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.
ReplyDeleteIf you pay a mortgage payment early, there is a benefit to you. Does it perhaps work similarly for insurance?
ReplyDeleteI really like the phrase above: "corporate psychologists, finance thieves and lawyers..."
ReplyDeleteThat sums up almost every damn company I do business with, but especially State Farm, with whom I have had two homes and succession of vehicles insured for decades.
Every bill or notice I get from them reveals new forms of predation, all of which I find I automatically agree to by paying my bill or utilizing their services.
This is exacerbated by the glee with which my inherited (from a good one) agent explains and tries to justify them to me.
A good recent example was a big increase of the premium on a very low milage farm truck (a 1960 GMC 3/4 ton insured with them for over fifty years). I found in the fine print that they didn't believe my milage report and used their "right" to use a third party source for the information. This turned out to checking with the local GMC dealer (sixty miles away) for oil change and milage. Since this failed (!) to get a report, they concluded that my milage must be higher than reported and overcharged me accordingly.
I did get the premium reduced after I was lectured that I just had to live with the proliferation of information gathering services.
That last probably means that my agent will find this post. If so Jay, screw you.
Codex
ReplyDeleteStans example is legal but manipulative. They keep coming up with new ideas and terms. I've had a negative option billing once. (Additional new coverage unless one opts out) which is illegal. Quickly canceled then complained. Every state has a regulatory body.
I think the problem is that there's more of that now then there used to be.
This reminds me of the gall my doctors office has, asking me several weeks in advance if I'd like to prepay what they estimated the cost for an upcoming appointment to be.
ReplyDeleteFor gall, I think this is the definition. My nephew and niece recently had their home completely destroyed in a fire (they, their two teenagers, and their two dogs are all safe). I went to the GoFundMe page created to assist them, and on the payment screen, GoFundMe added a 17.5% "tip". Yes, "tip" was on the description line. In addition, they had a "how much of your donation gets to the recipient" page that showed how they placed a "servicing fee" on each donation.
DeletePaul
DeleteThis has nothing to do with the topic. The tip is default you can change the setting to zero. The service fee is fair because gofundme is a service not a charity. Sorry this happened to your family.
There are tons of business practices that are "legal" but morally, ethically, right.
ReplyDeleteIt's our culture in this country: it's your own fault you were screwed over.
No one ever says the criminal is in the wrong.
We have normalized criminal behavior to the point that it is corporate procedure. They're just better at it since Enron....
add TIPPING to the 'corporate procedures' - and PAY ATTENTION: Often, the 'pre-calculated' suggested percentages are calculated AFTER the "credit card service fee" AND the sales tax are added. SO you pay a tip on those FEES if you don't write in your own custom amount. I used to be a 'generous' tipper; now I resent it.
ReplyDeleteAnd so here we are. And sadly, we ARE complicit as long as we let these systems take over. (ie: me to hubby: you paid the hospital copay in advance WHY???!!! hubby: it was easier... me (to self) AAAUUUGGGGGHHHH! so even when we KNOW BETTER, it's not WORTH holding the line?) It's a slippery slope, and getting worse.
Doordash lawsuits. Five and counting; exactly that.
ReplyDelete