Turning the Tables: AI Will Help Consumers Fight Bank Fees & Penalties

There’s an interesting article in today’s WSJ about DoNotPay, a free AI-powered chat-based service that was built to help London residents automatically fight parking tickets.  That service has now assisted 400,000 consumers fight off $11 million in fines (more background at TechCrunch).

It’s the brainchild of then 17-year old Joshua Browder (who is now 19, and of course, studying CS at Stanford). But Browder is not content beating the meter reader. He is now gearing up to equip everyone with free AI-powered law tools to take on bigger injustices and issues (see DoNotPay overview video above). His latest work, a tool to make it easy to process a no-fault divorce, something that typically can cost $10,000.

The article mentioned a few more areas ripe for this type of tool: airline restitution for delays and lost luggage and battling telemarketers and landlords.

But one area that’s sure to attract multiple consumer AI startups: bank fees, penalties, credit decisions, and more. What are you going to do when you start receiving hundreds, if not thousands, of cease & desist letters challenging NSF charges, late payment fees, and so on? Or worse, suing you in small claims court or threatening arbitration (see the current default “problem” at DoNotPay, how to sue Equifax for $25,000, inset).

You are not going to be able to afford the legal expense to fight for a $35 NSF fee. Eventually, you’ll have your own AI to fight their AI, but that’s a ways away (though if you saw Tim Huber’s AI talk at FF, it may be closer than we think).

An even bigger issue are all those sketchy charges on bank credit and debit card. It’s not a stretch to imaging the consumer’s AI routinely filing disputes and following up over and over again until you and/or the merchant capitulate.

Bottom line: Make sure your penalty fees are appropriate, well communicated, and understood by customers. And you might want to pay a bit more attention to new technologies available to answer customer queries, and even legal threats, in a semi-automated fashion.

Author: Jim Bruene (@netbanker) is Founder & Senior Advisor to Finovate as well as Principal of BUX Advisors, a financial services user-experience consultancy. 

Supreme Court Ruling Just Another Factor in Interchange Suits

A unanimous U.S. Supreme Court ruling this week that the parties to joint ventures aren’t engaging in price fixing as long as the joint venture itself is competing in the open market is unlikely to derail the many class action lawsuits over interchange being fought in Federal court.

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DataTreasury, NCR Settle Patent Infringement Case

In the latest in what seems an unstoppable march, DataTreasury Corp. settled its outstanding patent infringement litigation in the U.S. District Court for the Eastern District of Texas with NCR Corp., paying DataTreasury a fee and agreeing to license the Melville, L.I. company’s check imaging technology. DataTreasury said NCR had been infringing on DataTreasury’s patent rights. It’s the latest in a series of settlements stemming from a number of similar suits that DataTreasury filed in 2002.

DataTreasury, which has already settled its litigation against JP Morgan Chase & Co., Ingenico Group, and other firms that it says also infringed on its patent rights, is still suing several other big financial services firms– including First Data Corp., Citigroup, SVPCO and Bank of America, among others—on the same grounds.

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Interchange Front Shifts to Germany

Germany’s federal monopolies body, the Bundeskartellamt, received a legal complaint from the German Retail Association, alleging that interchange fee charged MasterCard and VISA, which average 150 basis points, prevents widespread credit card acceptance in Germany.

In a statement, the Association, a lobbying group, said that credit card payment account for only 5 per cent of all retail sales in Germany. The complaint calls on the Bundeskartellamt to cut interchange fees and to increase payment card transparency. It claims these steps will improve competition in the credit card sector. Spain, says the group, has ordered a step-by-step reduction of interchange to between 0.54 per cent and 1.10 per cent by 2008.

FFIEC Will Cause Financial Network Security Confusion

This year we can expect the computer security arms race to keep scaring the daylights out of anybody who understands what’s going on. Also: Look for confusion in the financial community about complying with the Federal Financial Institutions Examination Council’s (FFIEC) mandate to install two-factor authentication by year-end.

The main story on the hacking front is the upward spiral of money and resources on the black hat side, and the vigorous defense mounted by the white hats, now that real criminals are on the scene, says Kawika Daugio, director of Northeastern University’s information assurance program. “We’ve seen more and more professionals involved,” he says. “It’s the standard trend because, as the difficulty [to successfully attack a protected network] increases, the scale required and the sophistication required to make it pay, go up.”

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Federal Anti-Money Laundering Regulations

Get ready for Patriot Act II, says Peter Djinis, a former FinCEN official now practicing law in the Washington, D.C., area: The reach of U.S. anti-money laundering (AML) regulations will keep growing in 2006—from banks, brokerage houses and the like, which have been under the AML umbrella for years, and into industries like insurance, gems and precious metals, hedge funds, investment advisors, and off-shore real estate transactions.

The source of life insurance policy payments, for instance, is about to get a close look, and the ingenuity of bad guys is to blame. Djinis mentions a case broken by the U.S. Customs Service in 2003 in which Columbian drug cartels were buying U.S. life insurance policies with offshore money, cashing them out for near-face value in the U.S., and then either getting the money directly, or having it paid to third parties. “The paper trail was all messed up—(criminals) had all sorts of explanations of why they had that money, and none of the policies showed the illegal nature of the funds that bought the policies,” he says.

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Pending Financial Data Protection Legislation

Data protection is probably the biggest payments-related portion on Congress’ 2006 plate, says Nessa Feddis, the American Banker’s Association’s senior federal counsel.

Whatever law eventually emerges-as many as six were proposed last year-the topic was a natural for Congress, which has had to at least appear to respond to last year’s flood of data breaches. An industry-supported bill sponsored by Sen. Jeff Sessions was passed by the Senate Judiciary Committee in October (see Electronic Payments Week, Oct. 25, 2005), but it died  before it could come to a vote. "The enthusiasm for data protection [legislation] was a bit complicated by the fact that there are six committees involved," says Feddis.

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