Five Of the Most Bizarre Fine Print Clauses In Banking

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Consumer-banking legalese is usually about as boring as you can get. But lawyers occasionally throw in a catchy phrase, seemingly to relieve the monotony.



About 30 pages deep into an account rules and regulations contract, any consumer who has had the stamina to read that far is asked to "Please Read This Provision Carefully." Or a promotion will state the obvious: "Repayment terms and payment amounts ... may change, if, for example: we change your APR." Repayment terms change if they are changed? Thanks for the heads-up.



Here are five of the wackiest clauses in banking:

1. Wisconsinites Need to Shop Responsibly.


"Notice to Married Wisconsin Residents: all obligations on this account will be incurred in the interest of your marriage or family," states the Chase (CCF) Freedom Visa Signature Card's Pricing & Terms provision.
So, Wisconsin cardholders: You are legally bound to behave responsibly when racking up debt. (Where does that leave the rest of the country?)



2. Relax guys. Your interest rate won't vary based on some index. It'll be changed at the whim of the guy who's collecting payments.
Even better, "this is not a variable rate tied to an index, such as the Prime Rate," says Bank of America's (BAC) application for a $30,000 personal loan. "It's a comfort to know your rate won't automatically fluctuate every time the index changes."


A predictable interest rate? I'm all for it. But wait, there's more... "By 'non-variable rates' we mean that the APR will not automatically vary with an index, such as the prime rate. We reserve the rate to change your APR, fees, or other credit terms at our discretion."
A comfort? That the interest rate will no longer be based on the bank's cost of borrowing, but rather, on whether it would like to get more money out of the deal? That's a favor I can do without.



3. We really want you to know what's written in the second column of page 32 of your Account Rules and Regulations. Really. It says so right there.


If you—for some reason—happen to have suffered through 32 pages of account descriptions and legalese in Chase's "Account Rules and Regulations" you'll be rewarded.


In the second paragraph of the second column (no "Beware of the Leopard" sign, though) consumers are advised—in all caps—to "PLEASE READ THIS PROVISION CAREFULLY."


The buried provision advises clients that they've given up their first amendment right to a day in court: Instead they must go through arbitration.


Think Judge Judy with closed proceedings. The arbitration administrators are dependent on the bank for business, depending on the administrator they may or may not be bound to follow the law and decisions are subject to minimal judicial oversight. You can guess which party wins the vast majority of the time.


Plus the arbitration administrators forbid class action suits, which means banks have carte blanche to nickel and dime you without fear of legal reprisal.


But that's not all: In previous clauses Chase also eschewed any responsibility for determining whether a court has any authority over your account before freezing your money. They have a freeze-first-let-you-work-it-out-with-the-unauthorized-entity-later policy. And you're responsible for any costs the bank incurs in the process.


And if they make a mistake and accept a forged check, any problems you have as a result—even if you warned them of the risk beforehand—are your problem. You might get the money put back into your account, but you can't go after Chase for resulting damages.
All of these clauses are standard banking practice. Perhaps the only thing that makes Chase unique is that the three provisions all occur in a cluster on page 32.


4. Maybe if we're wordy enough ...


Who can Citigroup (C) disclose your intimate financial details to?


Rifle through its privacy policy and you'll find out: Affiliates, nonaffiliated third parties comprised of financial service providers and nonfinancial companies. In other words, anyone they want. (Perhaps the convolution isn't meant to confuse people concerned about their privacy. Perhaps it's just that their lawyers are paid by the word.)


The bad news is that, outside of Vermont and California, it is standard industry practice for banks to reserve the right to make such disclosures. The good news is that you can limit the disclosures by opting out -- just ask your bank for its privacy policy.


5. Press "1" if you're in immediate mortal danger. Press "2" if the danger is immediate, but not life threatening. Amid otherwise tedious forms requesting dreary financial details, the IRS publishes question 5c on form 3949 A.


"Do you consider the taxpayer dangerous?"


Filers check yes or no.

Wow.

The IRS found a way to make reporting crime mundane.


The form is for good Samaritans who uncover tax fraud—perhaps an activity that will become more common since now that tax whistleblowers who uncover significant tax fraud can legally enforce their rewards.

Still -- you have to wonder what they mean by dangerous. Dangerous, as in, the fraudster may be packing when the auditor comes? What do you check if your tax dodger is dangerous in a more sophisticated way? Say they wouldn't come at you with a weapon in a deserted alley, but they wouldn't think twice about engaging in Enron-type creative accounting practices that leave workers unemployed or unable to collect pensions.


Which box do taxpayers check then?


It's a question I'll have time to ponder next time I sift through reams of consumer banking materials.

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