Pennysylvania’s unemployed are getting nickled-and-dimed by pre-loaded unemployment benefit debit cards that come come pre-loaded with hidden fees.
The Comerica Bank MasterCard debit card used by the unemployment benefit program has fees like: $1.50 every time you make a withdrawal, after one freebie at Wachovia or PNC, $1.50 each time you transfer $ from the debit card to a checking account, $.40 to check your balance, $.50 every time your card is denied after one freebie, $4-$12 for replacement cards after losing your card twice, and $1 fee every month if you go without using the card too long.
Replacing checks with debit cards saved the state $2 million in processing and postage. Recipients can bypass all the fees by filling out additional paperwork and opting for direct deposit. Only 54% of Pennsylvanians have done that. Perhaps that number would be higher if someone told them about all the fees upfront.
Hidden cost of unemployment benefits [Philly.com] (Thanks to Eric!)
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My job does this! They no longer issue paper checks. Everyone was forced to get these really terrible Global Cash Cards that come with a lot of fees.
@KirbyEsphodel: Job?
Your job (as well as some other posters) gives you a debit card that they fill?
That seems very bizarre.
@ngoandy: Its not bizarre at all, Gamestop does this as we all know from watching those gamestop videos on youtube. I suspect many other retailers and lower level employers do this as well. You can opt for direct deposit though, which solves all of these problems.
If you are somehow working and do not have a bank account though, this creates problems for you.
@Outrun1986: So this is mostly for lower level service jobs then?
When I worked at Toys R Us, a lot of the other employees would buy a bottle of pop with their check and get the rest back in cash.
@ngoandy: Wow, I remember that when I worked at TRS, we wondered if they would take their own checks. We were waiting for the ‘store closing’ announcement every week.
@ngoandy: My boyfriends previous job did this. He had to fill out some paperwork, and they sent him a debit card that his paycheck was deposited to.
Of course, the card was never sent to him, and we had to trek all over god and creation to actually trackdown his paycheck every week, so when they let him go for downsizing, I was glad to have one less headache to worry about. Would he get his paycheck or not this week?
@KirbyEsphodel: Oh hell no. I accept cash, check, or wire transfer for my work. I’d NEVER consider working for an employer who provide payment in a proper form. If it’s a dodgy company, cash only.
Oregon uses ReliaCard through US Bank if you don’t want or can’t get direct deposit. They don’t charge any ridiculous fees like this though.
Unbelievable.
@uberbucket: Michigan also does this, through Chase. I get direct deposit, but my sister is stuck getting hers on the debit card since she can’t get another checking account due to her crappy credit. Every pay period, you get like one or two free ATM withdrawals and one withdrawal allowed at a teller and the same goes for balance inquiries. After that, it’s like $1.50 each time. There’s also supposed to be no charge for using the card for POS transactions, but they’ve frequently charged her 70 cents for using the card that way. It’s a total ripoff, and they really are nickle and diming her on her unemployment benefits.
I believe that might even be grounds for a lawsuit claiming discrimination against people without bank accounts. UE benefits are not supposed to follow the rules of payday lending and title pawn.
@Ash78:
I don’t think “people without bank accounts” is a protected class, so it would be pretty hard to win a discrimination lawsuit.
@madanthony: I’ve seen bigger stretches. If some group could show that it favors one economic or ethnic group over another, they might be forced to change the policy. I’ve seen that kind of crap in local and state politics many times. I always slap my forehead. “Mandatory auto emissions testing” = “unfair burden on the poor” and stuff like that.
@Ash78: “Disparate impact” ftl.
@Yossarian: Disparate impact faster than light? What are you talking about? He is describing disparate impact, if thats what you mean.
@jusooho: ftl == for the lose
@Ash78: Something that Comerica Bank throws into the fine print for the EPPI Cards (which I can almost guarantee is in the fine print for these cards)is that by using the card you have no right to sue them. So if you have no bank account and get defaulted to the debit card, there isn’t a damn thing you can do besides go get a bank account, send the direct deposit forms in and hope they don’t ignore them or pretend they never got them.
Yeah.. lets kick them while there down… Great Idea to get the economy back in place!!!
this is a big hit right now – even with employers. a reatiler i worked for changed to a direct deposit or pre-paid debit option a couple years back.
what aggravates me most about these programs is that they don’t seem to be governed by any specific government division. the pre-paid program offered by my employer didn’t comply with state banking laws or state labor laws, yet neither department seemed interested (or capable) in doing anything about it.
That’s 54% not 54.
Same in Illinois. The cards are issued by a bank in Springfield, IL that doesn’t have branches anywhere else in the state. When I was unemployed, I opted for direct deposit. However, not everyone has a checking account, so they can’t do that.
@MissTicklebritches: Maybe they got kickbacks during the Blagojevich days. Wouldn’t surprise me given Illinois politics.
@MFfan310: My uncle did the card before Blagojevich was in office. I’m almost 100% certain about it. If it was a Blagojevich kick-back it would have been a bank only in some Chicago suburb. Springfield sonds like IL kick-backs before Blagojevich.
@MissTicklebritches: When my sister was using hers, she either withdrew all the funds at one time or transferred them all at one time so they could only hit her with one small fee.
North Carolina also has a similar rip-off program. They partner with Wachovia bank. There are charges for withdrawal (limited to 2 a month), cash back and teller fees.
Direct deposit option is available, but not advertised. Even if you fill the direct deposit form when you file for benefits, the first benefit is delivered as a debit card.
I am guessing vendors who accept this debit card also have to pay a larger fee to the bank.
@PatriciaRhinoceros:
Direct Deposit is Advertised, though not exactly openly. When you file you get a notification of qualification where you can fill out your bank info and how much you want withheld for taxes on it.
If you get it out in time you shouldn’t have a problem with it.
Although, they hit me with one of those cards before my paperwork for Direct Deposit went through, so I have a card with ~$400 I need to cash out and put in the bank where it can be used responsibly.
Indiana has done this since late 2006… you can’t even get a paper check or direct deposit here. Every unemployment benefit comes on Visa debit cards issued by National City/PNC Bank.
At least in the Hoosier State, you can get unlimited free ATM withdrawals at National City/PNC Bank (of course), Old National Bank, 7-Eleven, or credit union ATMs in the MoneyPass or Alliance One networks, and cash back with a purchase is free, too. But a balance inquiry is 50 cents at an ATM (but free online). And help costs you 50 cents each time after your one each month.
So yeah, Indiana’s card is a bargain compared to Michigan’s.
@MFfan310: I meant “compared to Pennsylvania’s program”.
Still, what do you expect from a state where Joe Six-Pack can only afford a four-pack?
So withdraw your entire balance in one go every month. The fees are ridiculous though, who’s the state trying to help, the unemployed or the bank?
@vladthepaler:
The unemployed person is a shifty no-good freeloader that deserves their plight. The bank is an upright and godly institution that deserves their fees for putting up with the unwashed.
/snarky
No doubt there was probably some political kickbacks to get this system in place. Politicians care about only two things – making money for themselves and getting elected.
@Plates: i don’t think it’s so much about kickbacks as it is the allure in reducing expenses & a failure to shop around for comparable programs.
typically, programs like this are developed at the bureaucratic level – not at the legislative level – so the chance that there are kickbacks is minimal. a lack of communication & competition for budget funds between departments (say, dept. of labor & dept. of consumer protection) could also indicate why there’s no real consideration for consumers here.
@mac-phisto: OK, but someone is benefiting from the fees that are being charged. Who is that money going to?
@magic8ball: the fees usually go to the company that manages the cards – not to the state. they may get a small percentage of the fee income, but these companies rarely give back more than 5%. they figure it’s enough that they’re saving the state check processing fees.
Just a quick correction, 54% of Pennsylvanians receiving unemployment benefits get direct deposit, not just 54 people as the summary indicates. Yeah, there are some slightly backwards portions of the Keystone State (Pennsyltucky, I’m looking at you), but we’re not that backwards.
Seems like a good reason to get a checking account. Most banks will give you free checking with direct deposit
As someone who is filing for unemployment in Pa this week, I thank you for this information more than you could know.
<3 Consumerist
@Batwaffel: Make sure that you sign up for direct deposit as soon as you can! …which isn’t right when you open your UC claim. My husband had to get claim’s worth of money on that debit card because the state didn’t process the direct deposit paperwork yet. If you wait any amount of time, you risk having more than just one claim’s worth of money sent to the debit card.
Good luck!
I’m told by a friend that Mississippi does this also. I find it strange that she didn’t mention an alternative direct deposit, she made it sound like it was her only option. Pretty sad if it was. She found it extremely frustrating because she used it to pay rent, and rent is payed by check.
Here in NY you are given a card from Chase. So long as you use it at their branch/ATM you’d be ok. I wold just withdraw the lot of it and then deposit it at my lesiure in my bank acct.
First let me say that by FEDERAL LAW, no one can force you to take direct deposit.
I saw a clever solution to this issue in the late 90s in Colorado, where all municipal workers in a certain city were required to have direct deposit. Obviously there are always some people who can’t or won’t take direct deposit because they don’t have a checking account for various reasons (history of bad checks, bankruptcy, no credit history, etc). The municipality made arrangement with their bank that EVERY SINGLE MUNICIPAL EMPLOYEE would receive a free checking account with their direct deposit regardless of their financial history. With the leverage of a couple of thousand employees’ money, the bank was willing to take the rather small risk. (Don’t know if the same thing would happen today).
When the small company I worked for switched over to “mandatory” direct deposit, we had two employees who didn’t want it; the first was an older woman who was “suspicious” of all things electronic and who “didn’t believe” in direct deposit. She was also concerned about her bank holding her funds; with a regular check she could take it to the check cashing place and have cash instantly. We made arrangements with the bank the company uses to get her a “free checking” account with direct deposit and a guarantee from the bank that her funds would be available that day.
The second employee was a younger woman who had immigrated from South or Central America and who did not have a US bank account. She did not want a free checking account, and understands that she runs a risk; the person who signs the checks is not always here on payday to sign it. She occasionally has to wait until Monday to get a signed check.
So far this works for our small company. We had the option of fee-loaded debit cards but turned it down outright.
@AidelMaidel:”First let me say that by FEDERAL LAW, no one can force you to take direct deposit.”
Which federal law prevents this? It would run counter to the federal government’s own practices, as federal employees must be paid by direct deposit under 31 USC 3332.
@JoshRogan:
States in which Direct Deposit cannot be made mandatory.
Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Dist of Col., Florida, Georgis, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maryland, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Utah, Vermont, Virginia, West Virginia,and Wyoming.
@Cat_In_A_Hat:
Oh flarg. Mine’s not on there.
@Cat_In_A_Hat: yeah, well good luck getting your state to enforce those laws. i contacted my state department of labor b/c an employer forced direct deposit or prepaid card & despite a litany of fees (some of which were not even disclosed on their pamphlet), the DOL seemed perfectly content with my employer’s decision.
it seems that their interpretation of the law is that the prepaid card doesn’t constitute direct deposit – giving you the option of one or the other constitutes compliance (at least in the state of CT).
@AidelMaidel: Ah yes the privatization of governement and employer functions .The capitalizing on the simple manipulation and movement of money .
There’s an old saying ;if you want to know what’s really going on just follow the money .
You can probably trace these banks back to the politicians one way or another .
I spent 9 months unemployed in Colorado in 2008 (yay mortgage industry!), and Colorado uses the same system, only with Chase.
It was really awful. You have a daily ATM withdrawal limit, which keeps you from doing once a month transfers as other suggested. Use it more than once a month and you get charged.
And the best part? You get charged if you try to use it with a teller inside the building if you don’t have a Chase account.
To make this work, I had to open up a chase account (so they wouldn’t charge me to use the teller), transfer funds from the card to the chase account, then write checks from the Chase account to my “real” accounts.
Simply an awful system. States are doing this because allowing the bank to nickle and dime the person receieving benefits (Along with earning interest on all the money the state deposits with the bank for unemployment) allows the bank to charge the state less to handle benefit payouts. Still, it screws the person who needs the money.
As I said in another comment, the state of Arizona uses a Chase bank owned system. No fees are assessed at any Chase bank or any Allpoint system ATM (a web site finds lots of these in drug stores and groceries, for instance); I paid no fees to use this for supermarket purchase or anywhere else that accepts debit cards (and I even used it once as a plain visa card, which I hadn’t thought I could). The only fees I paid were for non-chase ATM access – no surprise there. My only problem now is how to get the last $1.77 out, now that the state is no longer plunking money in.
I should add that though I have two credit cards through Chase, I don’t have a bank account there. The on-line system that handled this card was not the regular credit card system; it was separate.
Any state official who signs up for a fee-based nickel-and-diming ATM system to distribute unemployment benefits should be shot (and his kickbacks thrown back into the pot). There’s no reason to hit people who are already in financial distress with this kind of fee, given that there are ATM cards avaiable that avoid that pitfall.
@jbl-az: “Any state official who signs up for a fee-based nickel-and-diming ATM system to distribute unemployment benefits should be shot (and his kickbacks thrown back into the pot).”
I agree with you that these systems are frustrating at best for the people involved. However I can not agree that killing the state officials involved and confiscating their estates is the right solution.
@jusooho: Sure it is maybe then they will understand people’s plights.
The company I just got hired at does this too. It’s a major company with a lot of government contracts, and I make well above average income (systems admin). I was stunned to learn they would only do direct deposit into a debit card account with fees or a checking account. I don’t have a checking account and don’t want one. Paying my rent is going to mean going to an ATM 4 times pulling the max out, with 4 ATM fees
and not having access to the money I earned in a timely manner
Glad to have a job in this economy, but this sucks getting hit with so many fees with the only other option being getting a checking account and giving my employer access to it.
@chelle29: You’re a systems administrator without a checking account?
I can’t think of any reason to be without a checking account unless you were avoiding judgments or something (and then I would just move banks every few months, I can’t imagine being without…)
@chelle29: Unless you are avoiding government surveillance just suck it up an get a checking account. Some will pay you $100, some will give you 5% interest… and many will try to screw you over. Not any worse than paying for money orders
Avoid liens or garnishments by opening a custodial account by putting it in your child’s name who is under18 with you being the legal guardian and you, the legal guardian is the only one who can do maintenance on the account like withdrawls, address changes, balance inquiries or anything else until minor is 18. The legal guardian can close the account whenever they want to except first check with financial institution about their early closing penalty fee; usually within first 6 mo. of account opening. I could be wrong, but I don’t think a lien or garnishment can be placed on a custodial account.
So who’s making all the money from the fees? The banks?
Mississippi’s unemployment debit card has always had these fees. Nothing new really. Most of these gov’t and employee debit/pay cards have these fees.
Is it really that difficult to open a checking account and sign up for direct deposit? Usually you can do this without leaving your chair. Why wouldn’t you want direct deposit into a checking account? Who buys stuff with cash?
@lvhotrain: Some people aren’t able to open a checking account, often because of past suspicion (or confirmation) of fraud, and sometimes because of fraud committed by a spouse.
They DO tell you all of the fees up front. I am currently on Pennsylvania unemployment. I haven’t had to face the wrath of any of these fees as of yet.
When you start unemployment, get all the paperwork, start receiving benefits, they do very clearly inform you several times that you can opt for direct deposit. Why more people haven’t? I don’t know.
I was very well aware of the fee schedule (I got it in the mail THREE times), but still didn’t get direct deposit. However, that’s because my Wachovia account was overdrawn by more than a week’s worth of my unemployment benefit. I just spent an hour in my local Wachovia Financial Center getting chargebacks put through on my account and insufficient funds fees refunded. Since my account was now back in the black, my last order of business while I was there was to have them perform a cash advance from my unemployment card and deposit it into my checking account. When I bother to find my checkbook, you can up that direct deposit number to 55.
So each month you get paid and pay the $1.50 to withdraw your entire paycheck. That would make it pretty much the cheapest relationship with a bank you’re likely to get these days, and if you don’t have a bank account it’s certainly a lot cheaper than a check-cashing place.
Also $4-$12 doesn’t seem like that much money to cancel+replace a lost ATM card – a bank does actually incur some costs as a result, and I don’t mind there being a little bit of a penalty there to encourage people to be more careful.
The balance inquiry fees, etc. do seem to be a bit steep, but again – just take all of the money out at once – it’s not the job of the unemployment office to become your bank, it’s their job to give you the money. $1.50 is a pretty cheap way for somebody without a bank account to get it, way less than it would cost to get a check cashed.
The Virginia employment commission requires that you either designate a bank account for your benefits or a debit card. Not sure on the charges for that card however…
About a decade ago, I had the misfortune to lose a job while living in PA. When I went to apply for unemployment, I was told that applications were processed quarterly, and we were only two weeks into a new quarter – so I would not receive benefits for a few months.
I wrote my landlord a note of apology and authorization to sell stuff I left behind (like a $400 convection oven), loaded what I could carry into the car, used what money I had to buy gas, and got the heck out of there.
These debit cards are another scam foisted upon the working public. It is total bullshit that someone should be charged so much as a DIME to get access to money they rightfully earned. I got no beef against Direct Deposit or employers opening up bank accounts on behalf of employees for direct deposit. But these debit cards are undermining Americans’ only means of building wealth.
Sure it’s $1.50 today, but the banks will realize they have a captive audience and start charging more and more. Look at what’s happened with out of network ATM fees in just the past 10 years.
I’d never ever foist these fee-laden debit card on my employees, I’d sooner make payroll in cash.
You get one free withdrawal, so can you not withdrawal the full amount all at once? Although isn’t this the same kind of debit card shenanigans some Guatemalan sweat shop workers brought up to our congress in the past couple of years? Where employees were paid with debit cards that had outrageous fees in order to withdrawal.
I’m not surprised by this at all. Once I saw the name “Comerica” the shock I had was replaced by pure anger. Comerica does the SAME THING with their EPPI cards that are used with Child Support payments.
Comerica must get some kind of a kick out of this since there was talk at some point recently of using the same card system for Social Security as well. They sure do like snatching money (no matter how small an initial amount it may be) from people who really, truly need it.
What this really shows is that banks are true monsters who feed off the dead. They want to make money, that is take money away from people who are unemployed and need everything they can get. The state saves money by giving the banks a chance to make a profit. Sick.