A bill to that will make payroll debit cards a legal form of payment under the state’s Wage Payment and Collection Act is beginning to move its way through the Pennsylvania Senate. A cosponsorship memo for the bill began circulating in August 2015, two months after a judge ruled in favor of McDonalds employees who filed a class action lawsuit against the usage of these cards. The bill was formerly introduced on May 13 and voted out of committee on May 18. A full Senate vote can happen once the Senate returns next week.
The use of these cards have exploded between 2012 and today and most of the cards are riddled with fees because payroll debit cards were the only type of debit / credit cards that were left out of regulations following the financial collapse.
More of the story can be found HERE:
The Center for Media and Democracy’s PR Watch shows that payroll cards were on the radar of big business in 2010 when an ALEC (American Legislative Exchange Committee) committee voted unanimously on the first model bills for the debit cards. Visa’s Vice President of State Relations introduced a model bill named the “Electronic Pay Free Choice Act,” where “an employer can force a worker to accept pay via a debit card if they do not have a bank account.” The Roosevelt Institute stated that banks were set to lose $14 billion in profits in 2011 from regulations protecting consumers from debit and credit card fees, but financial regulations following the Great Recession did not address fees associated with pre-paid debit cards. The New York Times reported that in 2013 “$34 billion were loaded on 4.6 million active payroll cards” in 2012 and those numbers were expected to double in the amount of money loaded onto the cards and the number of users by 2017. Visa claimed that a “company with 500 workers could save $21,000 a year” by switching to the debit cards.
The same report shows that low wage workers are hit with many fees from the banks issuing the cards. There are fees for account inactivity, replacing a lost or stolen card, ATM withdraws, requesting paper statements, over drafting an account, and since there’s lack of regulations limiting payroll cards, banks are using their fees to as a way to re-generate billions in lost income from regulations placed on debit and credit card fees.
A recent report published by the Restaurant Opportunities Center focused on payroll cards inside Darden Restaurants, the owner of America’s largest restaurant chains, and found that 76 percent of employees “reported having to pay fees to access their wages at the ATM,” 63 percent reported “that they were not told about all of the fees associated with the card before it was issues to them,” and 23 percent reported “not being given instructions on to use the Darden Card.” Employees faced a number of fees associated with the Darden Card and reported the following fees: $1.75 for out of network ATM withdrawals, $0.75 for an out of network balance inquiry, $2.00 card to card transfer fees, a $0.99 bill payment fee and a $10.00 replacement card fee.
Senate Bill 1265’s current language guarantees employees one fee free ATM withdrawal per pay-period that is below or equal to their previous pay. Payroll card advocates see this as a way for employees to withdrawal money and have it was walking around cash or deposit it into a bank account. The bill would not require employers to distribute pamphlets to employees explaining the fees associated with the bill, which is what New York’s Attorney General has been advocating. It leaves employees having to read the fine print provided by the banks, and it does not protect employees from the other fees payroll card companies already charge.
Card companies may even have a way around one of the only protections the legislation offers to employees. ROC’s report on Darden Restaurants pointed out that it would take some employees multiple days to withdrawal their paycheck because of daily withdrawal limits. This leaves a loophole for card companies to exploit payroll card holders because the senate bill only guarantees an employee one withdrawal per pay period.