[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:
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.”
Anderson Cooper goes beyond the headlines to tell stories from many points of view, so you can make up your own mind about the news. Tune in weeknights at 8 and 10 ET on CNN.
Questions or comments? Send an email
Want to know more? Go behind the scenes with