Bank of America Gets New Scrutiny from Press Over Prepaid Card Fees

by Mercator Advisory Group 0

An article on The Nevada View blog takes Bank of America to task for charging fees to unemployed workers in South Carolina who receive benefits on prepaid cards. The article profiles a recipient who collects unemployment on a Bank of America prepaid card, but does not live near the bank’s ATMs.

Shawana Busby has been out of work much of the last three years. She lives in Cordova, South Carolina, population 157 in 2000. She depends upon a $264-a-week unemployment check from the state of South Carolina. Busby finds herself incurring bank fees to get her money.

To withdraw her benefits, Busby, age 33, uses a Bank of America prepaid debit card on which the state deposits her funds. She could visit a Bank of America ATM free of charge. But she lives in a small rural community which does not have a Bank of America branch. Neither do the surrounding towns where she drops off her kids at school and attends church.

The article takes aim at the concept of public private partnerships and argues that the idea that consumers can avoid fees by using their cards in certain ways is an unfair burden because of the fee structure of the program. The article deals with all the standard issues that confuse cardholders, such as holds at gas stations. Cardholder confusion leads to fees.

The criticisms in the article also are part of a report by the National Consumer Law Center about the fees associated with unemployment cards. That report, which is cited in the article, can be found here: http://www.nclc.org/issues/unemployment-compensation-prepaid-cards.html.

Financial institutions and program managers (perhaps especially state agencies) face reputational and political risks in addition to financial ones. As programs look to make themselves sustainable and profitable, they should take into account these risks and decide what is necessary for sustainability and whether long-term use would justify more modest fees.

Read the full story at: http://thenevadaview.com/2872/bank-of-america-fees-on-unemployment-benefits/