s left. If the line between CUs and banks like WaMu and Wells Fargo continue to blur, we my find ourselves in too deep to pull the whole movement out of the quicksand.
Trey, you bring up a great point in response to my other comment: authenticity. The “Dick’s Credit Union” thing may work, but if it’s not authentically who they are (and more importantly, who they always have been), there will be a major disconnect. You’d really have to do that 100% from day 1 to make it work, or else it would be a jarring and frustrating change of tone for members.
Jeff Stephens, Creative Brand Communications
So were people from SunState at the conference you guys were just at?
SunState was there, but not in our sessions. I’m sure they heard about the discussion we had about the coverage this has received.