AT&T Universal: Reinterpreting “No Annual Fee For Life”

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No Annual Fee For lifeReader Bill has been a gold AT&T Universal Card since they were since introduced in the early 1990s and was annoyed when he learned that he’d be charged a $30 annual fee starting this month, September 2010. Here’s his email to me:

AT&T introduced its Universal Card back in 1990, and with the card came the written guarantees ‘no annual fee for life’, and ‘no annual fee–ever.’ Remember that? Well, I’m not sure whose life they were talking about (obviously not mine), but I received a notice last summer that my account would be charged an annual fee, beginning with the September, 2010 statement. I’ve run across lots of people online who are in the same boat I am–fighting an annual fee that was never supposed to happen. Some have been successful in getting the fee waived for at least the first year, others have not. I’ve been promised twice that the fee would be waived and a confirmation letter sent to me, but so far no letter has been received.

It’s my humble opinion that reeling in somewhere between one and two million customers by promising them no annual fee for life–and then charging them an annual fee–amounts to a bait-and-switch manuever, and my research online tells me that the bait-and-switch manuever is illegal in all 50 states.

Bill kept all the scans of the paperwork, here are pages from the marketing material (1, 2) as well as the pre-approval letter.

This is tied to the story we broke last year about how you could avoid an annual fee if you made annual charges of at least $2,400. Bill now faces an annual $30 fee, if he keeps the card, when he should be facing nothing.

Personally, I think this story is funny. On one hand, you can’t expect the people running the card today, in 2010, to know that part of the marketing strategy in 1992 was to offer “no annual fee for life.” On the other, if you promise that you won’t charge an annual fee — ever, then you shouldn’t charge an annual fee — ever. Bill, and other cardholders, have a legitimate complaint because this aspect of the card was at the forefront of the marketing campaign.

It’s a little like saying that when you buy BMW, their much touted four-year, 50,000 of free maintenance actually runs out at three years, 37,500 miles. You can’t promise something, even if you foolishly promise it “for life,” and then take it away. Why not grandfather every existing cardholder and create a fee for the new applicants? Also, nothing prevents them from converting the AT&T card (basically “closing” the line of cards) to another card and then charging an annual fee on the new card to skirt the “no fee for life” promise…

What do you think?

{ 25 comments, please add your thoughts now! }

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25 Responses to “AT&T Universal: Reinterpreting “No Annual Fee For Life””

  1. I think this is anything but funny.

    it is a simple matter to record the conditions under which the card was issued. Those records are easily maintained by computer.

    The solution is a class action (I hate suing anybody, but this is an exception) to bankrupt the company. Wrongs must be punished. Not everyone gets away with stuff as the banks did.

    This company lacks integrity, they are patently and openly dishonest. In addition to paying some penalty – perhaps $10,000 to each person charged an annual fee, they should be requited to admit guilt publicly. And this should be true, regardless of whether the business has been sold and is being run by another company.

    Reality: They will get a way with this nonsense. If were me, I’d be calling my Congressman right now.

  2. Matt K says:

    WOW! that’s some record keeping!

  3. Ladam8518 says:

    The provided literature states no annual fee. All we ask is that you use the card once a year.

    I interpret this to be no annual fee if the card is used once a year.

    Another interpretation, which Bill has taken, is no annual fee. If this is the case AT&T would have the right to charge an “inactivity fee” instead of an annual membership fee.

    The second method would eliminate controversy over the fee. The fee is no longer annual (even though the period for determining inactivity is a year) because it can be avoided by using the card.

    Another point to look into is the actual card holder agreement and whether or not it calls this out or the famous “terms and conditions can change at any time”.

  4. Aaron says:

    Every card has you agree to the ol’ “terms and conditions” are subject to change. CC companies are only obligated to notify you that the changes are going to occur and then change them. It is foolish to believe that something like no fees for life would last. People need to be realistic about things. 20 years of no fees was a good run, get over it and move on. The fact that he is still using a 20 year old reward card that isn’t that great when compared to other cards/telephone carrier plans PLUS that fact that he still has the original paperwork tells me he is more of stickler for the perceived principle of the change as opposed to actual savings. I guess the bottom line is to get when the gettin’ is good and move on when the well is dry.

    • “It is foolish to believe that something like no fees for life would last. People need to be realistic about things. 20 years of no fees was a good run, get over it and move on.”

      I disagree, and it makes me sad to think this is where our heads are at as consumers. Companies need to be more responsible in their messaging, and only make promises they’re willing and able to keep. No one likes broken promises or fine print or exceptions or confusion. Maybe I’m too optimistic as a marketer and a consumer, but it would be great to get to a point where company claims and customer expectations could meet in the middle.

      • Aaron says:

        I think you’re missing my point. When you sign up for a credit card you are also accepting the fact that they can change the terms on that agreement. It’s part of the approval process. You check a box that says “I Agree to the terms and conditions”. All they have to do is notify you that the change is happening with something like a 60 day notice (I don’t recall the actual time). This is no different than giving a website your personal info believing them when they say they won’t share it with ANYONE, but in fine print at the bottom it says something sweet like “These terms may change in the future”. Check out the Terms of Use on this very site and read to whole thing. While I doubt Jim would sell or transfer our info to someone else, who knows 20 years from now. And that’s the point.

  5. Martha says:

    I’m glad to know that all the paperwork that I’ve kept could come in handy 18 years later!

    Props to Reader Bill who’s kept his, and kept track, of his paperwork!

  6. freeby50 says:

    They probably did have the “terms and conditions” as “subject to change” clause in the fine print. But I don’t know if that makes this OK. The words “for life” and “forever” aren’t something you should be using if you don’t mean it. That would make such statements meaningless. I think this is still something that could and should be challenged legally. If I had such a card I’d complain to my state attorney general.

    • Jim says:

      Exactly… plus it’s one thing to say “we won’t charge you an annual fee” and it’s another to make it the cornerstone of your product pitch!

      As it turns out, he did and his state’s AG said there wasn’t much they could do (probably because it says “terms and conditions are subject to change”).

  7. zapeta says:

    As Aaron mentioned, I’m sure the terms and conditions are subject to change at any time.

  8. Esteban says:

    Define Life. Define Free. It’s like those absolutely free checking accounts (per their commercials – no strings attached free) from those big mega banks.

    When I opened the checking account, I found out that in ‘bank speak’ free = monthly fee.

  9. Shirley says:

    Time to drop that card and move to a more ethical company.

    • shiftomnimega says:

      Seriously. This card isn’t that hot. It’s not like dropping the 2% Schwab card. Those that have this as their oldest credit card have a tough choice, though.

  10. Joe says:

    I agree with you, though more passionately. I hate credit card companies for moves like this. If he still has his original account and was promised no fees ever on this account, then they have no grounds on which to start charging him. Can he sue?

  11. Barry Nissen says:

    Looks like a classic attorney class action suit in the making!

    Truth in Adveriting!

  12. CreditShout says:

    It’s tough that he’s been such a faithful customer for years and years and they’re willing to treat him like this. I guess they don’t care about keeping long term customers as long as they’re making money now.

  13. FlyFisher says:

    Ridiculous. A promise is a promise and the company should have honored it. I don’t know if it is worth fighting though, move on to a another no fee card out there.

  14. Tony says:

    I don’t think this is as easy as “moving on to another no fee card”. He would have to close the account to avoid the fee and thus his credit score would automatically suffer because his total credit limit will be lower.

    This might signal the return of the annual fee for all cards. I have 5 cards with a total limit of $108K. I can’t imagine paying $35 year on each card.

    I hope the industry decides to go with inactivity fees instead, which could be avoided by using the card at least once a year.

  15. Maddhatter says:

    It kind of surprises me that people are surprised by this behavior. I think the best thing is for consumers to be flexible and prepared to move if they don’t want to pay an annual fee. If all cards go to an annual fee, drop all credit cards.

  16. doraflood says:

    All the federal protections that went into place this summer did was hurt people who used credit cards responsibly and wanted to maintain their high credit scores. Credit Cards have caught on that we don’t want to play credit-card-exchange because we know it hurts our credit score. If you have had a card for a long time, chances are, you have a high ($15k or more) unused credit line that you would loose if you transfer to another credit card (at least for a year or two) as a new card would open with a much lower credit line — thus hurting your debit-to-credit ratio. So they are betting that you will suck up the new charges rather than risk a score hit going elsewhere. I got hit with something similar for the SPG AMEX card.

  17. aua868s says:

    another wait and bait approach.

  18. Kyle says:

    There’s plenty of no-fee cards out there. Switch. Simple.

  19. Sophomore says:

    If the AG for his state declines to pursue, perhaps he should send his documentation (including that the AG declined) to Elizabeth Warren at the new Consumer Financial Protection Bureau.

  20. jim says:

    Looking for info. about the original AT&T Universal Card (Charter) extended product warranty. Company now says AT&T warranty is limited to products whose original warranty is 1 year……It used to be added to original mfg. warranty whether it was 1 year, 2, 3…whatever…then add a year…….Does anyone have any info about this. I am unable to find anything on line…Thanks.

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