'Too Big to Fail' banks including JP Morgan Chase, U.S. Bancorp and Bank of America have seized on an opportunity to profit off the nation's jobless by siphoning millions of dollars in fees from state unemployment programs, according to a new report by the National Consumer Law Center.

Privatizing the task of distributing unemployment benefits, the banks have created a "fee-heavy" check card system. Instead of having payments deposited directly to bank accounts or recieving checks sent in the mail from their state governments, individuals across the nation are increasingly forced to use costly bank issued payment cards that are loaded with a "plethora" of costly fees for the recipient.

The large banks pitched the operation to states as a scheme that would "save millions in overhead costs" but have instead externalized such costs to America's jobless.

The Associated Press reports:

People are using the fee-heavy cards instead of getting their payments deposited directly to their bank accounts. That’s because states issue bank cards automatically, require complicated paperwork or phone calls to set up direct deposit and fail to explain the card fees, according to a report issued Tuesday by the National Consumer Law Center, a nonprofit group that seeks to protect low-income Americans from unfair financial-services products. [...]

Banks make more money when more people use the cards. In the past, some of their deals with states prevented states from offering direct deposit, or required states to promote the card program as a first option.

To cover the cost of issuing cards and running the programs, banks charge a plethora of fees, including charges for balance inquiries, phone calls to customer support, leaving an account inactive for a period of months, or making a purchase using a personal identification number.

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