California paying jobless benefits with debit cards

July 21, 2011 6:39 PM

For many years, millions of Californians have relied on the Employment Development Department - EDD - to receive their critical unemployment and disability benefits. Up until now, customers have had to wait for "checks" to arrive by mail. But not any more. The EDD has introduced the new EDD debit card - a faster, more convenient, and more secure way of receiving those needed benefits. The new Visa® debit cards provided by our partner Bank of America® offers many benefits.

Reaction has been mixed.

posted by Trurl (35 comments total)

Here in WA state, the unemployment benefit cards are "provided" by Chase. That is, they cost the state $1.70 (or thereabouts) per person per month for chase to provide them. That's a bill of close to $100,000 each month which is charged to the state for them to give people their unemployment benefits. All going into the pocket of one of the biggest banks in the world.

And that doesn't count the fees which get charged the benefit recipients who withdraw funds from their card into cash form.

It's all bullshit, and needs to be stopped. We're taking public money and giving it to huge corporations for them to basically do nothing. We were better off when the state was administering these programs themselves and people were receiving paper checks which could be cashed at banks without fees for anyone.
posted by hippybear at 6:46 PM on July 21, 2011 [13 favorites]

Why is the last link to a blog post about Social Security?
posted by Ideefixe at 6:47 PM on July 21, 2011 [1 favorite]

Sorry, did I say $100K a month? I meant to say $700K a month, the better part of $1million/month going from taxpayer pockets into JP Morgan Chase's bank account.
posted by hippybear at 6:48 PM on July 21, 2011 [2 favorites]

The question is if that is less than they paid to mail the checks.
posted by maryr at 6:50 PM on July 21, 2011 [6 favorites]

$1.70 per person per month seems a bit high, but seriously, you're advocating going back to checks? I was shocked when I moved from Norway to Mexico, and discovered that people were still using checks here, much like in the US. The last time I'd seen a check before that was in the 80s, when my grandmother still used them at the grocery store.

I'm suring making and mailing out checks cost a bit per person per month too. Maybe the government should negotiate terms or figure out a better way to do it, but getting your benefits on a debit card seems like a huge step forward, and a no-brainer.
posted by Joakim Ziegler at 6:50 PM on July 21, 2011

Why is the last link to a blog post about Social Security?

It's written by a dog! It's amazing!
posted by tumid dahlia at 6:50 PM on July 21, 2011 [3 favorites]

Here in WA state, the unemployment benefit cards are "provided" by Chase. That is, they cost the state $1.70 (or thereabouts) per person per month

Dunno. $1.70 sounds less than what it would cost to cut, mail, and process a check.

I wish that these sorts of things could be competitively put out to bid, but $1.70 per person is failing to set off my outrage alarms.
posted by schmod at 6:52 PM on July 21, 2011

OK I read the O.P and with regard to the California EDD debit card - which I just got in the mail last week - the author of the linked to article makes several incorrect assertions.

Firstly she says that there is a fee to transfer to your bank account. In fact that service is free and can be automated so it always transfers - for free- into your own account.

The author of the linked article says that there are many fees associated with the card. In fact there are not. The only time that you would incur a fee is if you chose to make more than two withdrawals at a non BOA ATM in a two week period. You can make unlimited debit transactions - no fee. You can make unlimited credit transactions - no fee. You can make unlimited cash back transactions - no fee or you can just transfer everything automatically to your own bank account.

The author of the linked article claims that there is a fee if you withdraw at a non BOA ATM. That is also not true. There are 2 free non BOA ATM withdrawals allowed each check.

So I don;t know what's up with that author or that article but it mostly just a bunch of unfactual info. (sorry Trul)

The benefits of this card are that my money gets to me 4 days earlier - no long delays during 3 day weekends and I don't have to take the check somewhere to deposit it.
posted by Poet_Lariat at 6:53 PM on July 21, 2011 [7 favorites]

It kind of sucks that you just get one free cash withdrawal per month, but if there's no upper limit on the amount, you could use that one withdrawal to get all your money out, which would make it functionally equivalent to getting a check and going to the bank, except you don't have to receive the check and go to a bank during opening hours, you can just find an ATM.
posted by Joakim Ziegler at 6:54 PM on July 21, 2011

schmod: it's more than any other state pays for the same service from Chase. Read the link.
posted by hippybear at 6:55 PM on July 21, 2011 [1 favorite]

Why is the last link to a blog post about Social Security?

Gah. Wrong electronic-payments-story link. Can't find the right one now, but it... mentioned Visa being the sole provider of the debit cards.

Mods, feel free to lop off the [more inside]. Sorry.
posted by Trurl at 6:56 PM on July 21, 2011

Oh crapski - I see that Trul was talking about CA EDD and the linked to article was talking about SSI payments. Grar .......

Well at any rate what I said about the CA EDD debit card holds true . I understand that deals from other states of from the Feds can not be a convenient.
posted by Poet_Lariat at 6:57 PM on July 21, 2011

With checks, many of the recepients end up paying much more to some random check cashing leech
posted by mulligan at 6:58 PM on July 21, 2011 [6 favorites]

Here in KS, we have Citi prepaid cards. It has one free withdrawal per week, so I have it transfer the money into my bank account and then use it as I need.
posted by reenum at 6:58 PM on July 21, 2011

I can see arguments for both sides. But you have to admit, pronouncing "checks" as if it belongs in air quotes is a pretty hard sell.
posted by Trurl at 7:02 PM on July 21, 2011

I think BoA is scum but the deal that CA EDD has with them on the debit card is pretty sweet. The thing to do for all these cards is just auto-deposit the cash back into your bank account. Where these banks make their cash in other states (aside form the tremendous interest they get on the floating deposits) is from the neediest and poorest served members of the population who just don't have the wherewithal to understand about associated fees. I am sure that such banks make a killing in fees from such people.
posted by Poet_Lariat at 7:11 PM on July 21, 2011

With checks, many of the recepients end up paying much more to some random check cashing leech

This. One large problem that the working poor face is being "underbanked". I don't really have a lot of time to go into detail about this subject, but pre-paid cards, like the ones being sold by Russell Simmons, are predatory cards that seek to take advantage of those people who cannot qualify for traditional checking accounts (poor credit, bad history, no history, etc.). What is sounds like here is nothing of the sort. While a $1.75 sounds like a lot going to Chase, it's likely saving the recipient tens of dollars in fees they'd incur if they were a part of the underbanked population.

I really don't like this post at all. It's misleading, at best. I happen to work for a rather large bank that sells pre-paid cards, so I have some knowledge of this situation. There are plenty of pre-paid cards that are considered predatory, like the one that was sold, and then pulled off the market, by the Kardashians. There are plenty of good reasons to be upset with banks. This isn't one of them, ESPECIALLY since the Durbin Amendment, and the Fed's interpretation, basically slaughtered bank's profitability on debit cards.
posted by SeizeTheDay at 7:19 PM on July 21, 2011 [3 favorites]

Where these banks make their cash in other states (aside form the tremendous interest they get on the floating deposits) is from the neediest and poorest served members of the population who just don't have the wherewithal to understand about associated fees. I am sure that such banks make a killing in fees from such people.

Yes, it's such a great thing that banks are using public funds to gain predatory profits from the least educated and least able to afford it in our society. I'm so happy about that.
posted by hippybear at 7:22 PM on July 21, 2011

Why isn't it just direct deposited into each person's bank account?
posted by Talez at 7:24 PM on July 21, 2011 [1 favorite]

When I was receiving unemployment from the State of Texas, it came from a Chase debit card. It was better than waiting for a check in the mail. But since I wasn't a Chase customer, I had to go to a Chase bank then down the street to my BofA. The advantage to going to Chase was I could take out all the money (to the nearest $20) and not hit a limit. Although Chase would waive its fee, if I went straight to BofA and used the Chase debit card there, BofA would add a fee. They'd let me go twice to a non-Chase but some other network (found mostly in 7-11 stores) without a fee. I think I also had the option of taking the card into a Chase branch and getting all the money. If I were a Chase customer it would be wildly convenient. Since I lived in a city I had several ATMs to chose from. But people living in the country are just SOL.

If I recall, I still had a bout $1.50 on that card. Too little to use to buy something or get in an ATM. But with lots of people with a few bucks in the account, the bank that holds the UI contract for a state gets to hold onto millions of dollars. I wonder if that $1.50 will ever get returned to the treasury of the State of Texas, or if Chase gets to keep it?

Later, Texas added the option of direct deposit so I could skip the whole ATM run every two weeks. That worked for me since I have a checking account. However, many people on UI don't have bank accounts and so they have to go the debit card route.
posted by birdherder at 7:29 PM on July 21, 2011

Why on earth are cheques and mail involved at all? Why isn't there EFT into nominated bank accounts? This seems absurd.
posted by wilful at 7:30 PM on July 21, 2011

Why isn't it just direct deposited into each person's bank account?

There are a lot of reasons why people who are on public assistance don't have bank accounts. I can't enumerate all of them clearly, but they involve reasons which range from having had an overdrawn account in the past which has never been reconciled to monthly fees attached to accounts to a lot of other reasons.

It's not reasonable to require that someone who is receiving public assistance to have a bank account, unless the state is going to provide the account for each person.
posted by hippybear at 7:30 PM on July 21, 2011 [1 favorite]

I really don't like this post at all. It's misleading, at best.

Apart from the "more inside", which I've already disavowed, the post consists of:

1. The wording of the opening to the official government video

2. A link to the official government video

3. A link to the official terms of the financial agreement that is the subject of said video

4. One snarky link to remind us of Bank of America's recent finanical difficulties

Seems pretty straight down the middle to me.
posted by Trurl at 7:32 PM on July 21, 2011

Why isn't it just direct deposited into each person's bank account?

For the record, New York state (not sure about others) gives recipients the option of having their benefits deposited directly into their bank accounts. This should be an option for those who have them.
posted by foxy_hedgehog at 7:36 PM on July 21, 2011

There are a lot of reasons why people who are on public assistance don't have bank accounts. I can't enumerate all of them clearly, but they involve reasons which range from having had an overdrawn account in the past which has never been reconciled to monthly fees attached to accounts to a lot of other reasons.

And yet, every single person on some form of welfare assistance in Australia manages to have a bank account. Why the difference?
posted by wilful at 7:36 PM on July 21, 2011

In Australia, social security payments are transferred directly into the recipient's bank/credit union account - and you have to have one.

The exception is for people who are subject to income management. They are instead issued with a "BasicsCard" provided by the government, not a bank. A portion of their entitlement is reserved to be spent using that card, which limits where and what they can buy.

Income management only applies to certain regions, where we don't trust blackfellas to spend their own money. This is not hyperbole. The government suspended the Racial Discrimination Act in order to introduce the scheme.
posted by robcorr at 7:38 PM on July 21, 2011 [1 favorite]

wilful: um... differences in the banking business structure between Australia and the US? I don't know what they are, but if EVERY SINGLE PERSON who is on welfare in Australia has a bank account, I bet there's something pretty fundamental different between the two.
posted by hippybear at 7:38 PM on July 21, 2011

Because bank accounts in the U.S. can be surprisingly difficult to get if you can't afford the fees, or, as pointed out above, you were ever overdrawn on an account and that never got cleared up.
posted by rtha at 7:40 PM on July 21, 2011

Sorry, did I say $100K a month? I meant to say $700K a month, the better part of $1million/month going from taxpayer pockets into JP Morgan Chase's bank account.

I hate to be that guy, but I find 450,000 households in WA on public assistance more shocking than $1.70 a month in fees each to make it easier for them to get their hands on the money.
posted by codswallop at 7:42 PM on July 21, 2011

wilful:every single person on some form of welfare assistance in Australia manages to have a bank account. Why the difference?

Raises hand.... oh ohhh .... I can answer that ! :)
About 7 or so years ago I became jobless and homeless. About the time I that happened I had zero money. Three of my checks bounced in my checking account - total of about 20 or 30 bucks for all 3. There was a $35 fee for each check. I had no money could not pay. Each week the bank added on a $35 fine until the total reached $400 in about 2 months time. I could not pay that for years. Called the bank to stop the fees. Ha Ha they told me.

In America , once that happens you get on a list. And once you are on that list you can not get another bank account at pretty much any bank for 7 years. That's what it's like living in a corporatocracy. I bounced 30 bucks - ended up owing $400 in 3 months.

Oh the bank that screwed me? They ended up one of the banks to fail in America because they couldn't pay their debt. Government covered their investors though.
posted by Poet_Lariat at 7:47 PM on July 21, 2011 [5 favorites]

When I moved to California, the first bank I went to (part of a big chain) wouldn't open a checking account for me because when they looked up my social security number, they found that someone with a different name and gender, in a state I've never lived in, had run up a bill and not paid.

It didn't matter that I had my social security card and ID, nor that my credit history under my name was stellar, nor that I didn't want a credit card ...

So, yes, it is within the bounds of reason that someone on welfare might have a hard time getting a checking account.
posted by zippy at 7:49 PM on July 21, 2011

Australian banks offer a Basic Bank Account to low income earners, with certain standard features: no account keeping fees, no minimum balance, unlimited free deposits, and six free withdrawals per month. In addition, when accounts are overdrawn, 90% of social security payments are protected and can't be used to pay fees/penalties.
posted by robcorr at 7:49 PM on July 21, 2011

Australian banks offer a Basic Bank Account to low income earners, with certain standard features: no account keeping fees, no minimum balance, unlimited free deposits, and six free withdrawals per month. In addition, when accounts are overdrawn, 90% of social security payments are protected and can't be used to pay fees/penalties.

Socialists!!
posted by wilful at 7:56 PM on July 21, 2011

I did a quick writeup of Australia's income management for the Go Back thread.
posted by zamboni at 7:58 PM on July 21, 2011 [1 favorite]

Poet_Lariat, when I moved to CA, I went to open a bank account and couldn't. The account I'd had in MD, which I'd closed when I moved, continued to get charges rung up against it because my gym apparently didn't believe I wanted to cancel my membership. It took forever to get that unscrewed up. Fortunately, I had a boss who was extraordinarily tolerant of my need to spend time on the phone, and time down the street at the bank. I was also fortunate to have a partner who was happy to open a joint account with me. I also have a college education, a modicum of financial savvy and enough vocabulary to threaten a legal rain of shit on my former gym. The whole system is set up to fuck you if you're poor and/or have thin social ties (or everyone in your circle is also poor/unbanked) and/or don't have much education.
posted by rtha at 8:11 PM on July 21, 2011