The Consumer Financial Protection Bureau (CFPB) recently issued a bulletin warning employers such as McDonald’s and WalMart against using debit cards to pay low-wage employees. The practice already launched at least one class-action suit, the Associated Press reports, and New York Attorney General Eric Schneiderman has questioned the use of payroll debit cards as an alternative to checks. Companies argue that the cards are a cost-effective means of paying their workers, especially those without bank accounts. Many of these employees, however, end up paying high fees to access their money and use these debit cards.
According to a 2011 survey by the Federal Deposit Insurance Corp., 28.3 percent of U.S. households are either unbanked or underbanked. Thirty-seven percent of voters surveyed by the Center for Responsible Lending reported being “overcharged” or deceived by a financial company. This perception is especially prevalent among African-Americans, voters in their 40s, and those of middle incomes. These consumer groups tend to support the CFPB’s stance on debit card pay practices.