I have been a State Farm customer for 60+ years, ever since my first car and apartment. Recently I've noticed a change in their billing policy. I used to get statements for the car, house etc a few weeks before they were due. This week I received correspondence regarding my car insurance, including an enclosed "courtesy remittance slip." It states quite clearly that this is not a bill, but I can use it to make a payment before the next bill arrives.
My next payment is due in two months. I ran the numbers. If I keep my funds in my credit union and wait to pay this in November, I will gain a dollar or two, which is not big money. But if you multiply this by the approximately 100,000,000 policies that State Farm services, it becomes a useful chunk of change for the corporation.
This is all legal. It's not predatory or manipulative. But it adds to my growing dissatisfaction with American corporate business policies. Am I being unreasonable?
Being another frugal slightly younger person then you. I pay my State Farm premium online using my credit card the week before it's due so I get the 2% back from the credit card.
ReplyDeleteI'm going to have to give that a go!
DeleteThe are currently having to pay out a $6 billion "dividend" to their car insurance customers because claims were well below premiums. The money has to come from somewhere other than the investors.
ReplyDeleteState Farm is owned by its policy-holders, not a bunch of fat-cat investors.
DeleteThis is correct. That's why the proper name of the parent company is State Farm Mutual Automobile Insurance Company. The reported dividend is being paid to policyholders.
DeleteIt's not predatory or manipulative.
ReplyDeleteI would argue it is both.
Because the only intention can be to have people pay early, and make money of that.
That is predatory and manipulative because a lot of people who are not paying a whole lot of attention will end up paying early, and State Farm will make boatloads of money of that without rendering any service.
Which IMHO just makes this stealing. They're taking money out of people's pockets without them noticing.
BTW, I am not very interested in arguments over individual responsibility. This is a big corporation exploiting using their corporate psychologists, finance thieves and lawyers to take money from their customers without rendering any service. This is sole the purpose of this policy change. This makes the relation between the company and the customer abusive because it is unequal. Yes, as a customer you should protect yourself, but you should not have to. This should not be accepted as normal behavior.
"Personal responsibility" often is shorthand for "a problem is being offloaded to you and I don't care".
Where is the CFPB when you need it? (rhetorical question)
Finally, something being legal does not make it normal, (morally) acceptable, or advisable. Cheating (on your spouse) is legal. But not normal, acceptable or advisable. This is cheating customers out of their money. Nothing different.
Not predatory... but is manipulative, even The Amazing Kreskin knows this. )
ReplyDeleteDevil's advocate, there is also a situation where the customer has the money now and not later. Whether that should be the case is another argument. This allows it to get paid before the money disappears.
ReplyDelete