By Denis Pombriant, founder and managing principal, Beagle Research Group

I saw this on The Huffington Post and thought it said a lot about CRM:

A California woman has refused to pay her bill for a credit card she has with Bank of America. According to Huffington Post, Ann Minch “has carried a balance of several thousand dollars on her Bank of America credit card, making minimum monthly payments of about $130, sometimes paying an extra $50 or $100. She says she’s never missed a payment.”

Minch’s beef is that, for all her good behavior and customer loyalty, the bank repeatedly raised her interest rate this year, reaching 30 percent in July.

It gets better.

Minch decided to make her fight with the bank public, posting a four-minute video on YouTube to explain her actions and demand the bank negotiate and reduce her rate.

Minch is not alone, especially in these hard economic times. Many people carry balances on their cards and pay monthly interest. Banks are only too happy to carry the balance and collect the interest because, at interest rates of 15, 20, or even 30 percent, it doesn’t take long for the borrower to pay the bank more than the original card balance. For banks, card balances are the gift that keeps on giving.

According to creditcards.com, as of June 30, 2009, Bank of America was the number-two general-purpose card issuer ranked by outstanding debt ($150.82 billion). In 2008, BofA was number three for cards in circulation (80.2 million) and had the second-largest share of the market’s total outstanding debt (19.25 percent). It was also number two in profitability in 2008 ($520 million). Interestingly, in J.D. Power and Associates’ 2009 Credit Card Satisfaction rankings, Bank of America was 10th, with a score of 687 out of 1,000.

Credit cards are a form of unsecured loan with the key differentiator being the loan originator. It’s you and me, not some loan officer. The banks can’t walk down the hall to tell you to stop making silly loans to yourself — the interest-rate lever is the only tool at their disposal for that. So, to influence behavior, they jack up the rates they charge in the hope that you’ll stop charging until you get your income and expenses in line.

The difficulty comes when money borrowed at one interest rate is suddenly assessed a higher rate. It’s like moving the goal posts — and, paradoxically, a credit-card holder whose payments only raised concern at a 15 percent interest rate may actually default once the rate gets pushed to 30 percent.

Lest you think that the bank has all the leverage here, consider this: Minch says in her video that she owns no property and currently has no permanent employment. There’s nothing that the bank can do to compel payment — it can’t seize her home or car and can’t garnish her pay.

The bank can (and probably will) take Minch to court — but, as she correctly points out in the video, the civil courts are backlogged and it could be years before the case gets heard. Meanwhile, she rails against Bank of America and all banks, institutions that have received federal bailout funds from the people of the United States and then turn around and treat those same people — their customers — the way she has been treated.

It looks like a Mexican standoff but it could turn into a circular firing squad because Minch’s goal now is not simply to get the bank to reduce her interest rate — she wants to spark a revolt against all big financial institutions, which she refers to in the video as “evil, thieving bastards.”

So far — as of September 22 — her video has been seen about 250,000 times, but it’s going viral thanks to social media. The expanding reach of this one customer’s complaint underscores the importance of every vendor having good policies and procedures in its CRM strategy (not just tools—strategy) to avoid this kind of nightmare scenario.