Chase Punishes Loyal Customers Over Lost Debit Fees

Chase is killing its Disney debit card rewards program in an effort to make customers mad about the Durbin Amendment. But could the third-largest bank have found a better solution?

We've all heard it before. Hey, so-and-so: you just won the Super Bowl. What are you going to do next?

If you're a Chase Disney debit cardholder, you won't be going to Disney World.

It appears that Mickey Mouse and the Magic Kingdom are the latest victims of the Durbin Amendment, a provision on the Dodd-Frank Wall Street Reform and Consumer Protection Act that limits debit card interchange fees to 12 cents.

The Huffington Post reports Chase customers who participate in the Disney debit card program will "no longer earn Disney Dream Reward Dollars" when they use the card to make purchases. Further, the cardholders will no longer be eligible for perks at Disney theme parks or discounts on merchandise.

Yeah, someone just ruined a kid's vacation.

To hear Chase tell the story, it's not their fault. The way the bank frames it in a letter to its customers, it's the regulators who are trying to rip the money out of the hands of America's third-largest bank and chisel away its $1.7 trillion in assets. As the letter goes:

Congress recently enacted a new law known as the Durbin Amendment that significantly impacts debit cards. As a result of this law, we will be changing our debit rewards program.

Fair enough. Take away the couple Disney Dollars customers earned by paying annual fees and spending loads of money.

Way to take the high road, Chase.

Rather than offer an alternative, Chase ripped the program away from its customers in a defiant and showy fit of righteous anger against U.S. law.

Outside of anarchic teenagers, who does that?

It doesn't have to be that way.

One thing we're starting to see more of are statement rewards, or value-added discounts within the online banking experience that are offered to customers based on factors like purchase history or loyalty to a bank. Companies like Intuit are developing these types of rewards, as is Jack Henry & Associates in its recently-announced partnership with BillShrink. At little cost, customers might get discounts offered through their debit card based on how and where they spend money.

In the age of Groupon, Living Social and Scoutmob, the concept could be huge. And rather than potentially costly debit reward programs, in-statement value-adds could save banks money. Customers see rewards based on specific line items; merchants use the opportunity to get closer to the customer. Customers feel they are getting an added value.

"It helps drive the core economics of the bank in a way that’s pro-consumer," says BillShrink CEO Schwark Satyavolu. "No fees or penalties."

In other words, rather than make customers feel like they're being punished for the evil Durbin Amendment, a bank can swap debit rewards with value-added propositions such as statement rewards.

"We believe that this is a new way for banks to achieve their business goals as well as help consumers in the process," Satyavolu adds.

It's something customers want -- a survey from BillShrink showed 81 percent of customers would review their statements more frequently if they came with special offers. And they might go to another bank to get them. In the same survey, 69.6 percent of customers said they'd consider switching to a bank that did offer these rewards over staying with their current bank that didn't.