Bustos leads 68 lawmakers in demanding investigation of payroll card abuse
WASHINGTON, D.C. – Today, during National Consumer Protection Week, Congresswoman Cheri Bustos (IL-17) led a group of 68 lawmakers in demanding an investigation from the Consumer Financial Protection Bureau (CFPB) into the growing abuse of “payroll cards.”
There is a growing practice of employers issuing debit cards, also known as payroll cards, in lieu of a paycheck or direct deposit. These payroll cards are generally issued by third-party financial institutions and can carry with them various hidden fees and charges for everything from checking the balance, speaking with a bank representative, using an A.T.M. to withdraw funds, to even transferring funds to an existing bank account. Often these fees and charges are not explained up-front to the newly-hired employee, many of whom are low-to-middle-income, and the cards effectively reduce their take-home pay.
“During the ongoing economic recovery, we can’t allow working families to be squeezed any more than they currently are,” said Congresswoman Cheri Bustos. “Transparency is a simple expectation for workers who may lose hard-earned pay through the convenience of a payroll card. Acceptance of fees associated with various payroll options should be an informed choice, is protected by law, and workers and their families deserve enforcement of that law.”
In the letter to Richard Cordray, the Director of the CFPB, Bustos and the other members called on him to further investigate this disturbing practice, and at the very least ensure that employers are complying with current federal regulations, by providing conspicuous notice to employees as to their options of how they may receive their paycheck, and in the case of using payroll cards, by providing the employee with an upfront list of all associated fees.
The issue of payroll card abuse has recently been documented across the country in among other places the New York Times, Forbes Magazine and the Des Moines Register. There is also an ongoing lawsuit in Pennsylvania regarding the practice, as well as an investigation by the New York attorney general, Eric T. Schneiderman.