Low wage workers "encouraged" to use payroll debit cards instead of checks or direct deposit

[thewayne]

A lot of employees at Walgreens, Taco Bell, McDonalds, etc. don't make a lot of money. Banks have invented a new tool to make more money: payroll credit cards. The employer credits the money to the account, the employee has immediate access to their money without the hassle and fees of depositing or cashing their checks. The only problem is that pretty much anything they do with the card results in a fee being charged against their fairly small take-home pay.

And because the cards are a recent invention, there's pretty much no regulations against it.

The employers frequently offer direct deposit, but put a mountain of paperwork in the way to avoid the card. The other problem is that low-wage workers frequently have no credit history or too many bounced checks to open a real bank account.

I guess there's nothing more fun than exploiting the poor.

http://www.nytimes.com/2013/07/01/business/as-pay-cards-replace-paychecks-bank-fees-hurt-workers.html?pagewanted=all&_r=0

Comments

[vaudy.livejournal.com]

Wow. The company I work for does payroll cards, with automatic sign up, but switching to direct deposit takes about five minutes on our online portal. There are ATM fees, but no POS purchase fees, so a lot of people who use the card just come to the customer service desk and take out their whole week's pay every week, because we can run a debit card for cash back without a sale (of course, that advantage is specific to working in the kind of place that has a customer service desk). Also, our provider is not one of the ones mentioned in the article; perhaps their practices are not as bad as others'.

I guess we're lucky.

[thewayne.livejournal.com]

Yeah, fees seem to vary from provider to provider, which is easy to do since it's largely unregulated. I found it pretty shocking, especially since it's likely that when I get back in the job market that it will definitely be in the shallow end. But one thing is for sure, I'll fight tooth and nail for direct deposit.

[silveradept]

Someone found a way to make the company scrip scam actually legal, by using a bank as the entity issuing the scrip and taking the profit from it. Not quite as good as doing it themselves, but still a far sight better than having to pay someone all of their wages.

And like all other corporate shenanigans, it's "optional", just that you have to be educated and willing to slog through something designed to screw you to get out of it. No surprises here that it's being used in places where the workforce is unlikely to have he education or language skills to get out. And probably don't have any labor union nearby to advocate for them.

[thewayne.livejournal.com]

I hadn't thought about the company scrip angle, I think you're spot-on. Maybe not from the company, but definitely from the bank.

[silveradept]

JP Morgan Chase are issuing a lot of these cards - considering their strong role in the mortgage crisis, it makes perfect sense to me that they would want to capture as much money as possible from people who could not afford to fight them on it.