Payroll Cards Are Under Scrutiny by New York’s Attorney General

July 2, 2013
New York Times 
credit card news

New York Attorney General Eric Schneiderman is seeking information about some of the state’s largest employers, including McDonald’s and Wal-Mart, and their use of prepaid debit cards to pay hourly employees. More and more companies are abandoning paper paychecks and direct deposit in favor of prepaid cards; but consumer attorneys, employees, and regulators argue that the cards can carry numerous, costly fees. The charges, such as a 50-cent charge for a balance inquiry or $2.25 for use of an out-of-network ATM, can rack up quickly and nibble away at the pay of part-time and low-wage workers. Many employees claim to have no alternative; while others say their companies offer a choice, albeit an elusive or confusing one. Some employees are afraid of requesting another option, for fear that it will jeopardize their employment, according to interviews with consumer advocates. Schneiderman’s office is investigating whether the use of payroll cards violates state labor laws. New York law requires employees to give explicit consent before companies can credit funds to a payroll card and that they have an option for accessing their wages without paying a fee. Some employers have been accused of forcing workers to use payroll cards as a condition of their employment.
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