The Verizon-Citi Visa Scam

My BlackBerry 8830 died a painless (to me) death this summer, so I went to a Verizon wireless dealer in Rhode Island to see if it could be fixed. No. So I got a new BlackBerry 9630, which I really like, especially because I got a $100 rebate - until I actually got a notice of the rebate.

I still like the Blackberry, but I hate Verizon's rebate scam. Instead of a check for $100, I got a Citi Bank Visa card with these messages: "Here's your Verizon Wireless Rebate Card - Use everywhere Visa debit cards are accepted!"

I don't want a frigging debit or credit card; I want my $100!

But the letter said these were my options to get my money: "Rebate Card: Use the attached rebate card instantly everywhere Visa cards are accepted; Bank Transfer: Go online to move rebate funds to your bank account; Cash With Card: Use your card to cash by taking your card and identification to any Visa member bank (see package insert for details); Paper Check: Go online to get your rebate funds via paper check to deposit or cash at your bank."

In other words, I had to go to a lot of trouble not to accept a Visa card that I don't want. After getting bailed out by the government to the tune of around $300 billion, Citi is finding new ways to get high-interest rate credit cards in people's hands. Here's what a February 28 Wall Street Journal article noted:

The taxpayer never sleeps when it comes to Citigroup, which yesterday got its third rescue in recent months from Uncle Sam. The amount and terms of the taxpayer commitment keep changing, while the management stays in place. The only institution that has a comparable track record on those two scores is Congress.

We don't mean to laugh, but we have to in order not to cry. No company on Earth has failed more often than Citigroup without being put out of its misery. Taxpayers have already put more than $50 billion in capital into the bank, while guaranteeing $301 billion of its bad assets, and the bank still can't stop its slide.

In a better world, Citi would have long ago been put into bankruptcy. The FDIC could have taken over and disposed of the bank's assets, while protecting insured deposits as it always does. The profitable parts of Citigroup could then have been sold off to people who could better manage them.

So how is Citi going to pay the government back? One way is to find new, underhanded ways to get Visa cards into people's wallets. Citi probably paid Verizon something to have the phone company send rebates in the form of debit cards. Verizon saved money by not having to pay postage, buy envelopes, or cut a check. Citi gets millions of cards in people's hands.

Just what the country needs in the middle of a debilitating recession that was caused by, among other things, too much consumer debt, too high interests rates on that debt, and by greedy bankers.

I wouldn't have been so upset if, at the time I bought the new phone, the clerk who told me about the rebate had asked me if I wanted the rebate in the form of a check or Visa rebate card. In other words, if I had had a choice.

I called Verizon outraged and the Verizon service person was very nice and polite and filled out the online form to get my check in the mail. So I was somewhat mollified, but I still believe this is a scam that shoves unwanted and unneeded Visa cards in unsuspecting people's hands and that an ethical, transparent, customer-focused company should give people a choice about accepting a Visa card.

But I don't hear a lot of people using the adjectives ethical, transparent, or customer-focused to describe Verizon or Citi Bank. This current scam isn't going to up the count.

Follow Charles Warner on Twitter: www.twitter.com/CHWarner

Comments

[gklargay]

Continued terms from above

* Fees: "You agree to pay all fees set forth in the Fee Schedule (the "Fees") [...]"
(No "Fee Schedule" on the terms sheet. See back side of colorful cardboard poster holding rebate card. It shows a harmless $3 monthly account maintenance fee, waived for the first 12 months and for additional periods should you (1) use the card or (2) add money to your card within a 3-month period, or your balance is $0.)
Translation: If you let Citi hold onto your $2.55 after the card expires, you get to pay Citi $3/mo. for that privilege (unless you add to or use your card within each 3-month period).

Follow that?

* Changes to this Agreement: Citi may change the terms of this agreement, including its ability to "add or increase Fees at any time."
You translate.

Oh, you innocent crackberry consumers, you thought you were just getting $100 in a neat little card. Maybe the old man was right.

[gklargay]

Did anyone read the terms sheet that accompanies the rebate card? Form your educated conclusions.

* Arbitration: binding and mandatory at your or Citi's (certain) election upon initiation of a claim; arbitrator's fee (higher than $100) paid by whomever files suit.
Translation: Don't get funny ideas about bringing a small claims suit or joining a class action.

Ok, so they got you for $2.55 or maybe the $100 card never worked. Who cares?

* Collection of Negative Balances: If you try to go over your balance, the vendor will likely reject it. But if it goes through, you pay the negative amount plus applied fees and "you authorize [Citi] to initiate an Automated Clearing House Transfer on your behalf in payment thereof if, we have the requisite bank account information."
Translation: If the late-night cigarette run to the respectable mini mart goes over your $2.55 balance (and Citi happens to have your bank account info (balance transfer option)), you've authorized Citi to deduct from your account the extra $3 plus Fees.

What are "Fees"?

[dimitriz]

Citi prepaid Visa card is a SCAM.
All the cards you get from them have higher credit limit them the rebate you're supposed to get.
Why?
Because if you go .01c over the rebate $ you're allocated they will charge you a $15 Over-Limit Fee per incident.
So if you don't watch it, the fees you're going to pay for using the card "might" be higher then the rebate you were getting to begin with.

[mezzodiva54]

I'll tell you how it becomes a scam -- when the card doesn't WORK. I too was annoyed to learn that my rebate was going to come in the form of a pre-paid card, not actual $$, but I was somewhat mollified to read the fine print and learn that I actually did have the option of either receiving the money as a check or having it transferred directly into my bank account. As I do plenty of online banking, I didn't think twice -- I initiated the transaction, and got a receipt stating that the transaction was successful and that $70 would be transferred to my bank account. I was told to allow 5 business days for this to show up in my account. Fine. It is now over two weeks later, still no money, and -- no surprise here -- neither Verizon nor Citi is particularly interested in hearing my problem. I'm currently on hold with my second supervisor at Citi while she is supposedly getting the transaction information from HER supervisor so that MY BANK can somehow figure out how to track this money down. I'm not holding my breath at this point that I'm ever doing to see this money. As far as Citi is concerned, the money went, the transfer was successful, the card has a zero balance, end of story. As far as my bank is concerned, this never happened. And as far as I am concerned, I have been well and truly screwed

[NathanARH]

I dont think your actually know what that debit card is. Its not a credit card, there is not credit limit, or finance charges, or interest rate. Its a debit card with $100.00 cash on it. You cant go over the $100.00 and owe citibank anything. The only "scam" there might be is the fact that its hard to get that last few cents off the card and therefore normally it gets thrown away with a few cents left on it.

Its actually an easier way to spend your $100.00 rebate. You can use it instantly at almost any store (online or offline), whereas a check you would have to run to the bank to cash before you could use it.

Next time do some research before you make a whole blog post that is utterly pointless and untrue.

[Newbie71]

When you put it that way, I could see how it might be a scam - but not the way you think. Many state governments have enacted legislation that allows them to claim unused gift card balances - and the federal government is considering it. Maybe it was part of the "rescue" package in order to reclaim the money for the taxpayers - directly from the taxpayers themselves.

[CharlesWarner]

You can be sure that Verizon is making some money or at least saving some money on the deal and that Citi wouldn't be doing it unless it knew it was making some money on the deal either through conversions to credit cards or from keeping unclaimed balances. Remember, it's in companies' financial interests to make rebates hard or complicated to claim.

[CharlesWarner]

I know it's a debit card, but what I object to is being on Citi's Visa lisst. Citi does its research and knows what percent of people who get a seemingly innocent Visa debit card convert it to a credit card or debit card. And debit cards are not benign -- a story in the NY Times told how banks are allowing people to go over their account's balance and charging them fees -- often $35 per transaction. It new source of income for banks. One person who agreed with what I wrote said that she objected to Verizon and Citi were predators. I don't like being attacked by predators.

[flhu]

I don't like to read uninformed blogs, either, but here I am.

Convert a $100 rebate card to a credit card? Um... you don't know how these things work, do you? $35 overdraft is a real problem with real Debit cards, but NOT these rebate cards. You just get denied if you go over limit.

You are disseminating misinformation for the purpose of promoting fear.

And you are completely ignoring the real scam of these cards, which is the few bucks on it left-over for purchases that will never be claimed. I got a Verizon card in my wallet with $2-5 bucks on it. I'm upset about that. You don't seem to be.

As for the "lisst" you mentioned... you could be put on that list by Verizon without a Citi Visa Rebate card, they just sell them the list.

[KingCujo]

My mortgage company just sold my note to B(sk)ank of America- I feel abused.

[ModernTimes1]

There are plenty scams offered by various companies.
But these is no conceivable way this offer is a scam.
$100 debit card is identical to cash. Unless you're some Luddite ala Unibomber.
Come on, get with it.

[CharlesWarner]

It's a scam because I am Verizon's customer, not a Citi Visa customer, and now I am on Citi's list. Verizon shared my information with Citi without my permission and made getting a rebate more complicated than necessary. Verizon is complicit in allowing Citi to make money off of me -- remember Citi wouldn't be doing this if they weren't pretty sure they could make some money off of it.

[Chad Bateman]

I don't think you get it. It's a pre-paid Visa Card. Just like the one you buy from drug-strores and give to your grandkids so that they can spend it anywhere they want. It doesn't make you a Citi Customer. You're not on Citi's List. All Citi has is your name, just like a bank would have your name if it were a paper check.

It's like this:
Verizon sends you a check. That check is drawn on a bank. You're not a customer of that bank, you just have a check from them. It works the exact same way.
Here's the difference:
If you get a check, you have to go to a bank to cash it. And if you don't have a bank account, or you're on check-systems, you can't cash it unless whatever the bank the check is drawn off of it local, and it probably isn't .
So they send you a Visa Debit card. You have the option of going into ANY bank getting the money directly off of the card. Tell them to do a "Cash Advance" to get the money off. It's not really a cash advance, it's just the way the transaction is processed.

What's more "Customer Centric"?
You can get
A. A check- cashable at your own bank or at the bank it's drawn off of, and nowhere else.
B. A debit card. You can use it at any store, or get the money out at any bank.