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March 13th, 2009
05:09 PM ET

Twist for the unemployed

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/US/03/13/unemployment.fees/art.jobless.fees.cnn.jpg caption="A brochure that goes out to Pennsylvanians seeking unemployment via debit card lists a number of fees."]

Drew Griffin and David Fitzpatrick
CNN Special Investigations Unit

If you’re out of work like Steve Lippe, who was laid off from his job as a salesman in January, you know you already have problems. But looking at the fine print that came with his new unemployment debit card, he became livid.

“A $1.50 (fee) here, a $1.50 there. Forty cents for a balance inquiry. Fifty cents to have your card denied. Thirty five cents to have your account accessed by telephone,” he recited.

He was quoting fees listed in a brochure that goes out to every unemployed person in Pennsylvania who chooses to receive benefits via debit card. He was given the option when he filed for jobless payments: wait ten days for a check or get the card immediately. Like most of the 925,000 state residents who received unemployment benefits in February in Pennsylvania, he chose the debit card. And only then, he says, learned about the fees.

“I was outraged by it," he told CNN. I was very noisy about it. I just couldn’t believe it. An outrage is just too weak a word. It’s obscene.”

According to the Department of Labor, 30 states offer direct deposit cards to the unemployed. Many of the nation’s biggest banks have contracts with the individual states. JP Morgan Chase, for instance, has contracts with seven states and has pending deals with two others, according to Chase spokesman John T. Murray. About ten states, the Labor Department says, pay by check only.

An Associated Press survey of the debit card fee structure shows fees range from the modest - that forty cent fee Steve Lippe mentioned - to a high of $3 per transaction, if the debit card is used at an out-of-network ATM. Most banks give jobless debit card users one free withdrawal per deposit period, which averages every other week in most states. But consumer advocates, including the National Consumer Law Center, say the unemployed “should be able to obtain cash and perform basic functions with no fees.”

A key Democratic member of the House Financial Services Committee, which oversees bank regulation and the Troubled Asset Relief Program (TARP) , told CNN she agrees wholeheartedly.

“Fees should not be attached to unemployment benefits that the taxpayers are paying to help Americans,” Rep. Carolyn Maloney, D-NY, told CNN. “Particularly, these fees should not be attached by banks that are getting TARP money and are being supported by taxpayer dollars.”

CNN asked some of the major banks involved in the debit card program for a response. Spokesmen for JP Morgan Chase, Wachovia, Bank of America and Wells Fargo all directed us to the individual state governments for comment.

The Acting Secretary of Labor and Industry for Pennsylvania, where Steve Lippe lives, is Sandi Vito. Via email, her staff invited us to Allentown, Pa., where she was taking part at a public meeting at an elementary school. Afterwards, we were promised, she would answer questions about the debit card fees.

But when the meeting ended, her staff said she was too busy to talk.

“Do you have a second ,” asked CNN Correspondent Drew Griffin.

“No, I don’t, I’m sorry,” she said.

“You can’t just answer one question?”, Griffin asked.

She didn’t say another word and left the school auditorium by a back door. Her spokesman, Troy A. Thompson, spoke with CNN after Ms. Vito left: “The distribution system for people getting their benefits has been improved by the use of debit cards, way above and beyond the distribution by check.”

The Department of Labor provided what it called “talking points” to CNN when asked for comment on the fee structure.

“States can do a better job negotiating fees with banks,” the Department said. “Many states have obtained terms far more favorable to claimants than those described in media reports.”

In addition, the Department had a few more bullet points to share:

  • The Department is concerned about the fees related to the use of debit cards as reported by the media.
  • We are aware that states are offering the use of debit cards to pay UI for some good reasons:
  • It is less expensive for claimants without bank accounts because they don’t need to pay check cashing fees.
  • Claimants can use the card free at merchants and therefore don’t need to carry excess cash.
  • Generally, these cards are safer and more secure than checks.

In its final sentence, the Labor Department added: “We will be working with states as they gain experience with debit cards to resolve these problems related to fees.”

soundoff (18 Responses)
  1. denise

    Please lets get this on the news headline and shame on J.P. Chase and any state involved! Everyone should needs pull all their money out of everyone of the banks involved find a credit union and deposit their money into a credit union and only bank locally get rid of these big banks and their money hungry corruption. AIG was the biggest sin of this century until the the unemployment department coming up with this debit card trash. I just shake my head I am going to pull out of JPChase credit card and mortgage.

    March 16, 2009 at 10:43 am |
  2. michelle lampe

    I am a divorced mother of one from new jersey we have had this debit card payment method for three years now here.... same fees as in this report about unemployment....this too is an outrage after all this money is for children and to take away from children. well need I say more......

    March 16, 2009 at 9:53 am |
  3. lorri

    How many of the banks you reported on are now owned by JP Morgan Chase? I don't know about Wells Fargo but I do know that Washington Mutual, Wachovia and Bank One are. Chase is charging fees for everything. Do a search on Chase complaints and I think you'll find plenty of reading material.

    March 16, 2009 at 8:53 am |
  4. Sherry, N. Calif.

    @TOM-I feel for you loosing your home. I would defintely look into who owns your note. Did WelIs Fargo chop it up and sell it to an investment bank? Find it. If they cannot produce it then you are free for awhile until they do.

    I suggest that those of you that chose ATM cards over direct deposit simply reverse your request if possible. This is an outrage. This why I do not own a debit card. Fees, fees, and more fees for BANKS. They are trying to recover their losses. Get rid of those debit cards.

    Adam, you are so right. There are more thieves out there than just good ole "BERNIE". Look out because they can also be friends of 40 years. Happened to me.

    March 15, 2009 at 12:25 pm |
  5. donna mcpherson

    It's the people of this country who are bailing out all these major banks, corporations, etc., with OUR tax dollars, and we're the ones STILL being screwed to date. Now, explain how that works please bc it's getting older by the day.

    March 15, 2009 at 11:35 am |
  6. Christine Chapman

    We have the same system in Michigan, you can choose either the Debit card or direct deposit. They don't even allow you to choose paper check anymore as an option. Michigan's UIA is far too overwhelmed. Personally, I chose direct deposit, and get my pay in two days, but...what I was advised by the benefits office of my former employer, if you choose the debit card...
    The best option with the debit card is to find someplace where you can cash the entire card out at once, just as you'd cash a real check. Deposit the cash into your checking or savings account. Then, you won't get hit with multiple fees throughout the pay period.

    March 14, 2009 at 11:11 pm |
  7. kevin

    This is outrageous! I think all of the fees should be returned. They still charge a fee if you go to the same bank on the debit card. In New York, the withdraws are in $5.00 increments so I know someone that has $2.25 on the card and cant get it out of the account. Who approved this and what were they thinking? These banks are out of control and its been this way for a long time.

    March 14, 2009 at 3:35 pm |
  8. Kim

    Which "banks "are looking out for we the people ?

    March 14, 2009 at 3:05 pm |
  9. Kim

    No charges are needed and this is absurd ! Which makes are looking out for we the people ? The ones that don't will go under !

    March 14, 2009 at 3:03 pm |
  10. Shani

    I am unemployed, and receiving benefits in the state of Utah. We had the option of a Mastercard or direct deposit in our banks account. I chose the deposit as I have had issue with temporary credit /debit type cards in the past.
    No fees associated however they sent me a card also. I have not used it. I destroyed it.

    March 13, 2009 at 8:47 pm |
  11. fauxdeux

    Not to mention, the fees are listed upfront if you choose to use the Debit Card. It's written right in your unemployment paperwork.

    March 13, 2009 at 8:41 pm |
  12. Michelle

    This is an outrage. ATM fees are nothing but a cash grab in any case, but what is of particular concern to me is that the government can track where (and on what) you spend your money. The next logical step is for them to regulate those expenditures.What a horrible invasion of privacy.

    March 13, 2009 at 7:13 pm |
  13. Annie Kate

    The charges should be disclosed to the claimants before they make their final choice over debit card vs. check. At least that way they know from the first what they are going to face. What ever happened to unemployment being automatically deposited in your checking account? TN and AL did that a few years ago and it worked out wonderfully well – your money was right where you needed it to pay bills and there were no fees attached.

    March 13, 2009 at 6:59 pm |
  14. Mike, Zephyrhills, FL

    Well you dont think that $25 dollars extra a week from the Govt is going to be free. We have to stimulate the banks!!

    They just cant do the right thing!!

    March 13, 2009 at 6:43 pm |
  15. adam

    This is absolutely disgusting. I also live in pa and on unemployment. 3 dollars to take out money and then you can only take out so much at certain atm's. I can get up to 20 dollara then sometimes can't usae all the money once it gets to a certain amount. My money and others goes to bail out and help these blood suckers and then I have to pay them to get my own money out. These banks are part of the reason I'm laid off in the first place. The system isn't wrong or broke its loop holes and capitolism gone astray. And greedy ceo's running things in washington. Our country is more corrupt than peolpe know. There's a lot more madoffs out there then people realize.

    March 13, 2009 at 6:36 pm |
  16. Tom

    I am one of the unfortunate in this economic depression. I am a month behind on my mortgage plus the monthly fees that they keep tacking on – and they are huge. My partner lost their job and my bonuses were cut out, this has left us in a hardship trying to make ends meet. I have watched CNN and all the news about Obama making help available to folks like me. Yesterday I received a letter of intent of foreclosure from my mortgage company – Wells Fargo. I contacted them today to see if I could something out, perhaps a loan modification. They refused and said that they would not modify the loans of anyone that was behind in their payments. This is ironic because it is the ones that are behind through no fault of their own that need help. I also saw on CNN where Wells Fargo was part of Obama’s loan modification program, apparently they are not. They said I had thirty days to pay the one month that I am behind, plus my regular payment, plus all of the late fees. I simply do not have the money. I already work sixty hours per week and I’m a type one diabetic that wears an insulin pump just to stay alive and the stress is beginning to take a toll on me. My partner has literally already put in over one thousand applications and not even an interview. What is someone like me supposed to do? Who was Obama’s help intended for? Apparently it isn’t for people that have worked hard all their life and paid there bills on time. Now when I need help or a solution, none is to be found. After living in my home for eleven years now I face losing it.

    Tom
    Morristown, TN

    March 13, 2009 at 6:34 pm |
  17. toadman

    Lippe is right to be outraged. This is insanity. If you have the option in your state, ask for a paper check, and use cash only. If you live in a state where these cards are mandated by law, then god help you.

    March 13, 2009 at 6:01 pm |
  18. Shayla Kersten

    Arkansas has debit cards for unemployment but you don't have a choice. It's the card or nothing. However, the only fees I saw were if you call and talk to a customer service representative. Then you pay $1.50. And there's an inactive fee but considering the job market around here, my card won't be inactive for a while.

    March 13, 2009 at 5:57 pm |