Court Considers Trauma After 2 Robberies

 

When most check cashers think of Workers Compensation claims, the usual array of broken arms, skull fractures, and sprained ankles come to mind.

But Workers Compensation is usually much more expansive than mere broken body parts. Recently, the issue of the mental trauma that can accompany two closely spaced check cashing store robberies was taken up by Oklahoma’s high court.

An Oklahoma check cashing store was robbed twice: the first time on Dec. 31, 2008, and the second on April 7, 2009. A woman, whose first name was Leslie, was the branch manager and the only employee on the premises during both robberies.

The first was an armed robbery by a man wearing something covering his face and a ball cap.

Leslie said that during that robbery, the man made her go into a back room and sit down when he pulled a gun out of his back pocket. She said she thought she “was dead.”

After he left, she discovered the store’s panic button was not working and telephoned the police.

In the second robbery, during which Leslie was ordered to turn off the security alarm, two men stole all the cash on hand in the office.

These men did not have guns. However, one of the robbers threw an empty plastic cash drawer at Leslie’s head.

Leslie said that the cash drawer hit her in the head, knocked her into the filing cabinets, and caused her to fall backward over a fan, onto the floor.

When they left, she locked the door and called 911. Leslie did not return to work for the check casher after the second robbery.

Files Claim

Leslie filed a Workers’ Compensation claim for a head injury and psychological overlay for post-traumatic stress disorder, depression, and post-traumatic headaches as a result of the robberies on the check casher’s premises.

She filed her claim on Oct. 19, 2009, alleging an accidental injury arising out of and in the course of her employment.

She sought permanent total disability as a result of her injuries, claiming she was unable to work or to be out in public.

The trial court heard testimony, admitted evidence from both parties, and then ruled that Leslie was permanently totally disabled due to injury to her head and psychological overlay.

The trial court found she was struck in the head with a cash drawer and developed post-traumatic headaches. Moreover, the trial court noted that Leslie had severe PTSD and depression.

As a result of her head injury combined with psychological overlay, the trial court agreed with Leslie’s medical expert that she was permanently totally disabled and would be unable to return to the work force in any form or capacity whatsoever. The trial court also agreed that vocational rehabilitation and retraining was not an option for Leslie.

In addition, the trial court awarded Leslie continuing medical maintenance in the nature of four annual office visits and prescription medication under the care of a psychiatrist.

Objects to Report

The check casher objected to the report of Leslie’s medical expert. The check casher timely sought review of the trial court’s order before a three-judge panel of the Workers’ Compensation Court (compensation court).

One of the issues the check casher raised as an error was that the finding of compensable injuries to Leslie’s head and psychological overlay was contrary to the law and against the clear weight of the evidence and should be reversed.

Further, the check casher claimed the trial court determination that Leslie sustained a head injury was not supported by her testimony or treatment records, that Leslie’s medical records failed to recognize long-standing migraines, and that the trial court’s finding should be reversed.

On May 16, 2012, the three-judge panel unanimously affirmed the trial court’s order, finding it was “not against the clear weight of the evidence nor contrary to the law. . . .”

Files Appeal

The check casher appealed to the Oklahoma Court of Civil Appeals. On Nov. 19, 2012, the appeals court held that the permanent total disability award was against the clear weight of the evidence and reversed the trial court’s order.

The case was then moved up to the Oklahoma Supreme Court, which granted the petitions for certiorari filed by Leslie as well as the check casher.

The Supreme Court noted that in the opinion that was under review, the appeals court ruled that a claim submitted by an employee for compensation for permanent disability was required to be “supported by competent medical testimony . . . which must include an evaluation by the treating physician or an independent medical examiner if there was no evaluation by the treating physician.”

The appeals court also ruled that Leslie’s claim for permanent total disability was not supported by a medical report from a treating physician or an independent medical examiner.

The order of the Workers’ Compensation Court finding, said the appeals court, that Leslie was permanently totally disabled was not supported by competent evidence and therefore it must be vacated.

Change in Language

The Oklahoma Supreme Court noted that in a footnote the appeals court explained that a 2005 amendment in effect at the time of Leslie’s injury removed the language previously found stating “a physician, including, but not limited to,” in reference to an independent medical examiner or a treating physician.

The appeals court indicated that although the prior statute’s language was broad enough to include a medical expert’s testimony, the 2005 statute required the report of the treating physician or the independent medical examiner to “support” the award given.

In essence, said the Supreme Court, the appeals court held the amendment eliminated the medical expert as a witness who could give “competent medical testimony” on which to base an award.
Because the appeals court found the treating physician did not give an opinion that Leslie had permanent total disability, it held the trial court’s award could not be sustained.

Intent of Statute

The Supreme Court said it did not believe, however, that the statute was intended to limit the testimony to only the treating physician or an independent medical examiner.

The statute required only that the award be supported by “competent medical testimony which shall be supported by objective medical findings” and which shall “include” an evaluation by the treating physician or an independent medical examiner if there were no evaluation by the treating physician.

The appeals court’s requirement that the permanent total disability award must be “supported” by the treating physician or a court appointed independent medical examiner improperly restricted the trial court from considering any evidence that was “competent medical testimony”.

The Supreme Court said it had previously discussed this very issue in the 2007 case of Conaghan v. Riverfield Country Day School, in which it ruled that a summary facial reading of the statute placed the responsibility for deciding disability with the Workers’ Compensation Court.

The statute mandated that the compensation court must have medical evidence from the treating physician or an independent medical examiner for each claim, and it permitted the compensation court to have medical evaluations and opinions addressing compensability and permanent impairment from other physicians.

It assigned the same meaning to the term “physician” as set out in another section, but added that “physician” included a person licensed by another state who would be qualified to be a licensed physician under the laws of Oklahoma.

The appeals court’s holding, said the Supreme Court, came very close to requiring the trial court to award compensation “within the range” of opinions of the treating physician and an independent medical examiner.

This was formerly required by the statute that the Oklahoma Supreme Court held to be unconstitutional because it restricted the Workers’ Compensation Court’s determination of impairment and disability.

The Supreme Court ruled this invaded the court’s independence and discretion to accord the appropriate weight or evidentiary value to the “objective medical evidence” as the trier of fact.

The trial court must be free to find the facts and apply the law to the facts. The appeals court’s holding also improperly restricted the trial court’s consideration of competent evidence to that of the treating physician who found Leslie did not have permanent total disability.

Evidence

Leslie had testified she had a problem with headaches, which she associated with the head injury and “triggered” her to recall the robberies, which led to severe headaches. She also said she had developed memory problems which she did not have before the robberies.

She said she rarely left her home unless someone went with her. She slept with a firearm. She obtained a “conceal and carry” permit after the second robbery.

She stayed awake while her husband slept and slept when he was awake.

She had received, and at the time of trial was still receiving, psychiatric treatment for her PTSD. She also developed several phobias.

On cross-examination, Leslie said she had only previously taken antidepressants after the birth of her baby. She had postpartum depression and was going through a divorce at the time.

She stated she had migraines before the robberies during her pregnancies. She also stated she was in a car accident between the time of the two robberies and had sustained a neck and back injury that caused knots in the back of her neck and tension headaches. Although surgery was recommended, she declined the operation.

Leslie also testified she had gone out of town by herself for particular events.

She explained that in April 2010, she went to Kansas, a two-and-a-half-hour drive, because her father had a heart attack. In May 2010, she went to visit her parents in Kansas “for a birthday present.” In June 2010, she traveled to her daughter’s graduation but did not go alone.

She only did yard work if her husband was home. If he was away, a neighbor across the street watched her through the window.

She had held a job, working in a church flower shop, but said she quit because the owner of the shop wanted her to branch out to make deliveries beyond the local area.

She had not told her boss that she took her husband or a family member along when she made deliveries.

Leslie said she quit and never told her boss of her delivery practices.

Medical Opinion

The written medical opinion of Leslie’s expert medical witness was attached to his deposition. The medical expert diagnosed Leslie with post traumatic headaches, depression and PTSD. He gave his opinion that she had permanent total disability. He stated he did not believe Leslie would be able to return to work because of her PTSD.

He based this opinion on his examination of Leslie; the medical opinions of other doctors, including the psychiatrist who was treating her at the time who stated she could not work; and his review of a packet of reports and evaluations from the office of a psychologist and his team who treated Leslie for approximately two years.

In addition, the medical expert considered the report of Leslie’s witness, a vocational rehabilitation counselor who evaluated her, and the evaluation of the check casher’s witness.

The rehabilitation counselor’s report found her to have transferable skills, but because of her PTSD and the medications she was taking, he believed retraining would not be an option for Leslie.

However, Leslie’s medical expert stated he believed the medications she was taking were reasonable and necessary and in accordance with the diagnoses she had been given.

She had also developed several phobias, which led the expert to think she would not be able to return to the work force.

 

A Few Good Men and Women

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By KENT MARTIN

There are critical components to success in virtually every business. These include such factors as cash management, product development, attracting and keeping customers — and hiring the best employees.

To Larry Bossidy, former chief operating officer of General Electric, “Nothing is more important than hiring and developing people. At the end of the day, you bet on people, not strategies.”

While many employers look for skill and talent when choosing their next employee, one key ingredient is frequently overlooked: Personality. A personality test can offer an employer vital insight into personality and emotional intelligence, which can’t always be identified in an in-person, one-on-one interview. These tests provide an employer with a psychological analysis of an individual’s character prior to employment.

The use of personality tests in hiring decisions has increased in recent years. As a result, the market for these tests has expanded. There are numerous personality tests available today, ranging from the popular Myers-Briggs Type Indicator to Conscientiousness and the Caliper Profile.

In 2011, almost 56 percent of all companies were using some form of personality testing in their hiring, a jump of 8 percent over 2010. The biggest reason for this rise may be growing security and workplace violence concerns, according to the Equal Employment Opportunity Commission.

But just as significantly, companies of all sizes are recognizing that they need to dig more deeply into their candidates’ character to more accurately determine their potential.

Critical to Success

“We recognize that improving on hiring and selection is critical to our franchisees’ success,” Chris Fox, chief operating officer of United Financial Services Group, said.

This is why he said his company, one of the largest franchisors of retail check cashing centers in the United States, chose Hireology, Inc., to manage the company’s hiring processes across its 130 franchise locations.

Hireology provides a SaaS-based selection management platform that enables franchisees to more effectively manage their hiring process system wide. (SaaS is otherwise known as Software As A Service, a software delivery system that provides access to software and its functions remotely as a Web-based service.)

“Anytime you can get another piece of information, another piece of the puzzle figured out on a candidate, the more likely you are to make a sound choice,” Margot Baill, product development director for Hireology, said.

“With personality assessment, you not only get to know how somebody reacts in certain types [of situations], but you also know their tendencies to what types of things they’ll be motivated to do.

“In the world of check cashing, I think personality is probably more critical than most other industries, because you’re going to have somebody who is face-to-face interacting with customers and you want to make sure it’s a personality that can a) deal well with other types of people, and can adapt to other personalities’ styles, but b) it’s important to figure out how to motivate that person.”

Fox said his company’s franchisees will be able to utilize Hireology’s selection management platform, Selection Manager. It includes job profiling, skills testing, behavioral interviews and verification services such as reference and background checks.

Fox said Hireology was selected because of its “strong offering, low implementation costs and deep experience in the franchise space.”

Those who testify to the benefits of personality tests point to one aspect of an individual’s character that cannot be determined in an in-person interview: Their EQ, or emotional intelligence, not to be confused with a person’s IQ. Baill said this is particularly critical in the check cashing industry.

“What’s interesting is for positions in check cashing, EQ tends to be more predictive of success because you’re dealing with more people face-to-face, you have to know how to adapt your style to meet the needs of every customer who have their own different styles and preferences,” she said.

“While IQ can help you understand the in’s and out’s of a product, it can’t necessarily tell you how to adapt to a certain style.”

Range of Tests

Cost is a major differentiator in selection of personality tests by a company. There is a wide range of tests available on today’s market, from programs that are available for free online to others costing from $100 up to $5,000 per employee candidate.

Baill suggests you get what you pay for. “The problem with the ones you find online, such as Myers-Briggs, is they’re not very job-specific,” she said. “And they can’t tell you how well somebody’s going to perform in a certain job.”

The Inside Story of Tom Nix’s Pioneering Career

-By CHARLENE KOMAR STOREY

The ungainly title of Tom Nix’s new book does spell it out: Nixland: My Wild Ride in the Inner City Check Cashing Industry. It is, indeed, about Nix’s fabulously successful career as a check casher in inner city Los Angeles.

The tale of building and running the Nix empire is far from a boring one. But interesting as the business angle is, both to industry insiders and business people in general, there are other fascinating aspects to the story.

The Nix family never started out to be check cashers. The author’s father, Thomas E. Nix, was a sales manager for a company that that ran home service bakery routes.

It’s common knowledge that there used to be milkmen who would deliver dairy products to homes early every morning. But not everyone knows that, at least in some areas, there also were men who would carry their oversized baskets to each door so homemakers could choose everything from fresh bread to coffeecake.

In those days, although the majority of mothers stayed at home, most families managed with only a single car and children tethered mom to the house.

Most drivers owned their own trucks and operated like a franchise. In 1966, the company the senior Nix worked for was sold to one more than three times its size. Not all the route drivers liked the deal, and Thomas Nix Bakery Distributor began operating to supply them. The two Nix sons worked in the company as well.

A bakery thrift store opened as part of the company to handle the day-old products. As more families bought second cars and supermarkets expanded, home service suffered. Nix added more groceries to the store so drivers could augment their bakery stock and increase sales to the customers that remained. Still, it wasn’t long before the route drivers turned off their trucks for the last time.

Switch to Grocery

The Nix store was changed into a full-service mom-and-pop grocery store named the Mini Mart. They developed a three-pronged business strategy. First came cheap bread. Because of Nix’s connections in the bakery industry, they were able to get bread cheap, and they sold it for the same low price. Sometimes they cut the price even more and used the bread as a loss leader.

Second was top-notch service. The Nixes were all extremely friendly with shoppers, and made sure they hired only warm, friendly people. “It was a joy to shop at the Mini Mart,” Nix brags.

Third came, yes, check cashing, but again, with a difference. Unlike supermarkets, the Mini Mart wasn’t restrictive in its policies, and unlike liquor stores, it didn’t charge a fee.

Innovative Approaches

The Nixes pioneered the use of free photo ID cards for those without driver’s licenses, allowing them to cash checks quickly and easily. They also first used the Photoscope to capture the customer and his or her check on the same frame.

What’s more, they found ways to allow people who lacked conventional ID to cash checks, from having women with kids bring in a child’s birth certificate to compare signatures to allowing co-signers to guarantee checks.

In the 1970s, banks began analyzing their accounts to determine which ones cost them more then earned. They added fees to make up the difference, and Nix, like other account holders that cashed a lot of checks, suddenly found themselves hard hit. They had to pass on the expense to their customers.

They started charging a quarter per check, then raised it after a year to 35 cents. Volume wasn’t affected. That raised the idea that check cashing could do more than attract grocery buyers — it could be a profit center on its own.

The Nixes began to charge a fee of 1 percent of the face value of each check. Volume skidded by a quarter, but over three or four months, it climbed back most of the way. The move was a success.

Only?Check Cashing

Then Tom Nix proved the value of thinking outside the box. He came up with the idea of opening a free-standing, drive-through check cashing facility.

His father thought he was crazy, and it took some time to bring the founder around. But eventually, the Nixes transformed an old gas station that had been turned into an auto repair shop into the first Nix Check Cashing.

The check cashing chain was run by people brought up through the ranks at the Mini Mart. The philosophy of friendliness and respect for the customer was imported as well — an approach that would show its value both in building the business and in keeping it from being quite literally destroyed when inner city Los Angeles burned.

The innovation and risk-taking that characterized the beginning of Nix Check Cashing continued throughout its life, until its sale to, of all things, a credit union. Nix’s abortive efforts to team with Western Union to set up a nationwide check cashing chain, and the threatening situation that resulted, would make a story all its own. So would his hair-raising experiences in the Los Angeles riots, from rescuing besieged employees to securing large amounts of cash as the city went to pieces around them.

One of a Kind

While anyone in the industry should read this book for those episodes alone, what makes the book stand out is Nix himself. It’s not just that he admits that he made mistakes, from overextending his business to trusting city officials after being warned that they wouldn’t keep their word. Many business executives would glide over those events, but there are others who would admit to them, too. But Nix is one of a kind.

Nix’s well-earned image as a hard-driving businessman is underscored by the tales of his upbringing and brawling ways as a young man. But then Nix surprises you by revealing his long-held belief in the usefulness of self-help tapes. You’re sure that his toughness will bring him through the worst dangers of the riots, but you’re taken aback when Nix credits meditation for helping him hold things together.

The book never really brings together the disparate sides of Nix’s personality; in fact, it creates some doubt that Nix has done that himself. Nonetheless, it’s a fascinating look at a complex individual who landed in a unusual and challenging industry at a time when it was changing — and who was responsible for a great deal of that change himself.

KISS Complexity Good-Bye

By RICHARD B. KELSKY

“Keep It Simple, Stupid” or “KISS” was the brainchild of an engineer at Lockheed as a guide for technical projects. It works equally well in life.

If you think about it, when things have gone wrong for you, complexity was probably a big factor. That’s why “keep it simple” is a mantra for a great life.

Take the hail damage to your car. An “Act of God,” right? Except that it happened when it was parked outside your girlfriend’s house when it should have been parked inside your garage — next to your wife’s car.

And that time you slipped off the treadmill at the gym? Anyone can miss a step … except you did because you were flirting with that hunk one treadmill over.

Last week’s fender-bender? That idiot in front of you stopped short —while you were texting. And that cop who should never have pulled you over and given you a DUI? You guessed it – that extra round of shots — complexity.

Same in Business

The same thing happens in business. Some folks take the simple route: set up a corporation, get insurance, put employees on the books and pay taxes.

Others make it complex: only accept cash, pay their workers off the books, and hope the IRS doesn’t figure out that their monthly expenses are more than their annual reported income.

Some get away with it, at least for a while. Even if they do, when they reach 65 they can’t stop working because they don’t have a retirement plan and their contributions to Social Security were so small that they’ll collect only gas money each month.

Steve Jobs lived by simplicity, even though it took an effort to get there: “That’s been one of my mantras —focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”

Here and Now

While all of that stuff makes for interesting philosophical conversation, let’s focus on the here and now of being a Financial Service Business. Ask yourself if you are making your day-to-day business operations more complex than they need to be.

I can’t tell you how many times I’ve been asked to assist after a cash loss or during or after an audit with problems such as fraud, compliance (lack thereof), OPM (Other People’s Money), cash, liquidity, net worth and on and on.

Here’s one you’ll appreciate: I get a call late on a Friday night, long after I’m asleep, the voice on the message filled with panic and despair – an audit going badly and getting worse. I return the call early Saturday, expecting to find the caller in their store, working feverishly to get things straightened out – but it is answered poolside at a resort in the Caribbean.

“Rich, I need your help. I didn’t file some CTRs. It was my compliance officer’s fault; he’s a moron. The auditor is coming back in two weeks. What should I do?”

I resist the temptation to say what my father would have said, “You should have minded the store. You shouldn’t be on vacation.”

Instead, I start asking hard questions, most of which go unanswered. We agree to speak on Monday.

No call on Monday. The next time I hear from him, he tells me he’s selling the store and asks if I know of a job for him.

Ignoring responsibilities, letting problems pile up and avoiding dealing with issues brings complexity — a violation of the life rule of KISS.

Take Detroit for example. In denial of its economic crisis for years, it finally hired an Emergency Manager — Kevin Orr — who had Detroit file for bankruptcy. In an interview, Orr observed, “Delay doesn’t produce positive outcomes.”

Following the Rules

I admit that I might be considered a bit anal when it comes to following the rules. But there’s good reason for that. As a product of a ‘70s education and an ‘80s entry into the business world, I saw many of my peers cross the line —and some get into real trouble.

I always preferred to accept my losses as reality, picking up the pieces and moving forward. I realized that crossing the line produced complexity, and complexity meant risk, and risk meant trouble.

I’m not saying that I have had no complexity. A different kind of complexity. Mine was caused by work — too much of it. Day-trips to California and overnights in Europe. Time was my enemy. I slept less and less, and worked more and more.

A doctor friend recently reminded me that back in the 80s I said that I could train myself not to sleep. I got my sleeping down to 2.5 hours a night.

Product of Complexity

All of that was a product of complexity. I thought that I could counteract complexity by extending my workday to 18 hours. When I woke up behind the wheel, heading for a guardrail, I knew that was something I had to fix (luckily, I missed the guardrail).

By the way, when it came to school, I never, ever, did homework, and I crammed for every exam. It ultimately (and luckily) didn’t hurt my future, but if I had it to do all over again, I would study every night. I know now that it would have been far less complex and far less stressful.

When I started working after law school, I took the opposite approach. I did everything that was expected of me and more. I have maintained that daily work ethic to this day. It makes things much easier.

So when you’re told you need to do something for FinCEN, a state regulator, a bank, or your wire transfer or prepaid partners, just do it. Stop behaving like me in high school. You may find that doing what’s expected or required makes it a whole lot easier to run your business, because you are not spending time making excuses and managing self-created complexity.

Work at It

Whatever the cause of your personal complexity, the removal of complexity is a slow process that requires daily attention. You have to work at it constantly. You have to jealously guard your life from self-created complexity and invitations to complexity delivered by others.

Since we all bring complexity into our lives every once in a while, don’t be too hard on yourself if it happens rarely and the punishment is not too severe. But if it happens regularly, with high risk, and bad results, it’s time to get a grip.

Some indicators you may recognize are inability to sleep, irrational anxiety, overreaction and anger.

So Keep It Simple, Smartguy.

 

Richard Kelsky is president of TellerMetrix, a provider of POS transaction, compliance, interface, electronic deposit and marketing software to check cashers, payday lenders and retail banks. He is also a New York and Connecticut Bar member, a Polytechnic Institute of NYU and NY Law School grad, a Certified Anti-Money Laundering Specialist and a frequent lecturer on business, legal, compliance, and technology issues. He can be reached at rkelsky@tellermetrix.com. This article does not constitute legal advice and is an expression of opinion by the author and not of any entity or organization.

Opportunity Brings Responsibility

By RICHARD B. KELSKY

There’s no denying that the number of checks is decreasing.

But look at it another way: there was a time when this industry was 100 percent checks. Then came money orders, wire transfers, bill payments, payday loans, benefit payments, phone cards, lottery, transit passes, tax returns, title loans, subsidized housing, parking ticket and toll tag payments, gift cards, prepaid cards, direct deposit, prepaid unloads, gold, small dollar loans, credit card payments and bank deposits.

And the list of ancillary products keeps growing.

The fact is, ancillary products ain’t so “ancillary” anymore. Collectively, they now account for a major portion of business. Individually, some have become primary. And they all appeal to a broader customer demographic.

But the number of products alone does not ensure success. Your success with any product depends on the marketing, sales and management effort you put into it. And, as more ancillary transactions are moving to real time over the Internet, you need to change the way that you do things —right now.

Opportunity: The chance to succeed. The opportunities that new products present are huge. With each new product, you get the chance to attract new customers seeking those services, and introduce those new services to existing customers.

The key word is “chance.” Products don’t sell themselves. You can’t just take on a product and sit there.

Communicate with the outside world. Unfortunately, other than signs reflecting core services such as “Checks Cashed” and “Loans,” the industry has little experience in reaching potential new customers with broader demographics. And communicating with potential customers is the only way to get them in the door.

That requires a plan. You can start by retaining a marketing firm that has industry experience — most offer a range of support from small, targeted programs to broad, multi-level marketing. If that’s beyond your means, visit some successful local competitors and start doing what they do. Attending major trade events like the Financial Services Center of America’s Annual Conference and Exposition is mandatory: that’s where you find out what’s new in products, marketing and regulation, and what industry leaders are doing.

New products, properly marketed, attract new customers.

Existing customers need love, too. In the past, employees were your face to the customer — but after that smile and a few words, they had to be all-teller-all-the-time to protect you and your business.

Today, it’s different. Tellers need to be many things. Tellers, first and foremost, but also salespeople, supported by marketing and rewards programs, signage, advertising, multi-media, and mobile communications — and training. Training on products — features and benefits, cross-selling, what’s best for each customer, and proper handling of each type of transaction. Even with an experienced staff, this last type of training cannot be taken for granted.

Adapt policies to new products. With each new product, you will need to review your policies, and put in place appropriate operating, management, compliance, disciplinary and loss recovery policies to protect you, your business, and your customers.

These policies must be reflective of risk, both through negligence and deliberate wrongdoing. And while you’re considering risk, check your insurance to make sure that it covers things such as employee theft of monies from customer accounts and theft by misuse of services (such as employees loading their own prepaid cards).

Real time transactions. With real time transactions, the opportunities for increasing revenues, profits and customer base are endless. But remember, real time may mean that what used to be correctable mistakes (or wrongdoing) cannot be fixed today. Today, when the button’s pushed, the money’s gone.

And finding those “mistakes” can be tricky. That’s where POS integrated services can help improve accountability. Also, if your system has built-in teller reminders, use them.

Compliance. This area is expanding its reach into new products.

If your methods and systems are antiquated, compliance issues can be missed or deliberately sidestepped.

Teller dishonesty. If a card unload that’s supposed to be $200 becomes $300 (and the customer still only gets $200), very complex problems can ensue.

And if tellers load their own cards, that comes right out of your pocket.

Teller accuracy. Even assuming 100 percent honesty, accuracy is an equally important issue.

If your teller is on a cell phone or texting while handling a transaction, a $25 load can easily become $250 — in real time.

Business-quality Internet. Even if your POS system can handle transactions such as check cashing, loans, money orders, customer lookups and reporting without the Internet, you won’t be able to process other web-based transactions if your Internet lines are down or just too darn slow. Which means you need great Internet service.

That comes at a price (i.e. more than $19.99 a month for DSL that goes out every time it rains) — and that’s a price you have to pay. If you can get FiOS, get it. It’s ultra-fast and reliable. Regular cable can be OK as well, but in my experience, it can vary greatly depending upon provider, locale and speed options selected.

If you don’t know how to figure out what line to order, ask your IT professional.

Security cameras and VOIP phones suck the life out of Internet lines. So if your store is processing transactions at three teller stations, sending an electronic deposit, using two VOIP lines, streaming videos, and emailing — all while you’re watching the store through the camera system — be prepared to max out your Internet line. You’ll know when phone calls drop, camera images barely move, and Web transactions come to a halt.

You can pay someone to engage in complex load-balancing or just get the right line now to help avoid the problem. And no matter what you do, your Internet lines will go down —so be careful of how dependent you become on Web-based products, like VOIP, just to save a few bucks.

Knowledge is power. Become familiar with your store’s systems and Internet configuration. You need to understand your network, have a diagram of your network, know the components in your network (modems, routers, switches, power supplies, cables, wireless, network cards, PCs, etc.), any passwords needed to access your router or modem, and all of the relevant Internet contacts and account numbers.

Whatever you do, resist the advice of the help desk at your ISP to push the reset button on your router. It’s rarely a solution to an Internet issue — just a knee-jerk reaction of the unsophisticated support person who cares little about the damage they leave behind.

And that employee you say is an “expert” with computers? A person who turns off the monitor when asked to reboot the PC is never going to solve your Internet connection issues.

 

Richard Kelsky is president of TellerMetrix, Inc. a provider of POS transaction, compliance, interface, electronic deposit and marketing software to check cashers, payday lenders and retail banks. He is also a New York and Connecticut Bar member, a Polytechnic Institute of NYU and NY Law School grad, a Certified Anti-Money Laundering Specialist and a frequent lecturer on business, legal, compliance, and technology issues. He can be reached at: rkelsky@tellermetrix.com. This article does not constitute legal advice and is an expression of opinion by the author and not of any entity or organization.

Cordray Appointment Now Unquestioned

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By PHILLIP LEE

Things are clearer at the Consumer Financial Protection Bureau.

That’s because Richard Cordray was confirmed by the Senate and “officially” appointed as director of the agency.

Cordray, who was confirmed by a vote of 66-34, has been director since January 2012 via recess appointment. Since the duration of a recess appointment is only for a year, Cordray was re-nominated by President Barack Obama this past January.

The Financial Service Centers of America, the Community Financial Services Association and the Online Lenders Alliance stressed that they will continue to work with Cordray and the CFPB.

“We’ve considered Richard Cordray our director for the past two years since the CFPB was created,” says William Sellery, executive director of FiSCA. “We will certainly continue working with the CFPB to ensure their regulations recognize the role of small dollar credit products and our members.”

“CFSA and its members have had a productive relationship with Director Cordray and his staff since the CFPB’s inception, and we look forward to continuing our dialogue,” CFSA says in a statement.

“Director Cordray and his staff have always been open to meeting with and listening to CFSA and its members, and we find that encouraging in terms of our relationship and ongoing work with the Bureau.

“Since the CFPB’s creation, OLA and its members have enjoyed a cooperative and productive relationship with the bureau. Our members meet with Director Cordray and his bureau chiefs regularly to educate them about the short term, online lending industry and the consumer demand that drives its growth,” said Lisa McGreevy, president and CEO of OLA.

“The CFPB was created to confront 21st Century financial challenges. Consumers are increasingly using 21st Century technology to pay bills, access credit and purchase goods and services online and our industry is using technological innovation to meet their short term lending needs. We are working with the CFPB to ensure the regulations recognize the innovations in the financial services industry used by industry and consumers.”

Controversial Agency

Cordray was originally tabbed for the position in July 2011, but his confirmation was blocked by Senate Republicans. His confirmation was stalled not necessarily because he was unqualified, but because legislators had problems with the CFPB as an agency in general.

President Obama decided to use his recess appointment privileges and installed Cordray as director of CFPB in January 2012.

Cordray was thrust into controversy this past year when a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit handed down a decision that President Barack Obama’s National Labor Relations Board appointments “were constitutionally invalid” because the Senate was not in recess. Those appointments were made at the same time Cordray was appointed.

The reason it may affect Cordray and the CFPB? Cordray was also a recess appointment, made on the same date as the NLRB members.

In the published report, the lawsuit was brought by a soft drink bottler who lost a union dispute before the NLRB. The company claimed that the president had no power to appoint the new NLRB members, and that the subsequent action by the board therefore lacked legitimacy.

If the ruling stands and the appointments were nullified, the results would be that all the actions since the members were on the board would be voided.

Critics of the CFPB have said that ruling would apply to Cordray and void any actions and regulations that he put forth as well.

Since then, the Senate worked out an agreement to confirm President Obama’s executive nominations. However, the lawsuit on the recess appointments has been appealed and headed to the Supreme Court of the United States.

There still is a pending lawsuit filed by State National Bank of Big Spring, Texas, against the CFPB. The bank, along with two organizations, is challenging the constitutionality of the agency.

Two Agreements Yield Very Different Results

 

By RICHARD WEATHERINGTON

When agreements were drafted in the past, payday lenders may not have paid a lot of attention to the design and layout of the form. But in some cases, the attention to the design can be important to the very enforcement of some of the agreement’s previsions.

Recently, two very different agreement layouts resulted in contrasting enforcement outcomes.

Two check cashing corporations operated a company engaged in delayed deposit check cashing. The payday lender was licensed in Mississippi and governed by the Mississippi Check Cashers Act.

A number of payday loan transactions took place in Clarke County and Newton County, Miss. In Clark County, 20 customers contracted with the lender for cash advance services. Twelve customers did the same in Newton County.

Both sets of customers signed one of two specific agreements with the lender.

The first version of the agreement was signed by eight of the 32 customers. It was one page, front and back, with a variety of font sizes, and was the older of the two agreements; it was last revised on April 12, 2001.

The remaining 24 customers signed the second agreement, which appeared to have been created on May 31, 2005. The entire second agreement was contained on one side of a single page.

Apart from the transactional terms listed at the top of the page and the eight bolded headings, the text of the agreement was essentially uniform in size and style. Each agreement also contained an arbitration provision. But the wording and style of the provisions were noticeably differed.

Two Lawsuits

The two groups of customers filed separate lawsuits, one in Clarke County, the other in Newton County. They claimed the lender had fraudulently represented the terms of its service charges and fees and exhibited a pattern of “predatory lending,” trapping the customers in a never-ending cycle of debt repayment.

Both suits alleged the lender had (1) breached the covenant of good faith and fair dealing; (2) negligently handled the customers’ accounts; (3) caused the customers to suffer emotional distress and mental anguish, (4) negligently hired, trained, and supervised its employees; and (5) fraudulently misrepresented the terms of the service charges and fees.

Citing the arbitration provisions in the two delayed deposit agreements, the lender filed a motion to compel arbitration in each case.

But the Clarke County Court entered a written order denying the lender’s motion to compel, finding the two arbitration provisions procedurally and substantively unconscionable.

The Newton County Court followed suit and also denied arbitration.

The Newton County Court “piggy backed” the Clarke County Court’s specific reasoning for denying arbitration.

The lender then appealed the denial of arbitration in both cases to the Mississippi Court of Appeals, and the Appeals Court consolidated the two cases on appeal.

Because the grant or denial of a motion to compel arbitration raises an issue of law, the Appeals Court review is from a fresh point of view.

According to the Federal Arbitration Act, arbitration agreements shall be valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. Doubts about the availability of arbitration must be resolved in favor of arbitration.

Does the FAA Apply?

Because the customers challenged the applicability of the FAA, the Appeals Court said it must first determine if the FAA applied to the arbitration provisions in the delayed deposit agreement.

The FAA governs the arbitrability of contracts evidencing a transaction involving commerce, and Mississippi has endorsed the undisputed dominion of the FAA, recognizing that it controls those agreements formed in interstate commerce in which a contractual provision provides for alternative dispute resolution.

Concerning the applicability of the FAA to these particular contracts in dispute, the Appeals Court said its threshold determination is whether the delayed deposit agreements between the lender and the customers “involve commerce” and thus fall within section 2 of the FAA.

Here, the customers argued that the circuit court incorrectly found the FAA applied to what they deem were wholly intrastate contracts.

As they saw it, because all parties were Mississippi residents, the delayed deposit agreements were not contracts “evidencing a transaction involving commerce.” The Appeals Court disagreed.

The court noted that, there must be some involvement with commerce, but it need not be substantial in each particular transaction.

The United States Supreme Court has interpreted the phrase “involving commerce” within section 2 of the FAA as the “functional equivalent” of “affecting commerce.” And the requisite connection for FAA governance of a contract’s arbitrability is met if in the aggregate the economic activity in question would represent a general practice subject to federal control.

Banking and related financial activities are of profound local concern. Nonetheless, it does not follow that these same activities lack important interstate attributes.
Thus, for purposes of application of the FAA, when assessing whether the contract involves commerce, only the “general practice need bear on interstate commerce in a substantial way.”

Specifically, said the Appeals Court, in the context of payday loan contracts between licensed check cashers and their customers, the Mississippi Supreme Court has previously found a sufficient connection to interstate commerce, partly based on the transactions being subject to the Truth in Lending Act.

The second delayed deposit agreement cited the FAA and noted that certain disclosures were made in accordance with the Truth in Lending Act. Although the first agreement lacked a similar expression, it disclosed the same information as the second.

Still, noted the Appeals Court, regardless of whether the particular federal protective regulations were cited, because the lender — a lender of money to consumers — must operate in accordance with the Truth in Lending Act, its lending activities involve commerce.

When viewed in the aggregate, the Appeals Court found that the general check cashing services performed by the lender affected interstate commerce. Therefore, the circuit judges correctly held that the FAA applied to both arbitration provisions.

External Legal Constraints

Having found the FAA applied, the Appeals Court said it next must decide if the motion to compel arbitration was properly denied as substantively and procedurally unconscionable.

The Appeals Court said its review would begin with a two pronged test focusing on the specific arbitration agreements and whether legal constraints external to the agreements bar arbitration.

Under the first prong, there are two considerations: (1) whether there is a valid arbitration agreement and (2) whether the parties’ dispute is within the scope of the arbitration agreement.

Under the second prong, the court would decide whether legal constraints external to the parties’ agreement bars arbitration of the claims. To evaluate if such legal constraints exist, courts generally should apply ordinary state law principles that govern the formation of contracts.

The Appeals Court said it agreed with the circuit judges that the disputes were within the scope of the arbitration agreements.

But whereas the circuit judges found the provisions substantively and procedural unconscionable under the first prong, the Appeals Court said that it was more appropriate to address these state law based external legal constraints, which, if applicable, would preclude abritrability under the second prong.

Unconscionability

Unconscionability has been defined as an absence of meaningful choice on the part of one of the parties together with contract terms that are unreasonably favorable to the other party.

There are two recognized types of unconscionability, said the court, “procedural and substantive.” Here, the circuit judges found the two arbitration provisions were both procedurally and substantively unconscionable.

In reviewing these findings, the Appeals Court pointed out the differences between procedural and substantive unconscionability.

Procedural unconscionability may be proved by showing a lack of knowledge, lack of voluntariness, inconspicuous print, the use of complex legalistic language, disparity in sophistication or bargaining power of the parties, and/or a lack of opportunity to study the contract and inquire about the contract terms.

Procedural unconscionability is most strongly shown in contracts of adhesion or more commonly known as a “take it or leave it contract.”

Substantive unconscionability, on the other hand, may be found when the terms of the contract are of such an oppressive character as to be unconscionable.

Substantive unconscionability is present when there is a one sided agreement whereby one party is deprived of all the benefits of the agreement or left without a remedy for another party’s nonperformance or breach.

First Agreement

The Appeals Court noted that the first delayed deposit agreement was signed by eight of the 32 customers. It is one page, front and back, and is entitled “Agreement.”

The front page lists the basic terms of the contract, including the annual percentage rate, finance charge, amount financed, and total amount owed. The front of the page also provides signature lines for the customer and the lender’s employee to sign, acknowledging their acceptance of the agreement’s terms.

The back of the page lists additional terms, including the arbitration provision. These additional terms are in paragraph form, but there are no separate headings, no bolded words, no capitalized words, and no distinguishable provisions.

The print used on the back page is smaller than on the front. The arbitration clause, which is found in the fifth of these nine nondescript, small print, back page paragraphs, states:

“Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association (AAA) and judgment on the award rendered by the arbitration may be entered in any court having jurisdiction thereof.”

The Clarke County judge noted the arbitration clause was intermingled with other non-distinguishable provisions and that it did not even distinguish the paragraph with the arbitration language as an Arbitration Provision.

There was nothing in that first contract that would draw the readers’ attention to the arbitration language, nor was the paragraph highlighted from the rest of the text.

Furthermore, the Clark County judge labeled the agreement one of “adhesion” or lopsided bargaining power because the lender had offered it to the customers on a “take it or leave it” basis, with no real opportunity to bargain about its terms. Both judges found the first arbitration provision was procedurally unconscionable.

CFPB Opens Fire On Industry

By PHILLIP LEE

The honeymoon is over between the Consumer Financial Protection Bureau and the payday lending industry.

According to a CFPB report, payday loans and deposit advance products lead to a cycle of indebtedness for consumers.

“This study confirms that payday and deposit advance loans, while designed for short-term, emergency use, are leading many consumers into long-term, expensive burdens,” said CFPB Director Richard Cordray.

“For too many consumers, payday and deposit advance loans are debt traps. And the stress of having to return every two weeks to re-borrow the same dollars after paying exorbitant fees and interest charges becomes a yoke on a consumer`s financial freedom.”

The report, which was released in late April, claimed that loose lending standards, high costs, and risky loan structures may contribute to the sustained use of these products, which can trap borrowers in debt.

The CFPB did recognize that there was a demand and usefulness for the small-dollar loans.

“These types of credit products can be helpful for consumers if they are structured to facilitate successful repayment without the need to repeatedly borrow at a high cost,” the report said.

“However, if the cost and structure of a particular loan make it difficult for the consumer to repay, this type of product may further impair the consumer’s finances. A primary focus is on what we term ‘sustained use’— the long-term use of a short-term high-cost product evidenced by a pattern of repeatedly rolling over or consistently re-borrowing, resulting in the consumer incurring a high level of accumulated fees.

Not surprisingly, the report was not well received by the payday lending industry. In a letter from Dennis Shaul, CEO, Community Financial Services Association of America to Codray, there was a definite sense of disappointment with the CFPB.

Shaul indicated the industry had cooperated with the CFPB over the last two years in sharing and providing information about the industry and CFSA’s members and customers, but was surprised the agency did not seek out more information for the report.

CFSA Strikes Back

“Given our history of collaboration, we were surprised that the Bureau did not attempt to learn more from the industry’s national trade organization to inform its report,” Shaul said.

“Not only are the data demonstrably incomplete and misleading, but the tone, conclusions, and specific language within the report seem aligned with the type of rhetoric that more often comes from advocacy groups that are not always driven by facts, but rather are driven by agendas and unsupported, anecdotal information.”

One of the criticisms was that there was a lack of dissemination of information to the consumer about payday loans and their costs. Shaul aid that was unfair to CFSA members.

“CFSA members adhere to a strict set of mandatory Best Practices, which serve as the industry standard and address many of the concerns raised by the Bureau in its report,” Shaul said.

“These include a right to rescind, a limitation on rollovers, and an Extended Payment Plan that allows customers to repay their payday loan over a longer period of time at no additional charge.

“Given that some lenders operate completely outside the law, and do not provide for the same important consumer protections that CFSA member companies do, it is exceedingly unfair and irresponsible for the Bureau to paint an entire industry with the same brush,” he added.

Still Open

Shaul indicated that CFSA would continue to work with the CFPB and provide information as requested.

“Despite our disappointment, let me make clear our industry’s continued interest in working collaboratively with the Bureau,” Shaul said.

“As we noted in our initial public response to the report, we appreciate the Bureau’s ongoing efforts to understand the role of small dollar credit products, and we share the mutual goal of protecting consumers and providing them with safe, responsible financial products.”

The Financial Service Centers of America also avoided burning any bridges. “We value our relationship with the CFPB and appreciate their efforts to understand the role of small dollar credit products and our members ,” it said in a statement, adding, “We are still reviewing the full report and plan to discuss the findings with the CFPB in the coming days and weeks, as we continue our dialogue with them.”

At the same time, FiSCA defended its members. “FiSCA members offering payday advances adhere to a rigorous Code of Conduct which can be viewed in detail on our Web site,” it stated. “FiSCA members are licensed lenders who comply with all federal, state and local regulations. Additionally, transparency is a key element of the payday advance product. Before entering into a transaction, the fees and terms of a payday advance are fully disclosed and posted in every store, and included in every contract.”


Cash Handling: The 24-Inch Frontier

By SAM BOSCH, President, Peregrin Financial Technologies

Information technologies have affected societies worldwide as significantly as the advent of electricity, wireless communication and manned flight. With the use of computers we can now land Curiosity on Mars, confirm the existence of the Higgs boson (“God’s particle”) and control the flight of unmanned drones any place in the world from an Air Force cubicle in the Nevada desert.

In the last decade, computer technologies have become much more functional and much less expensive. If the automotive industry had enjoyed comparable advances, we could now purchase a Mercedes Benz for $2.50 and get 100,000 miles to the gallon.

The payday loan industry has already benefited from computers through improved accounting and email communication.

Computers and the Internet enable an employee at a payday loan store to enter data into a computer and receive — from multiple databases, in a few minutes — information about an applicant needed to decide whether to provide a loan.

But the last frontier for the industry is the handling of cash — the 24 inches between the cash drawer and the customer’s hand.

Store clerks manually count and recount banknotes a number of times before handing them to the customer. Now there is an affordable and simple information technologies solution for this task.

Utilizing the information technologies incorporated in automated teller machines, coupled with Internet connections and unique application software, management can track in real time all payouts and cash balances in addition speed up transactions for staff and customers.

Cash Handling Is Expensive

At this year’s CFSA Conference, John Hecht of Stephens Inc., stated that in 2012 the payday loan industry dollar volume for the 19,000 payday stores was $30 billion.

Assuming $20 notes, the total number of bills “touched” a number of times before being received by the loan applicant was 1.5 billion! This manual task is labor intensive and subject to errors and risks. Historically, there has been no real-time way to measure or control this activity.

Financial institutions have calculated that the cost of handling cash is 1 percent of sales — a small percentage, but the total cost is significant.

To improve the tasks of cash handling and to reduce its costs some banks have invested in the teller cash dispensers marketed by Diebold, Burroughs and NCR. These cash products can dispense four or more different denominations very quickly and often can be used by two adjoining tellers.

Financial institution TCDs can also be linked to the branch’s computer system, but they are not Web-enabled, and they are very expensive — $18,000 to $30,000.

Although some of the features of these products are attractive, their cost puts them out of the reach of payday loan storefronts.

Affordable Solution

But now, by utilizing the basic technology of ATMs plus innovative software such as the SeguraCash application from Peregrin Financial, payday storefronts can afford TCDs.

Here’s how it works. The clerk is issued a unique mag-stripe card that has a number of parameters assigned to it: the maximum amount of money that can be dispensed in one transaction, say $100 to $1,000; a time-delay between dispenses, say zero to 10 minutes, and the total amount that card can dispense in one day, say $1,000 to $10,000.

These parameters are selected when the mag-stripe card is issued to the employee and can be changed at any time.

At the beginning of the business day, the TCD’s cassettes are loaded with cash. When a payout is desired, the clerk simply swipes the special mag-stripe card into the machine, which is generally located right at his/her station.

Once he keys in the four-digit PIN assigned to that card, the TCD displays up to five pre-selected cash amounts, ones that are commonly used in the course of a day’s business, plus a sixth option that allows the employee to key in a different number if one of the displayed-values is not the desired amount.

If the card number, PIN, dollar amount, and the delay period are all valid, the TCD accurately and securely dispenses the bills at a rate greater than two bank notes per second.

It then prints a receipt with the TCD’s ID number, the date and time of the transaction, the card number and the amount dispensed. The employee counts the bills one time in front of the loan applicant.

Real-time Monitoring

In addition to dispensing banknotes at the storefront, a TCD has the important advantage of being Web-enabled. This means that all dispense transaction can be monitored in real time.

A payday loan company headquartered in Houston with hundreds of stores across the United States can with equal ease access transaction activities 24/7 for payday locations in Los Angeles and Boston, or in Vancouver and Montreal if some locations are in Canada.

ATMs are actually specialized personal computers: they have microprocessors, memories, keypads, built-in Internet connections, and displays. Their functionality also includes reading mag-stripe cards and dispensing cash.

Two decades ago, a dial-up merchant-ATM with limited features cost $10,000 or more. Now, because of the advances in technologies and the advantages of high-volume manufacturing, an entry-level ATM dispensing a single denomination can be acquired for less than $2000. Multi-denominational equipment tops out at less than $6000.

Using a TCD incurs a small per-transaction fee but avoids interchange fees, surcharge fees and bank sponsorship fees.

Like merchant ATMs, these TCDs are Web-enabled, which means all cash dispenser transactions are logged and can be remotely monitored from any Web-enabled device — a personal computer in a home office or even a smart phone on Waikiki Beach.

The cash balances in the TCD’s cassettes can also be viewed in real time.

It’s an opportune time to consider modernizing a store front with new TCD technology. Because they are electromechanical devices the cost of TDCs are not expected to come down much further. Future improvements in the software will add functionality, but won’t require new equipment.

Forecasts are that in the near future more than 10 percent of payday loan and check-cashing storefronts will install TCDs that will not only improve the security and efficiency of getting cash handed that last 24 inches across counters, but will also provide important management tools for the payday loan and check cashing industries.

Sam Bosch is the founder and president of Peregrin Financial Technologies, a company that develops and markets merchant- and consumer-activated cash logistics products and services. Contact him at (503) 690 1111 or sam@peregrin.net

My Epiphany or How I Wasted Half-an-Hour of My Life

By RICHARD B. KELSKY

For as long as I can remember, people have complained to me about banks. Being a large bank groupie, I have always defended them. I still do. But my thinking has evolved to recognize that some of the complaints I used to dismiss may be well-founded.

I began this journey by realizing that my viewpoint was influenced by my unique realities: (1) I am accustomed to preferred treatment, (2) I have never paid a bank fee, (3) I don’t borrow money, (4) I don’t carry credit card balances, and (5) I don’t use banks for small-scale and walk-in financial services typically provided by a neighborhood financial service center.

That said, I recently had an epiphany: (1) Banks are essentially incapable of delivering small-scale and walk-in financial services, and (2) people who live paycheck-to-paycheck (or thereabouts) can become victims in a bank.

The Story

So, here I am, in a small town, needing a $100 gift card. Sounds like a no-brainer, huh? Guess again.

Let me begin by telling you that I stupidly passed up buying that card at the checkout counter of the convenience store where I was getting lunch. All it would have taken was selecting the correct card off a rack and handing the clerk the cash. There would have been no conversation, no interrogation, no attempts to make me feel like a criminal or an idiot.

But I, being a genius, decided to go to a bank — a major bank — to get the card. After all, I have had an account there for more than 10 years, so it would be easy.

I walk in and quietly join the line. By the way, there is absolutely no reason for that line. It only exists because it is moving forward at a snail’s pace – if it is moving at all. Many bank employees are milling about behind the counter, and more are wandering the lobby, but only two are actually waiting on customers.

It immediately occurred to me that people stand on line in banks as if they have no right to expect or demand better service.

Watching the interactions with the tellers, I observed that the customers must accept being ignored, treated as if their time is valueless, treated as if they are stupid, treated as if they are trying to cheat the bank, treated as if they are anything but a customer.

That is, of course, unless they come in frequently, the bank employee knows that they have a lot of money in the bank, or their kids go to the same school.

I tell myself that I can handle the wait. I actually visualize getting to the counter, handing the bank teller $105, and getting the card and my change in only a minute once I reach the window — if I ever reach the window.

Minutes pass, and I eventually get to the front of the line. Almost done —not.

The Indignities Begin

With $105 in my hand, my lunch sitting on the floor, I politely ask for a $100 gift card.

The immediate response (spoken in the loud and scolding tone of a school principal from the 1950s who has just caught a pupil in the hall without a pass) is: “Do you have an account here?” I responded in a quiet tone, “Yes.” Do you have an ID? I again quietly responded, “Yes.” I hand over my driver’s license.

The teller walks to a computer terminal on the other side of the floor. After a few minutes of feverish typing, the teller returns and tells me that they cannot find me in their system.

Just to remind you, (1) I am trying to buy a $100 gift card for cash, and (2) I am an authorized signer on several accounts in this bank.

She then asks, “May I have your Social Security Number?” (Which she feels the need to shout to the entire branch as if to announce “I’ve caught another criminal.”).

Not wishing to announce my Social Security Number, and finding her inability to locate me in their system somewhat annoying — if not scary — I tell her “absolutely not,” and ask for the manager.

I end up with a more senior teller because the branch manager is out to lunch. After all, why should there be any on-site management at a branch of a major bank?

“What is the name of your company?” she asked. In a quiet tone, I told her.

Have you guessed what happened next? After a while, she told me, “I cannot find that company in our system.” By this point, I felt like Jean Valjean in Les Miserables. The silent alarms have been activated, and Inspector Javert will walk through the door at any minute.

And the Actual Retail Price Is …

I protested that that was impossible, but the insanity persisted. After another few minutes the senior teller was talking to me like I was trying to trick the bank into committing the capital offense of selling me a $100 gift card.

By the way, I still had no idea what the bank charge was for that card. They keep that a secret, because you are supposed to pay anything they ask you to pay (if they decide to grant you permission to pay).

A server in a fast-food restaurant has to tell you how many calories are in a Big-Burger with cheese, but bank fees and charges are a matter of national security.

One Heck of a Computer System

I then dug through my wallet and found a card for the account. I handed it to the senior teller, who after another minute, finally found the account. After 10 minutes of putting me into an orange jumpsuit and leg shackles, for the entire branch to see, she announced, “Ha, ha, ha, ha, you see, if I don’t type in the name of the company with the exact spaces and ‘Inc.’ exactly the right way, I can’t look it up.”

Can you imagine how they check the OFAC/SDN list? I can’t.

Never mind. I just need the gift card. She tells me that it will be $103.95 (by the way, that’s 3.95 percent for the privilege of their taking my cash and handing me a card, which is more than twice the permitted check cashing rate in New York and an effective APR of something close to infinity).

I hand her the money, she takes another minute at the computer, and to make change, and hands me the change and the card.

The only reason that I survived this experience was because (1) I am able to defend myself, (2) I don’t have a “lunch hour,” and (3) I don’t give a damn about my relationship with this bank.
Many people are not in the same position.

Most of you know me. My hair is less than traditional, and if you catch me heading to the farm, my clothes may be as far from Fashion Week (except maybe Ralph Lauren) as they can get.

And that’s who I was when I went to the bank for the gift card. Just an ordinary person seeking walk-in financial services. For many people, that’s who they are 24/7. And visualizing them brought me to my epiphany.

When you are insulated from a paycheck-to-paycheck life, it is hard for you to understand the vital role played by Financial Service Providers. If you qualify for a home mortgage, or an overdraft or business line-of-credit, have too much cash to keep in your mattress, and don’t need walk-in financial services, banks are a good place for you. But they may not be a good place for everyone.

My Conclusions

1. Banks are essentially incapable of delivering small-scale financial services.
They can’t provide them quickly.
They can’t provide them economically.
They work through disconnected employees.
Their average customer is just a number.
They cannot manage real-time risk (heck, they may not be able to look up an account).
They charge more for ancillary services.
They don’t want to serve people on a walk-in basis.
They cannot deal with anything that does not conform to their world.
2. Ordinary people can be victims in a bank environment.
If I act like an ordinary person, I get treated poorly.
If I have little money, I get treated poorly.
If I dress down, I get treated poorly.
If I don’t know enough to say “no” or “enough is enough,” I get treated poorly.
If I don’t have an account, I get treated poorly.
If I have an account but don’t produce enough fees, I get treated poorly.
If I don’t produce enough fees, I get charged more fees.

Banks cannot handle the transactions required by the portion of our society that banks don’t want to serve in the first place — they just pretend to because it is politically correct.

Part of that political correctness is to attack those who actually do it well, and to support banks who pretend to be making services available to the so-called “unbanked.” (They even created the name “unbanked,” because it implies a lack of something other people have and can’t live without.)

In reality, while television ads make banks look great, obtaining everyday financial services at a bank can be expensive and difficult.

Financial Service Providers actually understand their customers and care about them.

FSPs want to provide services, rather building roadblocks to access. FSPs want ongoing relationships, formed on good customer experiences. FSPs are willing to provide financial services that banks cannot, are unwilling to, or are unable to provide efficiently or economically. All with an amazing transparency — and, in most states, Financial Service Providers are regulated, subject to government audit and rates set by law.

Richard Kelsky is president of TellerMetrix, a provider of POS transaction, compliance, interface, electronic deposit and marketing software to check cashers, payday lenders and retail banks. He is also a New York and Connecticut Bar member, a Polytechnic Institute of NYU and NY Law School grad, a Certified Anti-Money Laundering Specialist and a frequent lecturer on business, legal, compliance, and technology issues. He can be reached at: rkelsky@tellermetrix.com. This article is an expression of opinion by the author and not of any entity or organization.