Employers New Way To Screw You - Increasing Use Of Pre-Paid Payroll Cards

http://www.cbsnews.com/8301-505144_162-57593101/beware-employers-bearing-costly-payroll-cards/


Consumers once had to beware their bank. Today they may need to be equally cautious when dealing with their payroll department now that paying workers with plastic rather than checks has become a burgeoning business.

An increasing number of employers, schools and government agencies are loading pay and benefits onto prepaid debit cards, which payroll departments laud as an attractive alternative to paper checks. Payroll professionals have reason to be enthusiastic. Replacing paper checks with reloadable plastic cards can save check issuers millions each year.

That financial incentive is helping to fuel explosive growth in the industry, which has tripled in size over the past five years and is likely to double again by 2015. Mercator Advisory Group estimates that some $76.7 billion was loaded onto prepaid cards in 2012 and that total will rise to $168 billion by 2015. Aite Group estimates that 4.6 million payroll cards were active last year.

By contrast, payroll cards' impact on employees and other consumers is drawing concern from consumer advocates. These cards are largely unregulated and come with a bevy of service fees, they say. Where regulators have barred a range of fees on ordinary debit and credit cards, prepaid debit cards -- which work much the same way -- are mostly exempt.

Avoiding overdraft fees. As a result, payroll card users may incur fees for "inactivity" -- in other words, you didn't spend down your balance fast enough.

The largest issuer of payroll cards, NetSpend of Austin, Texas, levies as many as 18 different fees on its cardholders, according to CardHub.com, a credit and debit card comparison site. By comparison, the average prepaid card charges as many as 10 different fees, although the best issuers limit the charges to a relative few, according to Odysseas Papadimitriou, chief executive of CardHub and the author of a just released study of on the best and worst prepaid cards.

Among the most egregious fees on payroll cards are those that charge consumers to simply see their remaining balance, says Joseph Ridout, consumer services manager with Consumer Action, a San Francisco advocacy group.

"Balance inquiry fees punish people for being financially responsible -- for checking the balance in their account before they spend," he says. And because these cards are used to pay public benefits to some of the poorest Americans, Ridout adds that the nagging fees are being borne by the segment of society that can least afford to pay.

In some cases, meanwhile, employers and government agencies even get kickbacks from the banks that issue the prepaid cards, according to a recent New York Times report. McDonald's (MCD), Taco Bell, Walgreen (WAG), Wal-Mart (WMT) and other major employers were loading hourly workers' pay onto these cards, creating a financial burden on employees, the paper found. One worker quoted in the story, who earns $7.25 an hour, said he spends an average of $40 to $50 per month on fees associated with the prepaid debit card he receives in lieu of a check.

Such controversy recently led one McDonald's franchisee to announced that it would stop making payroll cards mandatory after getting sued and becoming a target of a New York state investigation.

Although companies and the issuing banks maintain that prepaid cards are a benefit to the roughly 10 million Americans who don't have bank accounts, critics say many workers have no option of getting their pay in any other way, even when they do have a bank account.

CardHub's survey found that while the fees on these cards have come down as the industry has become more competitive, consumers could end up spending as much as $360 annually -- $30 a month -- with normal use of these cards. However, every card has a slightly different fee structure, and most allow a certain number of free transactions, so it's difficult to generalize about how much any given card will cost. It depends in part on how the consumer uses it.

Compounding the problem is that fee disclosures are often lacking, or so confusing that consumers accidentally trigger fees in ordinary use. Worse, debit cards were initially sold as budget tools that guaranteed you couldn't overspend your wealth. The notion was that once you'd spent the amount you had in your account, any further purchases would be denied. Parents were even encouraged to use prepaid cards to manage their kids' allowance for this reason -- the thinking went that prepaid card would stop teens from overspending and teach worthwhile lessons about handling their finances.

However, while recent federal law stopped banks from allowing overdrafts on ordinary debit cards without the consumer's express approval, prepaid cards are increasingly providing automatic "overdraft protection" -- at a steep cost of roughly $25 per overdraft.

New York lawmakers are now considering whether to regulate payroll cards, while the federal Consumer Financial Protection Bureau has promised to weigh in soon on the products. In the meantime, employees and other consumers who are issued the cards in lieu of a check must protect themselves.

 

Man, that's more bullshit.

 

Things like this really, really piss me off. It's like these companies don't even use vaseline before they screw you any more. Hell, they could at least give you a reach around!

The more I read things like this, the more I see that the goal of these companies is to create a permanent American underclass where, no matter how hard you try or how hard you work, it is next to impossible to change your circumstances.

 

I remember my first job as a teen made us use pre-paid cards since many of us (minors) didn't have bank accounts, and it sucked! One time the machine wasn't working properly and gave an error every time I tried to withdraw money. Then, the next day I find out I was charged 10.50 for 7 alleged 'balance inquiries' at 1.50 each.

Next day I set up an account under my mom's name. It sucked having to ask her every time I wanted to take out my own money, but it beats having some pre-paid ATM service steal it.

 

Hey Krogy, seeing that you're from New York. Is that typical in the work place? How hard is it to get a checking account? Just hand the bank teller your check and they will open you an account. Hate to see anybody get ripped off over there OWN money.

 

I was actually in Jersey at the time, but the real issue was that they wouldn't let people under 18 open an account under their own name, they have to have a guardian cosign for it (which usually made them the true owner).

 

The woman who sued lives in PA...I had read her story a while back.. It's actually a fascinating read...how bold they were in violating her Right to her full pay.

Employee Sues McDonalds Over Pre-Paid Debit Card Payroll Policy

http://www.occupycorporatism.com/employee-sues-mcdonalds-over-pre-paid-debit-card-payroll-policy/

 

Good! This kind of behavior needs to be exposed for what it is!

 

Fast food workers in Chicago is striking for double pay.
http://www.foxnews.com/us/2013/07/29/fast-food-workers-plan-one-day-strike-for-monday/

 

I'm not surprised at this. our corporate overlords have been getting their way and feeling their oats for a long time now. From stuff like this to "too big to fail" to the death of unions, there's a creeping impunity on their part ..

 

They are stacking the deck against the worker from the word 'go'.

 

Sad but true. I think back on when I used to work in fast food and retail. I consider myself lucky that I was able to get out but it was nowhere close to being enough to live off of, even if you cut every possible corner imaginable. It's like I blinked and I missed where this county went from the war on poverty to the war on the poor. It's like corporations are actively trying to keep their employees from advancing in life!

 

so... just get your mom or dad to open up the account. You then go over with them on pay day to withdraw money out.

 

Not just fast food places but also at Wal-Mart and other big businesses. If I was working there I will make sure to fill out every form to avoid getting deluged with fees.

 

RUSH Card

Russell's greedy ass is part of the scam.​

No surprise with that recent Harriet Tubman video, Russell dont give 2 fucks about nobody.​

He even got that clown Alex Rodriquez in on it.​

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Wow, follow the money. Disgusting.

On a similar vein @ these cards being pure abu$e, the Kardashians got sued up the ass by an Attorney General (I think in MASS) for this type of highway robbery CC fee scam.

 

American capitalism has become increasingly extractive as workers are now more productive than ever before, yet wages have stagnated over the last thirty years. It isn't enough that wages are relatively lower but some companies engage in underhanded business practices with other companies for kickbacks.

 

....This probably can be attributed to several factors, the most notable of which is sheer cooperate greed.....and then there is the dramatic decline and neutralizing of unions which has been the wage negotiating arm for workers....Finally, companies have streamlined themselves in the last 12 years,... they know that there is a glut and abundance of available American workers,... the existing workers will continue with-out fret and at all cost to maintain their job security and so there is no compelling pressure on companies to demonstrate more fairness in increasing wages…….