NCLC Study Shows Improvements in State Unemployment Cards (Jan. 30, 2013)
Jan. 30, 2013
State unemployment recipients who receive their benefits on prepaid cards are saving millions due to lower fees and improved services, according to a new report by the National Consumer Law Center (NCLC). The results of the agency’s 2013 Survey of Unemployment Prepaid Cards were an improvement over the NCLC’s 2011 study, which criticized unemployment cards for fees related to ATM withdrawals, balance inquiries and overdrafts.
Of the 42 states (plus Washington, D.C.) offering a prepaid card option for unemployment benefits, 18 earned a “thumbs up” from the NCLC. Only three states—Alaska, Indiana and Iowa—were given a “thumbs-down” rating for what the report described as high fees and limited functionality. The remaining 21 states received a “neutral” rating. Those figures represent a significant improvement over the NCLC’s 2011 report, which gave a negative rating to 16 out of the 40 states that offered prepaid cards at the time, with just eight receiving positive marks. California’s card was listed as the best in this year’s survey, as it was in 2011, with Pennsylvania’s program among the most-improved, moving from a neutral rating in 2011, to a “Best Bet” in the latest survey.
One nationwide improvement cited in the report is the complete elimination of overdraft fees from all state programs, which the report largely credits to the interchange fee provision set forth by the Durbin Amendment of the Dodd-Frank Act. That law limits the interchange fees that merchants must pay when they accept debit cards, but exempts prepaid cards from that cap on certain conditions—one of which is the absence of overdraft fees.