Tuesday, August 11, 2009

Risky Business

Do you know what “risk avoidance” is? According to BusinessDictionary.com, it is a “technique of risk management that involves (1) taking steps to remove a hazard, (2) engage in alternative activity, or (3) otherwise end a specific exposure.” English translation: it means what business does to cover its own ass, even if that entails screwing their clients, their employees, their customers, and/or the public at large. When companies lay off hundreds, if not thousands, of employees in order to decrease costs and increase profits, that’s risk avoidance. When health insurance companies reject legitimate claims, discontinue the coverage of individuals or companies who file too many claims, or deny coverage to persons with pre-existing conditions, that’s risk avoidance.

And when stores and banks cancel your credit card, decrease your credit line, or increase your interest rate – even if there is no balance due, or you’ve been making your payments on time – that, too, is risk avoidance, and it’s going on right now at an alarming (and what should be an illegal) rate. Banks, in particular, are taking these measures now to “protect” themselves before the new federal banking regulations take effect next year – and the health insurance companies are following suit, post haste.

I found this out first hand last week when my elderly living room air conditioner breathed its last cool breath and died. I’ve had a Sears account since 1981 that had a $7,000 credit line and a zero-balance-due. I hadn’t used the card in nearly two years and in the past 10-15 years had hardly used it at all. But I held on to it, and kept it clean, because I own my apartment and am therefore responsible for the maintenance and replacement of all major appliances. I have no cash reserves or other credit resources – but I felt “protected” in the event of a household emergency, because I had my Sears card.

So, imagine my surprise when I got on the phone to Sears to place an order for a new air conditioner, only to discover that the order would not go through because my account had been closed in June due to “lack of use” – and, that Sears no longer owned and managed my account; that privilege had been turned over to Citibank, minions of which explained in no uncertain terms that once an account is closed, for whatever reason they see fit, there is no way to reactivate it and my only option is to reapply for a new account. I told them that I had not been informed that Citibank now owned my Sears account, or that my account was in danger of being closed unless I used it, or that it had in fact been closed when it was. They didn’t respond. I told them what I just detailed above, also explaining that I’m single, disabled, have no living relatives, live on a fixed income, and have a poor credit rating. I told them, “I know, and I’m sure your company knows, that if I reapply, I’ll be denied.” They didn’t respond. I did reapply. But it will be a month before I receive their inevitable rejection.

In the end, I sold some belongings I did not want to sell. Nothing fancy or particularly expensive – but put all together, it was enough to buy a new air conditioner (which I did not buy from Sears). I did what I had to do. What I’ll do if my stove or refrigerator go, both of which are 32 years old, I don’t know.

What I do know is that Citibank could care less and the reason they “can’t” reactivate a closed account is because they choose not to. Sears could also care less. As far as they’re concerned, it’s all about “what have you bought from us lately?” and if the answer is “little or nothing,” the fact that I started shopping at Sears in the 1970s, spent quite a bit of money with them, and paid off my account in a timely and proper manner throughout the 80s and 90s means nothing, because they no longer have personal business relationships with customers. Almost no one does. In America’s “mall culture,” relationships have been replaced with anonymity and discount bargains created by exploitive labor practices.

I also know that mine is an increasingly common, important story. Everyone I’ve spoken to about this has had their own story in reply. People I know whose affairs are in good standing have had credit card limits reduced, accounts canceled, home equity loans rescinded, interest rates raised to three, four and more times the previous rate, and in general, have been the consumer victims of companies (banks!) practicing “risk avoidance.” The irony, of course, is that they are not really risking much of anything, since their losses are largely tax deductible. But they’re unwilling to take manageable risk and reasonable loss or even endure the possibility of it. To them, all loss is unacceptable; profit is the only game they’re willing to play.

We have allowed ourselves to become a nation of faceless consumers instead of recognized citizens, loners instead of members of a community – big or small, real or symbolic. People made fun of Hillary Clinton when she cited the African proverb “It takes a village to raise a child.” But it does take a village, not only to raise children but to sustain us all. Only we don’t have villages anymore. We have cities and gated housing “sub-divisions” and wild, rural country – all of it territory where it’s every man for himself (as we used to say…). A friend of mine from Nigeria tells me there’s an expression in his country that translates as: “the people in your life are your garments.” But we don’t cover each other here.

This all feels especially pertinent right now, because while I support President Obama’s well-meaning determination to reform health care and rein in the banks, I don’t believe that banks, insurance companies, health care providers, major corporations, or any profit-based enterprise will allow themselves to be controlled. They’ll find loopholes in any law or just flaunt whatever law interferes with their prime directive: make money by any means possible, any means necessary, at the cost of anyone or anything that isn’t them.

So, I’m writing this to give you a heads up. If your credit rating is good, don’t assume that this will protect you, or that it will stay good, despite your best efforts. If you have access to ample credit, don’t assume that will continue to be the case. Don’t let your cards lay dormant and don’t pay them off in full on a regular basis; that doesn’t make you a good profit center – it makes you a risk. And we are, all of us, living without garments in a cold climate of risk avoidance that is riddled with what criminal law defines as “depraved indifference.” Personally, I’m planning on saving cash in a coffee can and flying as low beneath the corporate/financial radar as I can. As long as the powers that be are indifferent to my well being, I’d prefer that they not know I’m here.


Nadine B. Hack said...

Dear MizB - First, having followed your blog for sometime now and having used your professional services for copy text on behalf of many of my clients globally, I can say with confidence that you are one of the most gifted writers I have ever encountered. Anyone wise enough to hire you will be well-served by your prodigious talent! Second, in response to this particular post, I just encounted a similar situation where, after having dutifully paid the premiums on a health insurance policy for my husband for decades, through an accounting error we missed one month's payment. Rather than alerting us they simply sent a letter, with a refund for the check we wrote for the subsequent month, alerting us that his policy had been cancelled retroactive to the missing month. I was horrified, particularly since, as an insulin-dependent jeuvenille diabetic, he can not be uninsured for even a day. I had to scurry in a state of panic to remedy this. I am sorry that you are without air conditioning and hope you can rectify that so you can continue your brilliant writing in some comfort. - Nadine

Jane said...

Hi MizB:

As soon as I saw "Sears," I groaned ... having gone through the mill with them some 13 years ago when I turned to Sears Home Central to renovate my first kitchen and dealt with incompetence and idiocy day after day and week after week and month after month ... for the better part of a year. (When I bought my current apartment, it came with a Sears refrigerator ... which I couldn't even get them to come service, as I wasn't the "original" person who bought the refrigerator!) To this day, I won't even buy anything from Lands End anymore, because they are now owned by Sears.

But I wanted to offer a suggestion regarding the sudden death of appliances: you can find good working replacements easily and cheaply on Craigslist, as people are always moving and having to unload them. The only hitch is that you usually have to pick them up ... but that's not difficult to arrange if you have a neighbor with a car or small van (or hire one of those man-with-van guys).