CONSUMER ALERT Randomly Generated Fees

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Paul N

Paul N

SPFG, Supreme Picture Framing God
Joined
Jun 10, 2005
Posts
17,354
Loc
CT, not far from the LI Sound
You'd better look more closely at your American Express statement and the corresponding deposits in your bank account. They sure didn't match at all the last few days.....

I discovered 4 fees (which don't appear on the online statement...by the way!) slapped by Am Express as a "Non Swipe Fee, i.e manually entered"...according to their customer service...in just a 2 week period.

Knowing for sure that was not the case, it looked like a randomly generated fee to me!

I spoke to AM Express supervisor about this ridiculous claim by their customer service and it turns out this fee is applied automatically because they "assumed" we sell over the phone and online....

They're looking now into how and when this profitable switch happened ....
 
That is ridiculous. They know whether the card was swiped or not...
 
Sounds like yet another example of a company doing something they know is wrong (and probably won't stand up in court if they get sued), but they do it anyway, knowing most people either won't notice the fees or won't fight back.

Its a real shame that, as a society, it seems to have become acceptable for companies to operate on a 'bottom line at all costs' principle, without honesty or integrity. Dirty Business is now the norm.
 
Those fees are so small they hope no one notices. I just received a amex payment over the phone and expect to see that on my statement. Mine was a phone generated charge.
Things are changing so rapidly for the credit card companies for our betterment that they are trying to recoup the massive losses of regulation. So keep a sharp eye out for bogus fees.
Francisco
 
The plot thickens...

After over 2 hours on the phone with Am Ex and the credit card processor, it turns out the cards are shown as swiped at the CC processor's end, but when transmitted to AM Ex they show up as keyed in manually!

AM Ex will refund 6 months' worth of fees while they and the processor look into this issue.
 
I have had several of these charges (which may actually have been phoned in card numbers for reasons of pickup convenience etc.). The real pain is that they appear on the Amex statement a month off from the bank statement that shows the transaction. This makes keeping the book entries on this straight a real nightmare.
:fire: Rick

(I now no longer allow phone-ins on Amex. If they want the convenience they'll have to use MC, Visa, or Discover.)
 
Paul N said:
The plot thickens...

AM Ex will refund 6 months' worth of fees while they and the processor look into this issue.
Click to expand...

Kudos to you Paul N for following up on this! I hope it's a big check!
Francisco
 
I stopped taking AmEx six months ago when their fee schedule went through the roof. I haven't lost one sale because of it. BUT, be sure to investigate other cc processors. I use PowerPay through my Lifesaver software and their statements are easy to read and there are only 4 levels of discount fees. It makes it quite easy to track at months end.:thumbsup:
 
How do you KNOW you haven't lost a sale? Perhaps someone was irked that you didn't take Amex for their previous order, and took a subsequent order to another shop. You would have no way of knowing this. I'm not here to defend the CC companies by any stretch, but I think in today's economy you have to make it as easy and desirable as possible for people to do business with you. If it costs a little more, build it into your prices. (I'll bet Vivian K. would agree with me.)
:kaffeetrinker_2: Rick
 
I agree with Rick here. I don't like accepting all the cards and their fees either, and the way us small businesses are played, but well....that's business.
I add it as a cost of doing business.

I had a new customer come in just last week. He hesitantly asked if I accepted Amex. He was so happy when I told him that I did and he told me that 'the other shop' didn't because it was too expensive...

He had heard about me from a friend of his and decided to try me out. He was very happy with everything.

I like it when customers are happy. If taking Amex makes them happy; why not.

Some of these special MC award cards are more expensive....
 
Ylva said:
Some of these special MC award cards are more expensive....
Click to expand...

...especially corporate purchase cards or "P" cards. When all is said and done they can ding you for somewhere between 2-3% in addition to your base rate. It depends on the combination, but a phoned in P card* which has rewards tacked on is the most expensive card to take as far as I know. If you are working on a 10% margin...there goes half of it.

*They are always phoned in since the internal security of the corporations won't let these out of the building.
 
Rick Granick said:
Perhaps someone was irked that you didn't take Amex for their previous order, and took a subsequent order to another shop. You would have no way of knowing this.
:kaffeetrinker_2: Rick
Click to expand...


Perhaps ... but I do know this: Any customer who values their AmEx over quality craftsmanship is someone who, most likely, is a bottom feeder. Thankfully I don't have to accept a cc that rapes both customers.
 
Framing Queen said:
Any customer who values their AmEx over quality craftsmanship is someone who, most likely, is a bottom feeder.
Click to expand...

It's hard to argue with that logic. However, to apply that to your business you also have to assume that none of your competitors have the same quality level as you, and that therefore to use their beloved Amex they are being forced to lower quality. Dangerous ground if you ask me...
 
How about a sign in shop window:

"Yes, We Accept American Express!!"

PS: Hoping not to offend anyone with the font and the color. This blue is American express blue....:p
 
David N Waldmann said:
It's hard to argue with that logic. However, to apply that to your business you also have to assume that none of your competitors have the same quality level as you, and that therefore to use their beloved Amex they are being forced to lower quality. Dangerous ground if you ask me...
Click to expand...

Well, since I don't operate my business, nor have a business plan, based on my competitors, it's not a worry to me. In every single case where I have told the customer I don't accept AmEx because of their fees, I get agreement and a MC or Visa. Plus I accept Discover and debit giving the customer a wide array of choice without having to sacrifice - in some cases - up to 10% of the sale to AmEx.

:icon21:
 
Framing Queen said:
... Any customer who values their AmEx over quality craftsmanship is someone who, most likely, is a bottom feeder. Thankfully I don't have to accept a cc that rapes both customers.
Click to expand...

Perhaps they see it as a "status symbol" of their success or "bragging right", in the same way they do to display high end custom framing in their homes. Amex comes out of the customer's wallet/purse for just about ANY order over $300, for some reason. In most cases, they are also paying a yearly fee to keep the card.

Amex cardholders are exactly the kind of customers we WANT, in my opinion. Besides, the rate is often lower than Visa/MC rewards and corporate cards.

Our prices are figured to expect a 3% average fee, for all payment types. If someone pays cash or check, that's a bonus to offset any that jump up to 3.5%. BTW: Many banks now charge a FEE to accept cash. (a percentage) What a strange trend, eh? :)
I hope you don't mind an alternate opinion; to stimulate healthy discussion. I'm a troublemaker, today!
goodbad.gif


Mike
 
I went to get an estimate at an auto body shop this morning and on the front desk was a sign: "3% service charge for credit card payment". Is this "legal" or a violation of the merchant agreement?
:kaffeetrinker_2: Rick
 
Gas stations have done that forever. I believe it comes from conversion of oil company cards to VISA and M/C. His merchant agreement may allow it. There is a provision in the financial reform conference that will allow anyone to do that.
 
Framing Queen said:
Perhaps ... but I do know this: Any customer who values their AmEx over quality craftsmanship is someone who, most likely, is a bottom feeder. Thankfully I don't have to accept a cc that rapes both customers.
Click to expand...

For many women in their late 50's plus, they prefer American Express because they were the only credit company [40+ years ago] that would allow women to have a credit card in their name.

All of the others demanded that married women change the credit cards to their husbands name. For example when Janet and I got married, all of the credit companies {visa, Mastercard, department stores, banks...} except American Express, told her because she was now married the credit cards / accounts could not be in her name and had to be in my name. I refused to get a credit cards from them, [I was un-employed and in college] because I didn't want credit cards. Janet now only uses American Express and the card from the bank where she is a VP and Sr Trust Officer, which she has to have.

That has now changed, but many people have long memories. Also, this demographic is part of my target market.

American Express is equated with Woman's Liberation and freedom by these women. Looking at the income level of these women I would not call them bottom feeders.
 
Grey Owl said:
American Express is equated with Woman's Liberation and freedom by these women. Looking at the income level of these women I would not call them bottom feeders.
Click to expand...

Just 2 days ago one of them handed me a BLACK American Express card.....

With this card (VERY few qualify) you could charge a Learjet without prior approval or a limit of any kind. Many businesses (even high end ones like Cartier...a crazy story in NY times about an employee there refusing this card.......LOL) think they are fake because they don't see them that often.

And it does seem fake: It is thicker and doesn't bend like other credit cards.
 
Maybe my next ad should read:

"My Competitors Will Accept Your American Express Card at 3 to 10 times My price for Equal or Lesser Quality Merchandise and Craftmanship"
 
I'm of the opinion that we should make it as easy as we can for the customer to give us money :) I accept all cards, even dinners club. The Visa and Mc rewards cards often cost me more to take than amex and one of my best rates comes from discover. I refused to take amex the 1st 2 years I was in business and by refusing that card I was making about 35% of my clients choose another card. It's another cost of doing business and should be treated as such.
 
A few years ago I scraped all the American Express logos off my front window and removed all their point of sale material because I got fed up with their fees. It didn't impact on my sales in the least. Customers would ask "do you take American Expess?" and when I asked for another card they would usually pull out a Visa or Mastercard.

I believe that Amex actually offers its customers the best deal on rewards which is fine for them but not if I have to pay for it.
 
Rick Granick said:
Today i had ten times as much on Amex as on MC/Visa. Just sayin'.
:kaffeetrinker_2: Rick
Click to expand...

Today my Amex was equal to my other credit card business...

$ 0.00!!!

:cry:
 
applied automatically because they "assumed" we sell over the phone and online....



sure a sin sounds like a slam-dunk case of wire fraud(AND a big fat class action suit!!!)!!!!!!!!!!!!!!!!!:fire::fire::fire:
 
Cards is the new American currency. I'd say 80% of my transactions are via my debit card. To keep consumers using cards, the businesses will suffer the burden of fees. I expect this type of thing to happen more often. I believe that it will be businesses that will determine which cards make it or not. As with many others, I have found their fees to be uncompetitive and as a result I have quit taking them.

I believe that the few people that have tried to use it, had other cards at the ready. These days they are expecting shops to NOT accept them. Since I currently accept 5 types of payments (cash, check, discover, MC, and Visa) I do not feel that by not accepting one more is a great annoyance for clients. If it is and they need to seek business elsewhere, I can live with that because I don't think it a very great number at all.

Good job catching this “error”.
 
Business decision....

Paul N said:
...AM Ex will refund 6 months' worth of fees while they and the processor look into this issue.
Click to expand...

Sounds like AMX took the high road here...

Interesting Paul N - I summize by your followup comments, that you still recognize the value of accepting many forms of payment including AMX, and that this appears that the "fault" in this "error" may lie with the processor, whom you did not name. (That might be interesting to know as this shakes out.)

However by mentioning that it was AMX, it stirred up the discussion once again about accepting thier cards. If you dig into the archives, you will find this reacurring subject multiple times - it's emotional and important. I find this particular thread really does identify the two camps of decision processing quite quckly: 1) Those that feel the AMX customer has options and doesn't feel the need or see any lost revenue. 2) Those that recognize that it is a business expense and want to give their customer's every different option available.

To each his own - but to those that fall into this first group, I bring to your attention a couple of facts that even this short thread mentions.
  • Our custom framing customers are using credit cards as a form of payment more and more. We deposit daily and I have seen in more times than ever before that I am not taking a depost bag to the bank at the end of the day - that all of our transactions were paid with credit card.
  • The mention of premium Black AMX cards being used in our frame shops - Yes, we've seen them also several times - the people who use a Black AMX must spend X amount annually to retain use of the card. How happy will they be if you force them to bring out their V/MC?
  • The story of the AMX being historically Women friendly illustrates again how passionate people can tie themselves to their choice of CC. (Read again: their choice!)
  • As has been pointed out by several good business posters here who have crunched and examined the numbers, you will pay as much if not more in fees for other "special" Master Card and Visa credit cards.

With this in mind - Why would you NOT accept AMX as an option. Your bank charges you to process a check. You probably pay slightly more to accept check Vs. running a straight CASH business. Can you imagine not accepting Checks?

artfolio said:
...Customers would ask "do you take American Expess?" and when I asked for another card they would usually pull out a Visa or Mastercard...
Click to expand...

The customer asking is them telling you that this is the form of payment that they wish to use. :shrug:

HangingAroundHoover said:
...I accept all cards, even dinners club...
Click to expand...

Wow - I'm impressed. We have never had the question asked. Did someone inquire at your shop, or did you just set it up just in case?

Back to the AMX subject...

I don't think that I am going to change the way some folks think or position themselves on this issue - but for our business, I will always accept payments in the manner my customers wish to pay.

John
 
John Ranes II said:
With this in mind - Why would you NOT accept AMX as an option. Your bank charges you to process a check. You probably pay slightly more to accept check Vs. running a straight CASH business. Can you imagine not accepting Checks?
Click to expand...

Holy Cow John, I have never been charged to process a check. I also have not paid any kind of fee associated with my checking account since the mid 80's regardless of the balance. A financially savvy guy such as yourself should be out shopping for a new bank and not trying to talk people into accepting cards that have no affect on thier businesses.
 
Business accounts...

Jeff Rodier said:
...I have never been charged to process a check. I also have not paid any kind of fee associated with my checking account since the mid 80's regardless of the balance...
Click to expand...

Jeff - are you telling me that your bank doesn't charge you for deposits, item fees, etc. against your balance? That's how most commercial accounts are setup and depending upon your balance, you may never see a fee actually assessed.

Or are you running your business on a personal checking account?
 
John:

Yes, American Express refunded all erroneously applied fees 2 days ago.

As to accepting the Card: I have a spreadsheet which lists all daily transactions, their breakdown, whether high / low end framing, number of framed pieces, method of payment etc.

Just for the heck of it I calculated how much I was getting paid with AM Ex and in 2008 it was about $90,000, about 40% of total sales.

With that percentage in mind, it would be prudent to accept it.
 
John Ranes II said:
Jeff - are you telling me that your bank doesn't charge you for deposits, item fees, etc. against your balance? That's how most commercial accounts are setup and depending upon your balance, you may never see a fee actually assessed.

Or are you running your business on a personal checking account?
Click to expand...

Business checking with zero fees associated with it. I set it up with no credit line associated because of the fees involved in doing so. Instead there is overdraft protection so if I decide to use more than I have in the account it is a one time $32 charge.
 
John, I'm of the camp that you describe. I will say from the beginning that I'm not strongly anti-AMEX. I only dumped them when I tried to get my merchant account switched over to a new checking account. After I couldn't get through after about 10 tries, I canceled the checking account. Once they couldn't draft their fees, they were thrilled to talk to me. It was just convenient for me to dump them. If they had even a shred of customer service, I'd probably accept them today.

Having said that, I wish to disagree slightly. This is similar to the discussion of business hours. One may suggest that we should be open 7 days a week as to not turn-off any potential customer. It would be very hard to argue against that from a logical business stand point. Yet few frame shops are open 7 days a week. So clearly refusing to do that which is obviously business-wise isn't a make-it or break-it deal. For that matter Chick-Fla and Hobby Lobby seem to be doing just fine and they're closed on Sundays.

There is a local restaurant that is a bit of an enigma. We all have these little hole in the wall joints that only the locals know about. This place is packed from sun up to sun down. Not only are they closed on Sunday but they accept cash only. What business sense could this possibly make? None, yet they do and people still flock there in droves.

Dave Ramsey claims that he is about the only advertiser that demands payment up front and before the ads run. That is certainly a shock to many of his advertisers and is well outside the norm. Yet I'm going to guess he is doing just fine as far as his adverters are concerned.

Ok so about AMEX. I do not think when we consider the entire process in which one buys custom framing, that by rejecting a particular card is a make-it or break-it deal. We build a rapport with clients. We take in their personal treasures. We hang pictures in their homes, they trust our opinion on designs that may cost $1000+, we know their kids first names, and we even recall the last piece they brought in. If you think that after all that a fair number of clients will over look all that and seek business elsewhere because you don't take one specific card, then I would suggest you fail in so many other much more important areas.

Lastly I think that each case could be different. For example I do not think that the fees are always nominal. I'd bet you a Kentucky Bourbon Barrel Ale that I took in well under 5 AMEX the last full year I accepted it. I think just the monthly fee was 4 or 5 and change. Let's call it down the middle and say I paid them $50 in a year. Divide that by 5 cards and I just tacked on an extra $10 for each of those jobs in expenses. Plus their per use fees were always at the top. Since I took in so few AND I do not think that rejecting them is all that much of a gamble, I think this issue may not be as critical to business as the case is being made. That's my .02 anyway.

So all in all, I think it hard to argue against what you lay out. It's logical and difficult to refute with the same business minded logic. However the suggestion of the possible consumer response is overstated a bit. At the end of the day I do not think this is as critical or difficult of a decision at it may seem. If you take in 5, 10, or 20 a month then you should probably keep them on. If you take in 1, 2, or 5 a year, then dropping them can be equally obvious.
 
It really depends on a couple of factors. As Jay mentioned, some restaurants will get away with it. How they do it??

Case in point: Peter Luger Steakhouse in NY. This place opened for business in 1887 and accepted nothing by cash till a few years ago. Now they accept credit cards but......their OWN credit card only!! Look at this, on their website:http://www.peterluger.com/carap.cfm

And in this place, a steak dinner for 2 will easily run you $200... if you managed to get a table! A very good restaurant will get away with it, but a frame shop....only if it's the only one within 100 miles radius.

Also, repeat customers may not protest if one doesn't accept a certain card, but with new customers that could be a perfect excuse for providing them with an instantaneous excuse for Buyer's Remorse.....;)
 
Paul N said:
It really depends on a couple of factors...

Case in point: Peter Luger Steakhouse in NY. ...

A very good restaurant will get away with it, but a frame shop....only if it's the only one within 100 miles radius.
Click to expand...


I think people shop for frames and restaurants with similar emotions. When they come into both they are not only buying a frame and a steak. They are buying ambiance. They are buying trust, cachet, and style. If we reject one, of many, payment options and that causes them to move on then there is other problems.

Now having said that, I do think we have some limitations. I do not think accepting cash only, for example, can be the same casual decision. That is an alltogeher different barrier.
 
Jay H said:
At the end of the day I do not think this is as critical or difficult of a decision at it may seem. If you take in 5, 10, or 20 a month then you should probably keep them on. If you take in 1, 2, or 5 a year, then dropping them can be equally obvious.
Click to expand...

The voice of reason :thumbsup:

However, I will add this thought: I use Amex because of the rewards. It should therefore come as no big surprise that the Visa and Mastercards I have are the best rewards cards I could find. So if you refuse my Amex you may well be paying more for my V/MC. No doubt many Amex card holders are in the same boat.
 
That's a very good point, David. Dropping Amex could turn out to be a "wash" financially, with the true cost being inconveniencing some customers.
:cool: Rick

P.S. Watch out if Rob Markoff shops in your store. He's a man on a "credit card rewards" mission. ;)
 
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