Aug 13 - the payroll debit card scam: hitting vulnerable employees where it hurts

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 4 years ago '09        #1
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messy marv stan 4536 heat pts4536
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Aug 13 - the payroll debit card scam: hitting vulnerable employees where it hurts
 

 
visit this link Payroll debit cards: hitting vulnerable employees where it hurts | Washington Times Communities



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More employers are paying employee wages via prepaid payroll debit cards. As employees begin to feel the high costs of a largely unregulated sector of the banking market, large corporations and banks increase profits unscrupulously.

Some employers—usually large retail and restaurant chains—have replaced traditional checks with prepaid debit cards to pay their hourly employees. Employees can use these cards like any other debit card to make purchases, pay bills, transfer funds, and withdraw cash at an ATM

However, prepaid debit cards charge high fees for balance inquiries, ATM withdrawals, over the counter withdrawals, automatic bill pay, purchases, balance inquiries, and transfers to a checking account. The fees can be so high that some employees actually end up making less than the minimum wage.

The practice of a number of companies making payroll debit cards the only payment option for certain employees has recently come under fire.

According to the Site Group research firm, $3.4 billion was put on to 4.6 million active payroll cards in 2012. Figures are expected to reach $68.9 billion in 10.8 million cards by 2017.

Companies like McDonald’s, Taco Bell, Walgreens, Victoria’s Secret, The Limited, and Wal-Mart use these cards to pay their hourly employees. Prepaid cards are issued by most major banks and credit card companies, including Chase, Bank of America, Wells Fargo, and Citigroup, as well as several other less-known issuers.

The law in 25 states allows employers to pay wages through direct deposit or prepaid cards instead of traditional checks. Laws in other states are less clear. A handful of states require payment in cash or check.

Banks and card issuers claim that they can save companies a substantial amount over using conventional checks. For example, the Visa payroll card savings calculator estimates $1,980 in annual savings for a company with 100 employees and $39,600 for a company with 2,000 employees.

Other issuers claim that payroll cards save employees check cashing and money order fees. Employers and banks also claim that the cards are convenient for employees who do not have a bank account because payroll cards carry lower fees than regular check-cashing services.

Due to a largely unregulated market, some card issuers offer employers money outright for every employee signed up for the debit card program. A New York Times investigation revealed that Citibank and the New York Housing Authority (NYHA) have a contract whereby the NYHA receives one dollar for each employee it signs up to the payroll card program

Issuers and banks are making millions on fees a.ssociated with payroll debit cards. Losing income from new regulations governing credit and debit card fees, banks can recuperate lost revenue in the largely unregulated payroll debit card market.

For example, while a bank with over $10 billion in a.ssets is prohibited from charging overdraft fees on checking accounts, employees with payroll debit cards can be charged $30 or more in overdraft fees, called “balance protection.” Similarly, while banks cannot charge inactivity fees for debit or credit cards, no such protection exists on prepaid cards. Many cards charge $7 to $10 for inactivity of more than 60 days.

While offering prepaid cards may be useful to some employees and is perfectly legal, companies may run into problems if the payroll debit cards are the only form of payment they offer employees. The same is true if companies offer a choice between prepaid cards and checks or direct deposit, but employees are automatically enrolled in a debit card program which often involves a great deal of time and paperwork to opt out of.



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In June of this year, lawyers for Natalie Gunshannon and other employees filed a class-action civil suit against a Pennsylvania McDonald’s franchisee owner, claiming that the fees imposed by the debit card—the only payment option given—dropped several employees’ earnings below minimum wage.

The suit also alleges that by not offering Gunshannon and other hourly employees an alternative method of payment, the employers are in violation of Section 3 of the Pennsylvania Wage Payment and Collection Law (PDF), which states that “wages shall be paid in lawful money of the United States or check.”

Since the lawsuit was filed, the franchisees have announced that employees at their 16 outlets are no longer required to accept the prepaid cards. McDonald’s—not named in the suit—has reiterated that it leaves it to franchisees to determine the best way to pay employees as long as it is within the law.

The New York State Attorney General’s office recently announced that it is investigating the payroll practices at national retail chains including Olive garden, Home Depot, and Wal-Mart. Surprisingly (or not), even some states have begun to issue benefit payments through prepaid debit cards.

The class action lawsuit against McDonald’s franchisees is pending, but the outcome should indicate how courts will respond to this practice in the future.

58 comments for "Aug 13 - the payroll debit card scam: hitting vulnerable employees where it hurts"

 4 years ago '07        #2
Ham Rove 3511 heat pts3511
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cant wait to see the ppl defending this.
 4 years ago '05        #3
rawchester 14 heat pts14
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This makes me sick. fu*king big business!!
 4 years ago '06        #4
LGK 35 heat pts35
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people keep signing up for it.
 4 years ago '04        #5
matelyan 21 heat pts21
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 Ham Rove said:
cant wait to see the ppl defending this.

Allow me to save you the wait:

I'm sure by days end, someone will enter spewing this nonsense:

"Well if these people went to school and actually did something with their lives and quit making a career out of fast food blah, blah blah...."

While not once scolding or berating the banking industry for their shenanigans.
 08-14-2013, 10:39 AM         #6
Tha Problum 
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this has been going on, but nobody around here pays attention tho unless its mcdonalds

matter of fact a mcdonalds that was doing this was posted on here awhile back and that thread did numbers
 4 years ago '12        #7
OldBusiness 163 heat pts163
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I'll never forget walking out mid interview after hearing a job was doing this...and this was back in 2004 when I was 19...Was doing an interview radio shack and the dude told me they did this...told me the card would charge me like damn near 3 dollars for ATM withdrawals and that the bank would then charge me 2.50 on top of that...I had 2 other job offers that didnt mind just doing direct deposit to MY bank account.
 4 years ago '06        #8
LGK 35 heat pts35
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 OG k!lla said:
I'll never forget walking out mid interview after hearing a job was doing this...and this was back in 2004 when I was 19...Was doing an interview radio shack and the dude told me they did this...told me the card would charge me like damn near 3 dollars for ATM withdrawals and that the bank would then charge me 2.50 on top of that...I had 2 other job offers that didnt mind just doing direct deposit to MY bank account.
so wait. they ONLY paid you in the prepaid method?
 4 years ago '07        #9
Damagegadget 492 heat pts492
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I think my company is trying to move towards this... see what they used to do is over night checks to those without direct deposit...but then they decided to snail mail them...effectively making your check arrive 3-4 or even 7 days later..and running the risk of getting lost(as mines did several times before I set up direct depo)
 08-14-2013, 12:17 PM         #10
Tha Problum 
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 Mvs2527 said:
Unemployment does the same thing
They send checks in my state, probably even do direct deposit too
 4 years ago '09        #11
messy marv stan 4536 heat pts4536 OP
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the prepaid cards are convient for people who dont want to open a bank account just so the bank can extort their money. but the fees on these cards are a fortune. to deposit some duckets on a brand new card its like $4.95...then theres the $5 "maintainence fee" so thats $10 right off the top. the fees keep adding up from there. 15 or 20% of the balance gets ate up by these fees. the companies that issue these prepaid cards are the 2 giants visa or mastercard so the fees go directly to them
 4 years ago '06        #12
KFrizzle 296 heat pts296
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Hate this... My GF's card is the most BS of things...

Holds like $75 for days if you pay at the pump, even if you just pump 10 bucks..
 4 years ago '10        #13
kawgre12 14 heat pts14
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At the hospital I work at, they only make you do this if you don't have direct deposit set up through your bank account
 4 years ago '05        #14
Based_One 79 heat pts79
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Man I service these card at my job and man they nickel and dime these people thanfully we have some good ones such as US Bank but metabank and bancorp they're terrible also PLS they take advantage of poor people to the max it's a joke people even sign up for those sh*ts.
 4 years ago '05        #15
Based_One 79 heat pts79
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 KFrizzle said:
Hate this... My GF's card is the most BS of things...

Holds like $75 for days if you pay at the pump, even if you just pump 10 bucks..
Yup get cussed out everyday over this sh*t this and the 20% holds at resturants for tips.
 4 years ago '06        #16
LGK 35 heat pts35
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 regulate said:
Read the article before commenting next time.

.
just read it and in some cases its necessary for some people, but still people shouldn't accept this. some regulation is needed
 4 years ago '09        #17
messy marv stan 4536 heat pts4536 OP
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soon every single employee is gonna be paid this way no matter what career you have. the banks find ways to steal consumers money one way or another. one fee after another just yeilds the bank some more income


all regulations do is drive up the cost of business and hurt the consumer economically. sure some regulation here and there is needed. but theres no need for 5326374 pages of regulations that cover every single thing any business does. from the height of desks at the workplace to cubicle size every little thing is regulated with a complex set of laws that nobody except lawyers understands


Last edited by messy marv stan; 08-14-2013 at 01:02 PM..
 4 years ago '07        #18
wtr1906 45 heat pts45
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 regulate said:
This is another in the long line of reasons why people should just boycott banks altogether. Pull ALL of your money out and deposit it into a credit union. No fees whatsoever (even for certified checks, etc) and they even pay YOU to hold an account there.

Its one of the easiest things americans can do in mass to combat these corrupt evil banks yet its not happening on a large enough scale. Americans are so lazy and stupid they almost deserve to get r*ped like they are.
Although I defintely feel what you are saying, I have my money in a credit union and a big bank due to access when traveling and going to areas within town that have access to ATMs. Credit unions usually only have access to atms in certains areas and regions
 4 years ago '12        #19
OldBusiness 163 heat pts163
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 rai09 said:
so wait. they ONLY paid you in the prepaid method?
Yeah at the time they would ONLY pay out with that. Dead a.ss no bullsh*t

Like my moms always told me take your checking info with you to job interviews cause I always do direct deposit....And the management said they only paid through that card cause it was cheaper for them.
 4 years ago '12        #20
OldBusiness 163 heat pts163
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 KFrizzle said:
Hate this... My GF's card is the most BS of things...

Holds like $75 for days if you pay at the pump, even if you just pump 10 bucks..
Ah man I send money to my sister using paypal, or by just buying a reload card for her walmartmoneycard

Once said her 70 bucks to hold her over for a few days right.....She gets 15 in gas but pays at the pump...They then held the other 55 for 2 days so that money I'd just sent her for food? She couldnt even use for 48 hours
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