By Dan, on March 26th, 2011
Back in December 2010 I received a letter from Chase Home Finance, the servicer of my mortgage, informing me of an overage in my escrow account. This was not entirely unexpected, given that my escrow account had been running a surplus for some time, as a result of the reduced property tax rate, in turn a result of the drop in assessed value. While this had been anticipated, I still looked forward to receiving the check for $177.76, which, according to my account had been mailed out on January 26th, a full six weeks after the initial notification.
Why it would take them this long to cut and mail a check was beyond me, but at this point I was only slightly irritated by this. Why they would issue and mail me a physical check through the US Postal Service was even more beyond me, given that for years my payments were regularly and reliably made electronically via bank transfer. Wouldn’t is be easier – and not to mention faster, cheaper and less taxing on the environment – if they just returned to overage in my account the same way they received it, via near-instant electronic ACH transfer? One would think, but then one would not be attuned to how large Too-Big-To-Fail banks think and operate.
I patiently waited another full month for my check – in vain. Finally, on March 1st, my mortgage escrow balance – which, of course, bears no interest – was credited with $ 177.76. Confused, I called Chase Home Finance and, after a mere 5-6 minutes navigating their automated “customer service system” (“customer avoidance system” would be a more apt description), I was connected to “Stacy”. And, if the tell-tale lag and poor quality of the call were not clear proof that this call was being routed via VOIP telephony to an overseas call center, “Stacy’s” thick accent and poor diction was a dead giveaway.
After I established my identity by sharing various personal information – which I had already done with the automated system that connected me, mind you – “Stacy” informed me that my check had been returned by the US Postal Service because it was – so sorry – “undeliverable”. Never mind that I had been receiving all sorts of mail, including my statements from Chase, reliably all along, thanks to a USPS order forwarding my mail. Undeterred, I provided an alternate mailing address and was assured that my escrow refund check would be forthcoming.
And, sure enough, on March 3rd, my account was debited for $177.76 and two days later I received a letter in the mail confirming my new address and thanking me, signed by one Mr. Larry Thode, apparently the “Vice President of Customer Care”. Interestingly enough, the letter had a return address of Columbus, OH, where Chase Home Finance is apparently headquartered, even though my payments are processed in Phoenix, AZ. Even more interesting is that Larry Thode managed to “sign” my letter – in an attempt to provide “Customer Care” no doubt – even though, according to LinkedIn.com, ole Larry lives and works in Monroe, LA. In his LinkedIn profile, Larry describes himself as quite the go-getter and his “Responsibilities have included developing operational disciplines and strategies to improve both top and botton line results. I am able to inspire, and keep things simiple, and create winning teams.” While a grasp of proper spelling and diction seem to elude Larry, he should obviously be encourage to enumerate once more to add “and robo-signing bullshit letters to customers” to his skill set. But, I digress.
On March 22nd, I realized I STILL had not received my refund check and, figuring three weeks is a long time even for the USPS – all the more so given that Larry’s delightful letter and my new account statement had gotten here since then – I decided to brave Chase’s IVR system once again. After the inevitable goat-rodeo that they call their “automated customer service system”, I am speaking with “Cheryl”. Again, the noticeable lag, poor voice quality and a THICK accent that makes it nigh impossible to understand what is being said and makes it equally clear that I am speaking to someone in Chennai or Bangalore. “Cheryl” explains that it takes 21-28 days for them to “process” my check and then another 8-10 “work days” to mail it out. When I question why it would take this long to simply mail a check, she explained that Chase had to “calculate” and “process” my payment, even though this was the second time this payment was being attempted. Undeterred, I asked “Cheryl” why, since I made all my payments electronically, why couldn’t Chase simply return the favor and process the refund the same way, via ACH transfer, instead of a physical check? Or, even better, why not just apply the money (MY MONEY, after all) directly to my mortgage payment or credit card account? “Cheryl” responded that they had to “follow their policies and procedures”, which seem to be slightly slanted in favor of Chase and to the detriment of their actual customers. I wonder if Larry Thode knows about this since this seems like an opportunity for some serious “Customer Care”, no? I would write him about it but I’m not sure if I should send the letter to Columbus, OH or Monroe, Louisiana…
Why does this matter you ask? And when can we get past your measly $177, Dan, and on to the $33 billion you teased us up with in the headline? Good questions indeed. Well, one should consider that Chase is the third largest mortgage servicer in the US, with more than 9 million accounts. So, while holding onto my $177 for an extra three months may seem like a small issue, once you multiply it by 9,000,000, things start to make sense. Especially when you consider that my mortgage is rather small and at a fairly decent rate of 5.5%. But, even using my relatively low interest rate and applying it to outstanding amount of $177.76 for the three-month period in question, we get $2.44 of interest charges. Chump change, you say, and I would agree. But, once we multiply it by the 9 million mortgage accounts (many at much higher rates) that Chase services, we are talking about $21,997,800.00! To most people, myself included, this is a huge amount of money. Even for Chase, getting $22 million (for nothing!), is real money. After all, it easily covers their CEO Jamie Dimon’s well-deserved bonus of $17 million for 2010, with $ 5 million left over to throw a party and pay the little guys, including Larry Thode and his “customer care” team.
But, of course, Chase not only services mortgages, but also revolving consumer debt, including credit cards. And, obviously, it stands to reason that they would apply this windfall of free money – withheld from consumers like you and me – to the most profitable use available. The current (March 2011) average credit card interest charged is 16.82 percent. Three months of interest on my $177.76 at this rate comes to $7.47. Assuming I am not the only person being stiffed here this comes to $67,273,272.00 when applied to all 9 million Chase Home Finance Mortgage holders. Now, this is the sort of mind-boggling “financial innovation” often touted by Mr. Dimon and other bankers when they are pressed to justify their outlandish pay packages. A cool $67 million in “free” money out of nowhere, what’s not to like? Well, perhaps the small detail that it’s not “free” (consumers are paying for it) and it’s not “out of nowehere”, it’s the result of fraud, or, excuse me, the result of Chase’s “policies and procedures”.
So, now you’re thinking: “Nice rant, Dan”, but “what about the $33 billion Chase owes the taxpayer? Where is that number from and what’s up with that?” Great question. Chase, who like their fellow Wall Street bankers at Bank of America, Goldman, GE and others, like to brag about their cleverness and their ability to “innovate” (by which they mean such genius concepts as overdraft fees, hi-lo sequencing (Google it!), securitization and credit default swaps, all swell ideas..). They will also throatily insist that they paid their TARP bailout money back, though generally forget to mention another government program that has kept them alive and well-paid, even as main street continues to struggle through a tight credit market. This program, known as the Temporary Liquidity Guarantee Program, or TLGP is perhaps less well-known than it’s cousin TARP, but a sop to Wall Street nonetheless. TLGP allows big banks to borrow money under a federal guarantee, giving them access to funds at the same rate the US government enjoys. Oh, and guess who pays these loans back should one of these banks default? You guessed it: the taxpayer. Chase has yet to repay $33 billion loan we guaranteed for them, but insists now they are healthy and profitable enough to boost their shareholder dividend, a move that will net their chief executive, Mr. Dimon, an estimated $5.7 million additional windfall.
‘Cause, y’know how hard it is to make ends meet with a measly $1.3 million base salary and $17 million bonus.
By Dan, on October 10th, 2010
I had been thinking about this article for some time, mulling it over in my mind repeatedly. Each time I thought of the sad examples of humanity that exemplify so much of what is wrong with our country and society – people like Bernie Madoff, Angelo Mozillo, Richard Scrushy, R. Allen Stanford, Lloyd Blankfein, etc. – I found myself perversely enjoying the warm feeling of bile and anger rising up in me, much like one can strangely find off-putting pleasure in the taste of blood in ones mouth after a fall or being struck.
But, these billionaire mega-crooks – some convicted, some able to avoid justice through technicalities, payoffs or legal maneuvering, but guilty all the same – are just the tip of the iceberg. For if these perps could commit such enormous frauds and steal so much from so many for so long, it’s a safe bet that there are many more out there, working on a much smaller scale, undetected. And, while the scale of deception, narcissism, arrogance and plain old theft committed by these men is mind-boggling, the money stolen is sure to be just a small part of the damage they have caused.
Much larger looms the irreparable injury to the very fabric of our society, to the foundation of trust that forms the bedrock of our daily lives. For once people in positions of power and trust can show such a blatant disregard for fiduciary duty, honesty and just plain human decency, all bets are off. Moreover, while the acts of deception in and of itself are bad enough, the cynical ploys, feigned indignation and hypocrisy displayed in their defense are even worse.
Who can one trust these days when it seems that everyone is on the take and bought and paid for? Did your doctor prescribe a certain medication because he thought it would help your condition, or is he just trying to get that all-expense junket to Hawaii from some pharmaceutical company? Did your investment adviser recommend a mutual fund based on merit or to earn a fat commission? The list goes on.
But even in this cesspool of lies, deception, hypocrisy and double-dealing, every now and then one finds a particularly noteworthy nugget. One such treat comes from the Mortgage Bankers Association of America, the professional trade organization of the industry that brought us our current economic malaise and the financial crisis. It turns out these masters of finance, the same folks that insist that much the mortgage mess is to blame on consumers too careless to read their mortgage documents, have decided to back out of a real estate purchase they committed to at the height of the market. They would now much prefer to return their shiny new headquarters building bought for around $79 million back in 2007. At the time they astutely financed the purchase with a variable rate loan with an LTV (loan-to-value) ratio of about 95%. Hmmm…how novel. Of course, 2007 was the peak of the bubble, when money was cheap, mortgages easy to come by and lenders eager. Now the MBA is using a process known as “strategic default” to get out from paying the inflated price agreed to at the time. Basically, this is little more than breach of contract. And, while a new buyer has been found for the property, the agreed upon price is now only around $45 mil, reflecting the current state of the market and the “true” value of the property.
Interestingly enough, John Courson, chief executive of the Mortgage Bankers Association is on recordstating in the of the Wall Street Journal on Dec 7th, 2009, berating and lecturing consumers that living up to their loan obligations in spite of being underwater “isn’t just a matter of the borrower’s personal interest.” He goes on to insist haughtily that “defaults hurt neighborhoods by lowering property values. What about the message they will send to their family and their kids and their friends?” Indeed, John, indeed.
It’s sad that ole John doesn’t see the same moral hazard when it comes to his once high-flying industry group reneging on their commitment to community, kids and friends. What’s even sadder is that this outrageous tale of corporate malfeasance is being committed by the very same trade organization intended to guide and regulate the mortgage industry. And what’s outright pathetic about this issue is that the only people that appear to take note are Jon Stewart and a handful of bloggers. Et tu, professional press? I hope you at least got a good price for your soul and, given the MBA’s track record, insisted on payment in cash. Upfront.
And as to the bank holding the note on the MBA’s headquarters building – PNC Financial Group – who is being stuck with a loss of about $25 million, we offer a heartfelt “chin up”! After all, $25 million – an amount inconceivable to most Americans – is mere peanuts compared to the $7.6 billion – yeah, like with a “b” – in TARP money your Uncle Sam spotted you when things got rough. And while we acknowledge that you did repay this rather generous loan earlier this year, that kinda helping hand in times of need is a hell of a lot more than most consumers got.
But, after all, it’s just money. Granted, in this case, it’s a whole lot of money. A shitload in fact. But, compared to what the guys mentioned at the beginning of this article took from us, the $25 million – or even $7.6 billion – ain’t nothing to cry over. No, it’s safe to say, those guys took far more from us.
By Dan, on September 24th, 2010
Yesterday I wrote about the recent rush by companies to vehemently and vocally trumpet their sustainability and corporate social responsibility efforts in an attempt to either plug into the current Zeitgeist of consumers or, in cases like BP and many large banks, attempt to counteract the negative publicity resulting from some fairly egregious lapses. I also implied (ever so subtly, of course…) that many of these efforts were falling flat and failing to resonate with the intended audience. The reasons for this are numerous, but prominent among them is the failure by brands to overcome justified consumer skepticism due to a perceived dissonance between a brand’s actions and their messaging.
In a nutshell, many of these attempts to engage consumers around issues important to them fail because they are perceived as dishonest, hypocritical, or disingenuous attempts to pull the wool over their eyes. And if your message isn’t perceived as genuine and sincere, then no amount of repetition (aka frequency in ad terms) will help. In fact, it will do further harm. Hence, BP’s spending hundreds of millions of dollars to carpet-bomb network television viewers insisting they are doing all they can to clean up the oil spill – instead of investing the money in actually cleaning things up or ensuring catastrophes like this never happen again – will backfire with many people, including this writer. Sure, some less-engaged, less-discerning viewers will be placated by the slick commercials but, unfortunate for BP, this passive audience group does not blog, influence or drive opinion.
Now, clearly, the situation with BP and the Gulf oil spill is an extreme example and they were forced into crisis mode by the events, leaving them flailing in an attempt at damage control. But, attempts at trying to squelch – or better yet take control and reverse – a negative message are not all that different from trying to seed, nurture and promote a positive story. In both cases it helps to be forthright, humble, and honest, traits many perceive as missing in BP’s efforts.
For a recent example where efforts to promote positive actions backfired badly, readers can turn to this story on the Hershey Company, who just issued their first ever Corporate Social Responsibility Report, timed to coincide with the occasion of founder Milton Hershey’s 153rd birthday. The verdict by John Robbins, writing in the Huffington Post is damning: “Long on platitudes and promises, it was classic example of the practice of greenwashing – a PR effort to mislead the public into thinking a company’s policies and products are socially responsible, when in fact they are not.” Yikes!
Enough of the bad examples though. What can brands do to project a positive image and get consumers to not only like them but love them? Well, one approach is to find a real problem in the world – if you’re considering this approach, your timing couldn’t be better as we currently seem to have plenty – and then work to solve or at least lessen its impact. Ideally, find something that relates to your core business and allows you to bring your resources and core competencies to bear in a way that others could not.
A good example of this is the World Bicycle Program, an initiative to distribute bicycles in Africa and Asia sponsored by SRAM and Trek. Here is an idea that is simple, effective and perfectly aligned with the mission and business of the sponsoring brands. Efforts like this not only make a real impact in our world but also bear fruit, as made evident by the great coverage in the NY Times recently. And, since these efforts resonate and connect with consumers, they lead to real engagement and can generate a groundswell of goodwill and viral promotion, borne out by the 92 comments posted on the NYTimes site and countless re-posts to FaceBook, Twitter and blogs, including the one you’re reading now. What makes this story resonate is that people get it: we can all relate to Abel having to walk barefoot for three hours to get to school and we grasp how something as simple as a bike would reduce this significantly, freeing up more time to study, work or take care of his siblings. We also get the connection to SRAM and Trek and how these companies have the means to easily do something as simple as provide cheap, sturdy bikes that will dramatically change the lives of thousands of African children. In short, the story makes sense and it feels real.
Another good example is New Belgium’s support of the Save the Colorado project, an initiative to protect the Colorado River. Cynics may claim that it’s a bit self-serving for a brewery based in Fort Collins to advocate for water conservation, given that they rely on a supply of clean water to produce their beer. And, in fact, they would be correct to do so. New Belgium is even quick to point out that they are not entirely altruistic in their support of the initiative, and they openly admit water makes up over 90% of their product. Moreover, it’s clear to most that the brewery likely gets back just as much as they give through promotional exposure for their Skinny Dip beer, which they concede has also become their mascot for water advocacy. But who cares? By being forthright and honest, New Belgium is able to serve the greater good while also protecting their self-interest and making a few bucks. What could be more American than that?
My next post will look at other opportunities for advocacy-based exposure and will include some challenges for brands to step up and help solve problems here and abroad. For doing well while doing good makes for a great story. And having a great story, ultimately, is what great marketing is about.
By Dan, on September 23rd, 2010
Unless you’ve been living under a rock – and, given the state of the housing market these days, this is not altogether unlikely – you have probably noticed that a ton of companies and brands seem to be falling all over themselves to show how much they care about environmental and social issues. Corporate social responsibility (CSR) seems to be a hot topic these days and everyone from BP (Beyond Petroleum? Not so much maybe. And certainly not beyond massive advertising) to Bank of America (Look how much WE lend to small business!) and Pepsi, who would like to Refresh Everything, is jumping on the band wagon.
Watch the evening news or the Sunday morning political gabfests like Meet the Press and Face the Nation and what you’ll really face is barrage of corporate propaganda that would have you believe that the Gulf of Mexico is cleaner than ever before, banks seem unable to give their money away much less lend it out, and that you can help save the world simply by getting an American Express card. You will also learn that the oil & gas industry is swell and – despite well-publicized subsidies in the Billions – really a tough place to make a buck, along with how clean and environmentally friendly coal really is. It almost makes you miss those Enzyte ads with that Bob fellow or long for an honest OxiPitch by the late Billy Mayes. Almost.
Many of these efforts are well-executed and supported by slick Websites and massive media buys. Nonetheless, most of them strike the discerning viewer as insincere attempts to cash in on the public’s newfound concern for social issues or merely transparent efforts to deflect criticism. Are they effective? Do they sway opinion or lead to increased sales? It’s hard to say, since the effectiveness of broadcast media is notoriously difficult to measure.
Online media is a different animal, however, and, judging by the number of views and subscribers the YouTube channels of BP, Chevron’s Human Energy and Pepsi’s Refresh have, there is room to grow. None have more than a few thousand, viral it’s certainly not. Compare this to the Venetian Princess’s Gaga parody at 34 million views or the sequel to little Charley biting the finger at a whopping 230 million. And please bear in mind that both achieved this level of popular exposure without paying tens of millions of dollars to Omnicom Group or any other global ad agency.
Our corporate communicators fare somewhat better on FaceBook, where they are no doubt aided by traffic drive-to from online ads and the fact that you have to “like” them to compete, get discounts or vote. Without this leg up they would no doubt struggle here as well. Bottom line is that it’s just not easy to like you when I know you’re just trying to sell me. It’s telling that the only FaceBook page tied to a brand in the top-25 is one about Crocs. Unfortunately for the shoemaker (if you consider Crocs to be “shoes”, or even “made”, given they are formed by injection molding rubber), this page is hardly flattering and, one can only assume, was probably not started by the company.
So, how does one break through the noise, connect with people and stir them to advocacy on your behalf? Well, honesty, integrity and offering a good product are a great place to start, but we’ll assume for now that these are given. Another important aspect is being real. Be sincere, direct and authentic in every aspect of your business – even if it costs a few cents more. Don’t tout health and wholesome goodness, like Mott’s does, and then sweeten your juice with cheap high-fructose corn syrup or buy concentrate from China. Last I checked we have both cane sugar and plenty of apples right here in America.
Next, try actually standing for something. Ideally something good. Look around for a challenge or problem we face that is related to your business. Trust me, there are plenty out there. Then, look for a solution that is both simple and impactful and work to implement it. Make social responsibility not a just a necessary evil or a marketing gimmick, but live it! Honestly, sincerely and real. More on this next time!
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