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Bank Of America Makes Millions Charging Fees To Withdraw Unemployment Benefits
Late last month, a national backlash forced Bank of America to abandon its plan to charge customers $5 a month to use their debit cards. But Huffington Post reports that the corporation has quietly been mining other sources of fees, preying on its most vulnerable customers to rake in millions in revenue:
Shawana Busby does not seem like the sort of customer who would be at the center of a major bank’s business plan. Out of work for much of the last three years, she depends upon a $264-a-week unemployment check from the state of South Carolina. But the state has contracted with Bank of America to administer its unemployment benefits, and Busby has frequently found herself incurring bank fees to get her money.
To withdraw her benefits, Busby, 33, uses a Bank of America prepaid debit card on which the state deposits her funds…Busby visits the ATMs in her area and begrudgingly accepts the fees, which reach as high as five dollars per transaction. She estimates that she has paid at least $350 in fees to tap her unemployment benefits. [...]
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.
Millions of jobless Americans like Busby have little choice but to rely on the bank’s prepaid debit cards to collect their monthly benefits. Forty-one states have contracted with Bank of America, Wells Fargo, JP Morgan Chase, and other banks to provide access to public benefits, allowing them to collect unlimited fees, both from the unemployed and state governments. South Carolina, for instance, pays Bank of America a fee for each transfer it facilitates on a debit card, and for handling direct deposit of unemployment benefits.
Families who are living hand-to-mouth are outraged to discover that banks worth trillions of dollars are taking such a big cut of their benefits, when they depend on every penny. The New York Times reports today that banks have been quietly raising fees on everything from replacing lost cards to monthly maintenance. BofA customers can be charged $1.50 for speaking to a customer service operator more than once a month, $1.50 for using an “out-of-network” ATM, and $0.50 for entering the wrong PIN number too many times.
Bryce Covert at New Deal 2.0 reported earlier this month that, “big banks are making a tidy profit by acting as middlemen for what should be publicly provided services.” U.S. Bancorp made $357 million in revenue from its unemployment benefit card division — more than one-fourth of its total revenue. Meanwhile JP Morgan “made $5.47 billion in net revenue for most of last year in the division that handles food stamp cards.”
Fed up with big banks’ exorbitant and never-ending fees, customers have been flocking to credit unions. One survey found that credit unions gained at least 650,000 new customers since September 29, the day Bank of America announced its debit card fee.
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29 Comments so far
Show AllThis is a good issue for Elizabeth Warren's campaign.
Yep - I agree. She may be the only one with enough integrity and hutzpah to challenge this practice. Enough is enough!
Unfortunately this is nothing new. In the 70's, CA paid unemployment with vouchers which could only be cashed at a specific bank. If you opened an account at that bank you could go to any teller and get your cash instantly. If you didn't have an account you had to wait for up to an hour in one teller's queue to cash your voucher. I wrote Jerry Brown who was gov then (also) and he ended the practice within a month.
So South Carolina is sending it's citizens hard earned tax dollars north to a foreign bank? For Shame! South Carolina should use a local credit union - or form it's own state owned and run Bank of South Carolina.
This has been going on for some time. Two years ago Michigan's unemployment checks went from direct deposit to a Chase debit card. I wish I still had the list of charges that came with the debit card but there were many. I ended up just having the teller at my bank withdraw the funds from the debit card and then deposited the funds into my bank account. If there is money left on the card when the unemployment runs out and the card is almost depleted what is left can't be extracted. Nice fleece.
New Mexico has been doing this with BofA and unemployment for at least 3 years. It was an atrocity when it first came out, but fortunately, I found a job within 6 months and could get out of that rip off. All over the world, the banksters and financial devils are making their move against the people. It's getting really ugly and so many are still asleep. I remember all the poo-pooing and conspiracist accusations leveled when the alarm was raised about the Trilateral commission during Bush 1 years and it's "New World Order", but guess what? Look who just took over in both Greece and Italy. Admittedly, this is another stage in the game that's been going on for longer than we think, but they are in the open now and the common person is going down.
My goodness, I do believe it is time for an Occupy Bank of Amereicha. Or better yet, storm the damn place and hang all the executives from the highest tree. Oops, sorry...that would be violence. Well, we should at least give them a full week of banners and signs right outside their main HQ! By gum, that'll teach em!
What about the state official/officials who were bought out to give the monies to the bank to administer? Budget cuts? probably more expensive for bank to administer. Did the state pay a fee to B of A also?
Let's find out?
So why don't you storm the damn place and hang all the executives from the highest tree. Oh, that's right. You want someone else to do it.
So has Oregon, at least a year. What a scam that our states participate in or does the Federal government require states to do it if federal $$$ are involved?
It is shameful. If there is a way for banks or the top 1$ to scam taxpayers money, they will do it. Look at foreign aide? look at Congo? Look at Paul Singer?
We cannot trust any government agency at the moment? They are all bought and paid by top1%.
Bring them down!
Not just unemployment, disability too. I guess they thought when people went for direct deposit...your paycheck went to the bank they considered it implied consent to handle all your money. I don't remember voting on this and there is no other option if you object. In other words it is not voluntary.
What a disgrace! ...........Have you all seen this article on Congressional insider trading?: http://www.msnbc.msn.com/id/45287592/ns/politics-more_politics/ ..... I wonder how many of them own shares in the banks that get government fees for distributing unempoloyement checks, food stamps, etc.. ? ............Isn't it astonishing that the federal government has grown by leaps and bounds, yet they are incapable of sending out checks and food stamps so they don't have to pay fees to a bank that is doing it for them?
Meanwhile JP Morgan “made $5.47 billion in net revenue for most of last year in the division that handles food stamp cards.”
Speechless. What bastards.
Time for Banksters' heads on pikes.
As someone said last week: It is not about the money; rather, it is about maintaining the power and showing the government who has the power.
Don't forget, November 25 International Buy Nothing Day. http://www.buynothingday.org/
Over the years I've heard the name Karl Marx many times. My redneck background deminished enough to subordinate to curiosity and the local library pronvided a book.
It's the "free market" capitalism which doesn't fit in here, not socialism. The neat thing about Marx is that he brought people together, he didn't just talk. He made things happen.
These banksters have to be retrained or fired.
JohnB, your comment is so important. I have friends who really nice people for the most part, but somewhat misunderstanding, and so don't know what what to think. We must be more aggressive in presenting a critical analysis to all that we know to bring about the change we so desperately NEED!
I shared this story with a conservative acquaintance whose only response was that North Dakota had plenty of jobs for people of all skill levels. I guess that's America's jobs plan: all the unemployed people can relocate to North Dakota?
Isn't that what the dust bowl migrants were told about California during the depression?
oh it gets better; today the same guy said that people should go where the jobs are... exampe: in the Pacific Northwest the farmers can't find enough workers. He said this is "honest work." So, I guess those of us who were laid off, even after spending thousands of dollars for advanced degrees, should pack up and move to Washington to work the crops. I'm sure those farmers are going to pay great wages and provide health and retirement benefits, too, not to mention the fees to relocate. I've always wanted to be an unskilled worker, spending hours and hours doing back-breaking physical labor in all kinds of elements...
An added bonus is that since the workers are hired as piecework independent contractors they must make 100% of their own FICA payments. You have a sociopath or an idiot for a friend.
He's your typical rightwing guy who's had no problems finding high-paying executive jobs, with a stay-at-home wife who homeschooled their kids. And if you're unemployed, don't have/can't afford health insurance or the copays/out of pocket expenses that come with insurance, etc., it must be your own fault. And Bank of America shouldn't be criticized for charging fees for those on unemployment. Only the unemployed should be criticized.
Well , let the free markets decide, no more bank bailouts, arrest those that commit fraud and perpetrate global ponzi schemes, and take your money out of banks that commit those crimes, and watch them go out of business.
Were the States unaware of these fees when they signed the agreements with these banks? Or did State governments knowingly enter in to these types of predatory agreements with the banks in providing services to the unemployed? Did they know that through fees some of the benefits were going to be siphoned off? What did the states getting in return for this arrangement? Another case of privatization gone bad? Someone is benefitting and it's not the unemployed who contributed to these funds while they were employed. Shouldn't they have some say in this?
When I hear about folks being ripped off by the banksters I usually think to myself " if they are so dumb as to have an account with a nest of thieves than what can they expect. This takes it to a whole new level. Collusion between the rapacious corporate weasels and a possibly corrupt state human resources department. State attorneys general should be involved but since they are trying their best to get Obama Care declared unconstitutional they are likely to be too busy, especially if the governor is needing campaign funding.
Washington State has a card system in place for their food stamp program. It is handled by JP Morgan and I am fairly certain that the recipients are not charged for this service. The cards are used at point of purchase like a debit card. Our unemployment is paid either by a mailed check or direct deposit also with no fee.
Track these decisions back to their source and hold the politicians involved accountable. If it is found these decisions were made for personal gain or cronyism; if it is found these people are not doing what works best for ALL, shouldn't we remove them from their positions of power like we remove irresponsible drivers from the road? This goes for corporate heads as well. If they fail to be good stewards of the earth, if they do not work for the interest of ALL, shouldn't they be removed from their positions of ownership and power as well, until they learn to act responsibly? Isn't responsibility the price of freedom?
Some of us live in a world the majority of us don't want to live in. It's a world where success is defined by money, power and privilege. If the majority of us want to live in a world where love, truth and joy define success, we must become the change we want to see in the world. If we want to live more for the love of being and creation and less out of the fear of suffering and death, we must insist on keeping the Law of the Jungle in the jungle and out of society! Aren't we spiritual beings creating a human experience? Who do we want to be and what do we want to do?
My wife has been working at a major bank as a banking software developer for more than 27 years and she wrote the very first program that ran the first ATM machines. During these years she would confide in me the many unethical, if not illegal, instructions she was asked to write into their software, especially into their Online-Banking software, and had warned me many times to be very careful with my own business banking.
Despite this, in 2004, I fell pray to JP Morgan-Chase and M&T Bank where I had my small business accounts. (I had lost my job in 2000 after investing my most productive17 years as head of production in one of the most successful New York pre-press operations, and I had managed to hang on to a few clients working by myself).
Without going into the horrendous details, these two banks embezzled my accounts and put me out of business. I wished I had a machine gun then, I would have shot them all dead.
So many other personal, and my friend's, nasty experiences with banks prove them to be nothing more than a legalized mafia.
Let's hope that something substantial will come out of the 'occupy' movement, although my feelings are that things will get even worse, and as of today they are.
The occupy movement needs to get globally organized if it is to succeed.