Trimming the costs of governance isn’t inherently a bad thing, but charging the unemployed fees to access their account information probably isn’t the best way for the state to save money.
However, that’s exactly what happened when Rhode Island outsourced the management of unemployment fund accounts to JP Morgan Chase in 2007.
“JPMorgan Chase agreed to operate the system at no cost to the state – if it could charge fees to those receiving unemployment benefits,” reports David Klepper of the Associated Press.
About 35 percent of the 41,000 Rhode Islanders on unemployment use what’s called an Electronic Payment Card to access their benefits. Ostensibly, these would be the people that are so poor they don’t even have a bank account. But Laura Hart, a spokesperson for the state Department of Labor and Training said others on unemployment “may appreciate the convenience of the EPC format.”
Or they may not, once they consider the fees JP Morgan Chase charges to use the service: a $.50 fee to check your balance; $1.50 to withdraw funds more than once per week; $3 for using a bank out of the system.
“The fees shift the cost from state governments to the consumer,” Lauren Saunders, a lawyer with the National Consumer Law Center, told Klepper.”These are people living on thin margins already.”
While Rhode Island isn’t the only state to outsource these costs – at least 40 other state do, according to the AP – the state senate last week voted to have the governor review the fees Morgan is charging.
The bill, if passed, would require that all fees for using the debit card be stated on the card itself. It was sponsored by Sen. William Walaska and Erin Lynch, both Warwick Democrats.
Currently, according to Hart, cardholders are given “literature” that explains the fees. “Additionally,” she said in an email, “DLT produced an information video about avoiding EPC fees” that is on the DLT website.
She also said that “most” fees associated with the EPC cards can be avoided.
What good is a warning on a card?
And don’t expect Peter Kilmartin to do ANYTHING to hurt the bottom line of the banks. Peter Kilmartin thinks that we need to look the other way when banks do wrong, and he will do whatever he can to deny Rhode Islanders access to the courts when they are wronged.
Child Support payments are the same way. And the parent (typically a mother) has to pay fees to access the money- even if they withdraw it as one lump sum. The other parent (typically a dad) is paying administrative fees that could be going elsewhere.
This reflects the “Government as a Business” model. Perhaps banks should forfeit a 10% finders fee to the state every time the police catch a bank robber?