CFPB Warns Employers About Payroll Card Abuse

[Omaha Steve]

http://www.aflcio.org/Blog/Corporate-Greed/CFPB-Warns-Employers-About-Payroll-Card-Abuse

09/13/2013

Mike Hall


Photo by DJJudah/Flickr


Earlier this summer, we reported on a new trend—especially prevalent in low-wage industries—where more and more workers aren’t getting paper paychecks or direct deposits to their checking accounts, but instead are finding their wages on prepaid cards. The Consumer Financial Protection Bureau (CFPB) warned employers yesterday about the misuse of prepaid payroll cards and that they cannot require workers receive their wages via prepaid cards.

The cards save the employer money, and mean big (and mostly unregulated) profits for the banks and financial institutions that issue the cards. But they also eat big chunks of the workers’ pay though a bevy of fees they must pay to access their accounts.

Workers typically are forced to pay withdrawal fees ($1.75 or more) each time they access their money at most ATMs and even fees to transfer money from the card to a personal checking account. Other fees can include $2.95 for a paper statement and $6 to replace a card. Some users even have to pay $7 inactivity fees for not using their cards.

FULL story at link.