Stop Bank Fees for EBT Recipients!

Friday, August 01, 2014

In California, most recipients of the state’s welfare-to-work program receive their monthly checks through an EBT (electronic benefit transfer) card. But each time they use these cards to get cash, the banks charge them an ATM fee. A recent study by the California Reinvestment Coalition found that big banks took $19.4 million out of the pockets of poor Californians in 2012. The average CalWorks family lives on about $510 per month. To its credit, Citibank has agreed to waive ATM fees for welfare-to-work recipients who use EBT cards, but the other big banks continue to take money away from low-income families.

A state bill pending in the California Senate (AB 1614) offers a solution to this problem, and would help many of our most economically-disadvantaged families keep more of their own money. This is the letter Consumer Action has submitted in support of the bill:

 

 

July 31, 2014

Honorable Kevin de León
President pro Tempore-elect, California State Senate
Chairman, California State Senate Committee on Appropriations
State Capitol
Sacramento, CA 95814

Re: AB 1614 (Stone) - Support

Dear President pro Tempore-elect De León,

Consumer Action is writing in support of Assembly Bill 1614, which would shield low-income Californians receiving EBT benefits from unnecessary bank fees. Bank fees and surcharges cost low-income CalWORKs and CalFresh recipients about $19 million each year, and function as an impediment to savings and as a barrier to these families’ future financial progress.

Consumer Action is a nonprofit consumer advocacy organization with offices in San Francisco and Los Angeles, which has championed the rights of low-income and underrepresented consumers since 1971. Over 40 years ago, we published our first consumer guide that compared banking services, and we continue to regularly provide consumers, through our trainings and publications, with the financial information they need to establish positive banking relationships.

AB 1614 will require that EBT recipients receive critical information that will help them protect their benefits. It does so by directing county CalWORKs administrators to use information provided by the California Department of Social Services to inform recipients how they can avoid fees, including by receiving benefits via direct deposit to a personal bank account.

It will also ensure a high level of service for the state’s EBT vendor for future contracts, like a toll-free number and an online dashboard to help recipients track the use of their card and report issues such as lost or stolen cards. AB 1614 also will require future EBT vendors to inform recipients and retailers when an EBT outage is expected to last for more than an hour. This will minimize the hardship many recipients suffered recently when outages were not addressed with a timely response. It also establishes a fund to be created by fines and penalties paid by EBT vendors to improve cash access through the EBT system. 

AB 1614 will improve protections for some of our state’s most vulnerable consumers, and empower them with necessary information. We respectfully urge an “AYE” vote on the bill when it comes before your committee. 

Please contact me should you have any questions about our position,

Joe Ridout
California Legislative Coordinator
Consumer Action