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Bank Of America/MBNA Merger Produces More Problems

By Martin H. Bosworth
ConsumerAffairs.com

November 8, 2006

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To hear employees and consultants tell it, the takeover of MBNA by Bank of America went so smoothly and beautifully that many were forced to break into song. But a closer look indicates that there are many problems bubbling under the surface, and dragging customers down with them.

Tom from Santa Clara, Calif., wrote to ConsumerAffairs.com to tell us that his MBNA credit card suddenly stopped working after his account was picked up by Bank of America.

"I have been embarrassed by having my credit card denied in a restaurant and a doctor's office," he said. "Luckily they accepted American Express or I would be washing dishes now."

Tom called Bank of America, and they confirmed his card was good and he had available credit. "There is a system-wide problem with their credit card process and they have no idea when it will be fixed," he said.

Another irate customer lost both his Bank of America debit card and several checks to hungry new ATMs put in place since the merger.

"I put my debit card in a BofA ATM machine and it promptly ate it, refusing to regurgitate either card or money," they wrote. "It was one of BofA's new ATM machines, the ones that supposedly take check deposits. I have tried to deposit numerous checks using the new machines but with zero success."

Bank Of America's even having problems in its home base of Charlotte, North Carolina.

One frustrated customer told the Charlotte Observer that two weeks after the merger, she can't print statements from her online account.

The glitches come as Bank of America merges its massive credit card operation with MBNA's own system, a transfer the company has called a "rousing success."

Part of the process involves issuing new Bank of America-brand cards to MBNA customers as their cards expire, a process that may account for the failure of some MBNA cards to process.

Bank of America has chosen to use MBNA's own account managing system, and take the process in-house, rather than outsource account management to third party companies as it has done in the past.

The buyout of MBNA has filled Bank of America's coffers considerably, with the bank reporting increased earnings of 41 percent for the third quarter, due chiefly to increased lending and higher credit card fee collections from MBNA customers.

Fees Fly High

Bank of America was one of the six major banks cited in a Government Accountability Office (GAO) study that found credit card late fees and penalties were increasing at a fast clip, and disclosures explaining credit terms were increasingly hard to interpret.

The bank is looking at increased adoption of "contactless" payment cards, which don't require signatures or swipes through card readers. Like many of its competitors, Bank of America is hoping that contactless cards will encourage customers to use plastic for small transactions, such as buying gas or food.

Merchants generally oppose the promotion of "micropayments," claiming that the high interchange fees they pay to process credit transactions wipes out any profit they make, forcing them to raise prices in order to recoup costs.

Privacy advocates and researchers have found numerous flaws in contactless credit cards, such as the ability of identity thieves to build readers that could hack the data contained in the RFID chip embedded in the card.

And yet, despite all the perils, Bank of America is pressing on, just as it did with its consumption of MBNA. Let's hope that, at least, the next series of glitches doesn't inspire another round of song.

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