Prepaid payroll cards can be a way to land funds in the hands of employees without traditional bank accounts. But in recent weeks, a few scandals and lawsuits have been adding to payroll cards’ bad name.
New analysis from the National Consumer Law Center (NCLC) isn’t helping the technology’s reputation.
According to reports late last week, researchers are pointing to Missouri and Kansas as the two states whose government employees are hit hardest with payroll card fees.
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Both states have payroll card programs operated by NetSpend, with the Skylight Financial brand. Researchers listed these two states as the worst in the nation due to overdraft fees.
“Workers who opt in to overdraft ‘protection’ will pay $25 for each overdraft, up to $125 a month and $450 a year,” the report stated. Kansas, it noted, also used a card product with additional fees for an array of use cases, like accessing a balance statement via ATM.
The researchers had some harsh words for these states, too.
“Overdraft fees are completely unacceptable on payroll cards, and Kansas and Missouri should both be ashamed of paying employee wages on a card that promotes this predatory feature,” the National Consumer Law Center said.
The state with the best practices in its payroll card programs? Nebraska, the report concluded, which provided government employees with cards that charge “virtually no fees for cash access, purchases, account information or penalties,” while also waiving some fees for out-of-network ATMs.
Reports said the NCLC’s findings will be used to call the Consumer Financial Protection Bureau into action to reform government payroll card rules, a topic currently being debated in several courts across the nation regarding the use of payroll cards in the private sector.
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