As if the nation's downtrodden unemployed don't have enough hardship to deal with, it turns out that many face hidden fees when accessing their unemployment benefits.
According to consumer groups, unemployment insurance (UI) debit cards are hitting the unemployed where it hurts most through hidden fees that may take users by surprise, assuming they don’t read the fine print. And guess who's often profiting from these fees? The very same banks that helped caused the recession.
A majority of Americans in about 30 states receive their unemployment benefits directly deposited into their checking accounts, funds which can be accessed with a UI debit card. The expeditious method serves both the unemployed individual by giving them speedy access to their funds while simultaneously saving the state money, according to stateline.org. Moreover, unemployed individuals without bank accounts have the luxury of avoiding check-cashing fees and making purchases with their card. Fast and convenient though it may be, the fees can be significant in some states. In Texas, the Chase UI card charges a $5 ATM fee for every withdrawal after the first one in a given month. According to the Consumers Union:
Some states, like Nebraska and Minnesota provide the ReliaCard run by U.S. Bank that has a $20 Overdraft Fee! Or if you have a bank account you’d like the funds transferred to, you’ll need to pay $2.50 to move the money over for Missouri Access recipients.
"If you are issued your unemployment benefits on a prepaid card, be sure to read the terms and conditions," Suzanne Martindale, an associate policy analyst at Consumers Union has said. In 2009, the U.S. Labor Department offered guidance to states outlining “best practices” for UI debit cards, such as: eliminate overdraft charges; allow for more than one free ATM withdrawal per payment and don’t charge fees when the card is used to make purchases.
Unfortunately, these guidelines are routinely ignored. And much like the way that many Americans were lured into toxic mortages, it comes down to "reading the fine print". . . . yet again.
Worse yet, it seems that these cards are not covered under legislation enacted by Congress last year to reform Wall Street, consequently allowing the issuing banks to raise fees to the merchant and consumer at will.
Senators Robert Menendez and Richard Durbin are proposing new rules that would limit the fees on all prepaid cards. Further, the legislation would create "a new framework to ensure consumers aren’t fleeced by prepaid cards," according to Senator Menendez.
In a time of economic uncertainty for the average worker and mega bonuses for bankers, the unemployed have suffered enough abuse. Let's not use UI debit cards as one more opportunity to hit them when they're down.