South Carolina has contracted with BofA to administer the state’s unemployment benefits; the funds are deposited by S.C. into recipients’ BofA prepaid debit card accounts. It’s a system that has worked well for BofA in other states, like California and New Jersey. Those states, however, included requirements in their contracts with the bank that allow users to make a number of free transactions at other banks' ATMs. And since you can see what’s coming, I’ll get right to it:
Lots of small towns in S.C. don’t have Bank of America ATMs, and many unemployed South Carolinians are being hit with fees for using their hometown ATMs rather than driving 50 miles to a town that has a BofA machine handy. One woman told Ross that she has paid at least $350 in fees — just to access her own unemployment benefits.
When S.C. learned of the options that BofA gives people using its prepaid cards in other states, they asked for a change. Now, recipients of unemployment benefits in S.C. have unlimited free withdrawals at BofA machines, and one free withdrawal per week at other ATMs — a whole one free withdrawal per week — Wow, what generosity!
Bank of America, of course, officially says its prepaid debit cards are “a good deal for everyone . . . clients value the cost savings, and individuals appreciate the ability. . .,” blahblahblah. And as far as the government of S.C. is concerned, hey, it’s all good, since they’re saving on printing checks.
Here is a key take-away from Ross’ terrific story:
Bank of America [after their $5 per month debit card fee fiasco] has quietly continued to mine another source of fees: jobless people who depend upon the bank's prepaid debit cards to tap their benefits. Bank of America and other financial firms — including U.S. Bank, Wells Fargo and JP Morgan Chase — have secured contracts to provide access to public benefits in 41 states . . .
In short, the same banks whose speculation delivered a financial crisis that has destroyed millions of jobs have figured out how to turn widespread unemployment into a profit center: The larger the number of people who are out of work and dependent upon the state for sustenance, the greater the potential gains through administering their benefits.
Kind of makes you proud to be a Charlottean, doesn’t it?