(MintPress) – Big banks are once again the target of accusations that their predatory practices are hurting the nation’s poor.
The National Consumer Law Center issued a 2013 survey of unemployment compensation prepaid cards, discovering that the 42 states that have adopted the banking-sponsored practice are passing on fees to the recipients of the cards — the unemployed.
It’s the second time the banking industry has come under fire for this practice. In 2011, the National Consumer Law Center issued a similar survey and found even more “junk fees” passed down to the unemployed through U.S. Bank. Its 2013 report cites some improvements, but indicates there’s still room to change — on the part of banks.
“States have made many improvements in their UC (unemployment compensation) prepaid cards, but work remains,” the Law Center said in its report. “For families struggling with unemployment, every dollar counts.”
The cards used through the program have largely been given positive ratings by the Consumer Law Center this time around. Yet that doesn’t mean the unemployed are losing out on costs. In California, recipients collectively paid $1.8 million in fees.
The problem that persists are policies within states that either encourage or automatically enroll the unemployed in the prepaid card programs, rather than fully disclose the option to sign up for direct deposit, which would allow the recipient to incur the full amount of allotted money.
The larger problem, however, exists in California, Indiana, Kansas, Maryland and Nevada, where those on unemployed are required to receive funds through the prepaid card system. This, according to the National Consumer Law Center, is a violation of federal law.
Drawing on the improvements from 2011, and the areas that could still use a boost, the Law Center indicates that a few thing must be done. Direct deposit, it says, should be done initially, making it easier for the recipient. This is a big one, as data collected by the Law Center indicates most workers choose the direct deposit option when they’re offered, but some states place barriers for recipients to do so.
“Others automatically enroll workers in the prepaid card, requiring them to go to extra effort to disenroll to select direct deposit,” the report states.
Fees for balance inquiries, customer service and denied transactions should also be eliminated, the Law Center states.