Bank of America: Fees on Unemployment Benefits

NEW YORK | Friday, November 11th, 2011 8:40am EDT

It got a lot of attention when Bank of America abandoned the plan to charge debit cards $5 a month, but nobody was thinking about the way how bank collects fees off the unemployed.

Bank of America Fees on Unemployment Benefits 01

Bank of America is up to debit fees extend to unemployment benefits. Photo: Rainforest Action Network/ Flickr

In some states benefits for unemployed are issued via Bank of America debit cards. States save money without using paper checks, but the unemployed lose out from all the fees hiding in the cards.

There is a good illustration showing how the 1% keeps the 99% compressed and paying:

Shawana Busby, 33, is now at the center of a major bank’s business plan. Being out of work for much of the three years, she depends upon a $264-a-week unemployment check from the state of South Carolina. But Bank of America administers its unemployment benefits, and Busby has frequently found herself incurring bank fees to get her money.

To withdraw her benefits, Busby uses a Bank of America debit card on which the state deposits her funds. She could visit a Bank of America ATM absolutely free of charge. But a small community in the state’s rural center in her town does not have any Bank of America branch. Unfortunately, the surrounding towns also don’t have such a branch.

She has nothing to do but drive the state capital and use a Bank of America ATM there. But, at the same time, a 50 mile drive will cut into her gas budget. So Busby visits the ATMs in her area and begrudgingly accepts the fees, which reach as high as five dollars per transaction. She estimates that she has paid at least $350 in fees to tap her unemployment benefits.

“When you are living on $325 in unemployment benefits a week, believe me, you need and notice every penny,” another woman, Sandra, said. “So I called, I know one week, three or four times before I realized those calls were costing me money. I was, well let’s just say, utterly outraged.”

It may sound strange because many people are accustomed to a Bank of America Branch, which can be easily found on every street corner, sort of like McDonalds. It is the third biggest company in the entire world. Its net income in 2010 amounted about $2.238 billion.

Bank of America and some other financial firms such as U.S. Bank, Wells Fargo and JP Morgan Chase — have signed contracts to provide access to public benefits in 41 states. These contracts typically allow banks to collect unlimited fees from merchants and consumers.

To cut a long story short, the same banks whose speculation caused a financial crisis that has destroyed millions of jobs have figured out how to turn widespread unemployment into a profit center: the greater amount of people who are out of work and dependent upon the state for sustenance, the greater the potential gains through administering their benefits.

“It’s absolutely ridiculous,” said Sue Berkowitz, director of the South Carolina Appleseed Legal Justice Center. “It should not cost you any more to use a debit card than if they had issued you a check.”

Bank of America announced that its prepaid debit cards are a good deal for everyone: from state taxpayers to people who draw unemployment benefits.

“We have provided prepaid card programs to government agencies for many years,” said Jefferson George, a Bank of America spokesman. “Clients value the cost savings and increased efficiency and individuals appreciate the ability to receive their benefits payments more quickly and securely.”

Nevertheless, Busby and her family are still too dependent on unemployment benefits since June of 2008, when her husband was lost his job in a tractor company. Soon she also was dismissed from her own job teaching welfare recipients life skills. Now Busby went back to the unemployment office to sign up for benefits anew. She had received some checks, and was sent for a debit card, despite the fact, she has never applied for one.

Even now that being cognizant of the fees, the woman is afraid to switch to direct deposit, fearing a resulting gap in her weekly benefits. Her family’s finances are very tight, so any delay puts them behind on the bills.

“There is always, something due — a light bill that has to be paid, car insurance, the phone,” she said. “I get my benefits and that’s when we buy food, that very day. There’s just a very delicate balance at our house. Nothing, I mean nothing, can go wrong.” [Via The Consumerist and The Huff Post]

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