Electronic statements are good for the environment. They save big money for banks. But do they benefit consumers?
A new report from the National Consumer Law Center argues that for many Americans — particularly the poor and the elderly — the answer to that question is no.
The Boston-based consumer group finds fault with banks that steer consumers to go paperless, often by charging fees for old-fashioned statements. And it is asking the Consumer Financial Protection Bureau to establish new standards regarding the delivery of monthly statements for bank accounts, credit cards and mortgages.
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Outdated and inefficient processes come at the cost of face time with customers and weigh banks down with unnecessary expenses. Here are some of the most common problems faced by the industry and ideas about how to fix them.
October 1 -
The 28-year-old Young Americans Bank was founded to teach kids to save, but now the bank is focused on showing its customers how to spend wisely. CEO Richard Martinez says tots still prefer paper statements, while tweens are getting their allowance via bill pay.
June 4 -
New regulations and the end of the refi boom are forcing banks to seek new sources of noninterest income. Some are taking a hard look at offering services they can charge for.
November 7
"We have concerns that aggressively pushing electronic statements can cause consumer harm," said Chi Chi Wu, an attorney at NCLC and a co-author of the report.
The consumer advocates' complaints got a chilly reception Wednesday from banking trade groups. Viveca Ware, an executive vice president at the Independent Community Bankers of America, bristled at the suggestion that banks are coercing customers to accept electronic statements.
"It's not to the financial institution's advantage to try to prescribe a default electronic option," she said. "If the customer's not happy with the statement delivery method, and they leave the bank, it's the bank that loses."
Nessa Feddis, a senior vice president at the American Bankers Association, said that electronic statements keep costs lower for all customers.
"Some institutions have introduced incentives to encourage customers to use electronic statements, but the overwhelming majority of banks continue to offer paper statements at no charge," she said in an email.
Under a federal law passed in 2000, financial institutions are allowed to send electronic statements, but only if customers choose that option. When customers go paperless, banks reduce their printing and postage costs, which in aggregate can be substantial.
In recent years, some depository institutions have begun charging a fee for paper statements — often around $2 per month. Banks that currently charge those fees — at least for certain accounts — include KeyCorp, BBVA Compass, BB&T and Regions Financial.
Banks are having some success in steering their customers toward electronic statements. In 2014, more than 25% of all credit-card account holders opted out of paper statements, according to a recent CFPB report.
In the same report, the consumer bureau found that fewer than half of the credit-card customers who opted out of paper statements accessed at least one statement online during the fourth quarter. The agency expressed concern about the implications of that finding.
"Consumers would therefore be less likely to identify any erroneous or fraudulent transactions," the CFPB stated in the December 2015 report. "They would also not encounter standard statement disclosures, such as the minimum payment warning."
The CFPB said that it will continue to monitor the situation. But now the NCLC is pressuring the consumer bureau to take action.
In its new report, the consumer advocacy group calls on the CFPB to bar financial institutions from charging fees for paper statements. The report also asks the bureau to prohibit banks from making electronic statements the default choice for consumers, and to bar banks from making the paperless option a condition of signing up for the product.
The NCLC slammed some financial institutions for becoming more aggressive in how they seek customers' permission for electronic statements.
As one example of what NCLC described as deceptive efforts by banks, the report cited an online pop-up message that was shown by JPMorgan Chase to its credit-card customers.
The message stated "Action Required" in large letters, and it included an button to "Accept" electronic delivery of statements, as well as an option to "Manage Preferences," but no button to decline paperless statements.
A JPMorgan Chase spokesman responded in an email: "We always aim to be clear and straightforward in all of our communications with our customers."
The NCLC argues that even for digitally savvy consumers, paper statements may offer important advantages over electronic files. Paper can serve as a record-keeping tool and a reminder to pay a bill, the report states.
The consumer group's report also cites research that found 33% of U.S. households do not have access to broadband Internet at home. Those numbers are higher among low-income households and senior citizens.
Some of those consumers can still get online via their mobile phones, but the report's authors argue that mobile access is insufficient.
"The ability to see a few recent transactions at a time on a mobile device is not the same thing as being able to sit down and carefully review an entire statement," the report states.
