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Friday, June 14, 2013

Nickeled and dimed and dollar-fiftied

Or: the rich get richer by causing the poor to get poorer.

Today's Wilkes-Barre Citizens' Voice brought a story so shockingly outrageous that...well, you should read it for yourself:

Former worker sues McDonald's franchisee


OK, that's not exactly the most exciting or informative headline. It's the reason for the lawsuit that makes it so outrageous: A former employee of a local McDonald's franchise is suing her former employers because they only gave her one option for collecting her pay: not by paycheck, not by direct deposit, but by debit card. A debit card laden with fees of all sorts, fees for almost anything you could imagine. From the article:
The J.P. Morgan Chase payroll card carries fees for nearly every type of transaction, according to the lawsuit, including a $1.50 charge for ATM withdrawals, $5 for over-the-counter cash withdrawals, $1 to check the balance, 75 cents per online bill payment and $10 per month if the card is left inactive for more than three months.
$1 to check the balance? And that $1.50 charge is for ATM withdrawals at a Chase ATM - it's higher at "out of network" ATMs. The problem is that the closest Chase ATM to the person filing this suit is in New Jersey - more than sixty miles and at least one tollbooth away.

The suit is being filed because Pennsylvania law requires that wages be paid in "lawful money." Unfortunately, Pennsylvania law doesn't really define "lawful money." And then there's this:
In 2005, the state Department of Banking concluded the use of payroll cards did not violate any laws within its jurisdiction.
So, legally, this may not even be an issue. But wait, there's more:
The Federal Deposit Insurance Corporation estimated that $60 billion in wages will be distributed through payroll cards next year.
Walmart, the largest private employer in the U.S., switched to paperless pay in 2009, with about half its 1.4 million employees receiving direct deposit and half receiving paycheck cards. The Home Depot, Lowes, United Parcel Service, FedEx and hundreds of other large employers use payroll cards. The Chicago Public Schools system uses them to pay more than 4,000 student employees.
And that's the really outrageous part. Not only is there precedent to suggest that the use of fee-heavy debit cards as a means of distributing wages is legal, the cards are already in widespread use - to the tune of sixty billion dollars projected for next year.

I took a few minutes to absorb this over breakfast this morning when I realized that I've already had experience with this sort of thing myself. Not as a wage-earner - quite the opposite. Sometime before I lost my job in 2010, Pennsylvania changed its Unemployment Compensation system over from using paper checks and direct deposit to debit cards and direct deposit. I was wary of the direct deposit system (for some irrational, unexplained reason - was I afraid of the State of Pennsylvania getting access to my checking account? Like they don't already have that information?), and I opted for the debit card. I was aware of the fees involved, so I used the card in a way that would minimize the fees being charged. I saw the fees as the price of collecting unemployment - from a system I had been regularly paying into for the previous eighteen years - and didn't complain.

But I had a choice to use direct deposit if I wanted it. The employees of companies that offer no options but debit cards don't have a choice. And the financial institutions behind these debit cards enrich themselves by means of those fees, chipping away at the meager wages of the folks forced to use debit cards, quietly redistributing wealth seventy-five cents and a dollar and a dollar fifty and five dollars at a time. Sixty billion dollars worth of wages tied up on debit cards are bound to generate quite a lot of fees.

How soon until fee-laden payroll debit cards are the only way that wage earners will be able to collect their paychecks?


2 comments:

Michelle Hryvnak Davies said...

" was wary of the direct deposit system (for some irrational, unexplained reason - was I afraid of the State of Pennsylvania getting access to my checking account? Like they don't already have that information?), and I opted for the debit card. I was aware of the fees involved, so I used the card in a way that would minimize the fees being charged. I saw the fees as the price of collecting unemployment - from a system I had been regularly paying into for the previous eighteen years - and didn't complain."

I was more wary of USING the debit card than I was using direct deposit. The state of PA doesn't need to know how I spend my funds. It takes a pay cycle or two to get the direct deposit setup, but it's worth it. The first few times I used my debit card, I took the entire balance out as cash and deposited the entire balance as cash into my checking.

Also - the debit card is the same one that they give to people who court-ordered have child support coming to them. I didn't need anyone judging me based on the plastic I pull out of my wallet. It's no one's business.

Michelle Hryvnak Davies said...

Anyway, your argument is irrelevant as the NSA already knows your checking account information.