U.S. Sen. Mark Warner (D-Va.) has joined 15 of his colleagues in calling for an investigation into the fees and practices associated with pre-paid “payroll cards,” cards some employers use to pay their employees instead of payroll checks or direct deposit.
These cards often come with fees for ATM usage, balance inquiries, swipe purchases, overdrafts, and inactivity that can create financial risk to employees. The payroll cards also may violate existing consumer regulations. The senators expressed their concern in a joint letter to the Consumer Financial Protection Bureau (CFPB) and U.S. Department of Labor (DOL).
Recently, The New York Times reported that the fees attached to these cards can be so exorbitant that some workers end up making less than the minimum wage. In addition, there are serious concerns that workers are being pressured or coerced by their employers into accepting their salaries through pre-paid cards. In fact, the Times reported that some employers receive commissions for each employee they sign-up to a particular pre-paid card, which creates a perverse incentive structure in which employers are being rewarded for steering their employees toward high-fee products.
“We must send a loud and clear signal that we will not tolerate financial products that take advantage of vulnerable, low-income workers,” the senators wrote. “We must ensure that workers are provided with adequate disclosures about their rights under federal law and the fees associated with particular cards.”
Share
Chris Graham
