Going green is an enviable goal, but for some people paper is still the better choice for financial statements, according to a new report from the non-profit National Consumer Law Center.
Digital is cheaper; it eliminates printing and postage costs. That’s why banks, credit unions and credit card companies are pushing so hard — with bill inserts and on-screen pop-up messages — to get their customers to switch from paper to electronic monthly statements.
“Good old paper may be old-fashioned, but it actually has advantages,” said NCLC attorney Chi Chi Wu, who co-authored the report. “It’s much easier to get your mail, open the envelope and look at a statement versus getting an email, remembering to go to the website, enter your password and download the statement and then open it and look at it.”
Even computer-savvy people who pay their bills online often prefer paper statements, Wu said. Computers can crash and email can be ignored or overlooked. Paper statements are more likely to be opened.
A 2015 report on credit cards by the Consumer Financial Protection Bureau found that people who opted out of paper statements are for the most part “opting out of reviewing their statements entirely.”
Bruce McClary, vice president of communications at the National Foundation for Credit Counseling, says it’s important to read and review those statements.
“People who read and understand their monthly statements are in a better position to take control of their finances because they know exactly where their money is going,” he said. “Those who don’t could be costing themselves by overlooking disclosures that reveal how much they are paying in interest and fees, and how long it may take to pay off their balance. Fraudulent charges and billing errors could also go unnoticed when people don’t read their statements.”
One more benefit: Paper statements can be critical for family members who are trying to piece together financial records for someone who is incapacitated or has passed away.
On the other side of the digital divide
The world is going digital, but millions of Americans are still not connected. In December 2015, a Pew Research Center report found significant numbers of some demographic groups don’t have home broadband service:
- 53 percent of people with less than a high school education
- 59 percent of households with incomes below $20,000
- 50 percent of Hispanics and 46 percent of African Americans
- 55 percent of Americans 65 years or older
The Pew report noted that the percentage of homes with broadband Internet dropped in the last two years from 70 to 67 percent of all households, with the biggest decline in low-income and minority households. The major reason cited: the cost.
“If you have a consumer who doesn’t have broadband Internet access, sending them electronic statements is going to be very problematic for them,” Wu said. “They may have an email address. They may even have a smartphone that they can access the Internet. But it’s a far different thing to have access to your account with a full desktop screen versus a 5-inch screen.”
And while these people might be able get on the Internet at work or at the library, this is not a secure way to get financial records.
“Using a shared computer or a public computer at the library to do any sort of financial transaction is like playing Russian roulette,” said Adam Levin, chairman of Identity Theft 911 and author of the book "Swiped." “It greatly increases your risk of becoming a victim of identity theft.”
Your legal right to paper statements
Financial institutions are required by federal law to provide written statements for credit card accounts, most bank accounts (if they can be accessed by ATM, debit card or other electronic means) and mortgages.
The Electronic Signatures in Global and National Commerce Act (E-Sign) prohibits switching customers to digital delivery of these statements without their permission. As part of this informed consent, customers must be told they have the right to switch back to paper at anytime.
NCLC says some financial institutions “are aggressively pushing consumers into electronic statements, using tactics that are questionable and arguably illegal.” They’re doing this by making electronic delivery the default for new accounts (and burying that information in the fine print of the application) or by charging a fee for printed statements, the report noted.
“If a bank or lender is required to send regular statements as a matter of law, they should not be permitted to charge for paper statements because it dissuades people from getting them,” Wu said. “Even a modest charge means that some consumers don’t realistically have a choice to keep getting their paper statements.”
Asked to respond to the NCLC’s report, the American Bankers Association and the National Association of Federal Credit Unions said the law is being followed.
“Some institutions have introduced incentives to encourage customers to use electronic statements, but the overwhelming majority of banks continue to offer paper statements at no charge,” Nessa Feddis, an ABA senior vice president, told NBC News in an email. “Electronic statements help keep costs lower for all customers while providing environmental benefits.”
Patty Briotta, NAFCU’s director of public relations, said many customers now prefer online banking and electronic communications because it gives them “efficient access” to their monthly billing statements.
“NAFCU’s member credit unions have worked hard to increase access to these services for their members, while also remaining in compliance with current regulations and preserving consumer choice,” she wrote in an email.
Studies done by the Consumer Financial Protection Bureau, Briotta noted, show that the use of electronic documents in financial transactions actually helps increase consumer understanding of complex financial documents and leads to increased feelings of consumer empowerment.
A call for action
The National Consumer Law Center is calling on the CFPB to prohibit financial institutions and credit card lenders from:
- Making electronic statements the default choice
- Requiring consent to electronic statements by making it a condition of a financial product or web access
- Charging a fee for paper statements that are required by federal law.
“Paper versus electronic should be the consumer’s choice,” said Lauren Saunders, NCLC’s associate director. “Banks and credit card lenders should not push consumers into electronic statements with fees or coercive measures.”
Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitter or visit The ConsumerMan website.