The ReliaCard, which is used by 16 state agencies across the country, works like a debit card. But since it’s not attached to a checking or savings account, overdraft charges are deducted from future payments.
With the average unemployment check in Ohio averaging less than $300 a week, an accumulation of overdraft fees could have serious consequences for displaced workers living paycheck-to-paycheck, said David Rothstein of Policy Matters Ohio, a Cleveland-based public policy research organization.
“Unemployed workers cannot afford to have any part of their compensation siphoned off,’’ Rothstein said. “It’s critical that public dollars go directly to the families.”
Rothstein and others criticized the banking industry’s practice of charging overdraft fees on state-issued debit cards in testimony earlier this year before the U.S. Senate Banking Committee.
And the US Bank decision wasn’t voluntary.
“With the ongoing implementation of changes stemming from the Durbin Amendment, neither states nor consumers have a choice of opting in to overdraft protection on prepaid cards, which means after July 18, transactions will be declined if funds are not available,” said Nicole Garrison-Sprenger, vice president of corporate public relations at US Bank.
Ben Johnson, a spokesman for the Ohio Department of Job and Family Services said only a fraction of Ohio’s unemployment insurance recipients had opted for overdraft protection before the changes to the Federal Reserve rules.
“Less than 2 percent of all (Ohio) claimants ever requested the protection,’’ Johnson said.
US Bank still charges out-of-network fees on the ReliaCard ATM transactions that are not part of the US Bank or Visa Plus networks.
Ohio now requires all claimants to prove they have been actively seeking work to qualify for state and federal benefits by submitting the names of at least two potential employers with their weekly applications for benefits. In addition, claimants are required to participate in “re-employment” counseling and training at their local job centers within six weeks of collecting their first federal benefits checks, which kick in after their state benefits have been exhausted.
The federal program will end at the end of this year unless Congress acts to restore federal extended benefits.
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