Bank of America rakes in big debit-card fees from people withdrawing unemployment benefits

Bank of America may have ditched its controversial debit-card fees for voluntary customers, but people on unemployment benefits who are forced to use the bank because it has to contract to administer their payments, there are plenty of fees in store. But hey, they can afford it -- a $264 unemployment check has lots of stretch in it, right?

To withdraw her benefits, Busby, 33, uses a Bank of America prepaid debit card on which the state deposits her funds. She could visit a Bank of America ATM free of charge. But this small community in the state's rural center, her hometown, does not have a Bank of America branch. Neither do the surrounding towns where she drops off her kids at school and attends church.

She could drive north to Columbia, the state capital, and use a Bank of America ATM there. But that entails a 50 mile drive, cutting into her gas budget. So Busby visits the ATMs in her area and begrudgingly accepts the fees, which reach as high as five dollars per transaction. She estimates that she has paid at least $350 in fees to tap her unemployment benefits.

"It really boggles my mind," she said. "This bank is taking little bits of money out of thousands of pockets, including mine."

Who needs predatory payday lenders when you've got enormous, fantastically profitable banks?

For Bank Of America, Debit Fees Extend To Unemployment Benefits (via Consumerist)

(Image: Bank of America building, Downtown Los Angeles, a Creative Commons Attribution (2.0) image from 8047705@N02's photostream)


    1. I think the execs at B of  A would beg to differ: get a fat government contract to administer UI benefits; get paid by the state for the work; charge UI recipients to receive the money. Sounds like a free lunch to me.

      1. The fees are charged only if you withdraw from a non-BoA ATM. 

        That means BoA has to pay a third party for the use of their ATM which means the customer ends up paying.  

        There are real costs involved so it’s not a free lunch. Here’s an example of one such cost…

        You’re big on OWS, but you ignore the fact that Wall Street only held 1/4 of the mortgages that melted down. Washington held the other 3/4 via Freddie Mac and Fannie May. If you want to rail against greedy incompetents getting fat paychecks for little or no work Cory, look to Washington – it’s full of them.

        1. Can you come up with a single piece of evidence that the two FMs have any more than a very small percentage of the bad mortgages starting a decade after Wall Street started deliberately packaging their lions’ share of them into phony securities?  If so it will be the first one that I’ve ever seen.

    2. While this is true, you’re misquoting Friedman here. All Friedman meant was that for every product or service, SOMEBODY pays the cost. What’s stirring up anger is that it never seems to be BofA that pays.

      Nevertheless, like I said below, it’s not BofA that’s collecting ATM fees from Ms. Busby, it’s whoever owns those ATMs that Ms. Busby is using.  In this one instance, it is wrong to blame BofA.

      1. None of the banks need ATM fees to survive. The ATM fees are an agreed upon method  to take more money  to make insanely high profits. Banks conspire to limit the number and placement of ATMs. This lets them provide a reason for charging a fee. Likewise, it spurs the placement of private ATMs (more than likely funded by a bank) in delis, newstands, bars, etc.) where a bank couldn’t be seen to place a machine, such as a bar or strip club.

        ATMs as I recall, didn’t have fees when they started appearing. The fees only started after some bright MBA thought, “Mhmmm. I wonder if there are any other ways we can squeeze another dime out of those saps?”

        1. If I remember correctly, initially ATMs were touted for convenience… and for saving the money that the bank would otherwise spend paying tellers.

          Corporations frequently institute cost-saving measures. They do not, however, frequently  pass those savings on to their customers. Instead, things get cheaper for them, and they charge the customer the same amount (if not more).

    3. Jan, You could easily be misunderstood and seem to be saying that people receiving unemployment insurance coverage, a system which they have paid into and have a right to collect, are somehow freeloading. 

  1. I can’t believe I’m about to defend BofA, but while there are many good reasons to rage against that machine (i.e., their participation in the false inflation and subsequent collapse of the housing, equity, and derivative markets), I don’t think this is one of them.  

    I think the incredulity and rage over this should be directed at the badly run unemployment benefits program that locks recipients into using the BofA prepaid debit card system instead of allowing for alternative methods of fund distribution to accommodate the differing needs of the various benefits recipients the program is trying to help.  After all, as much as I hate ATM fees, these aren’t special unemployment-benefits-program-only fees BofA has deployed to further screw the disenfranchised (I mean, are we imagining they’re mustache twirling silent-film villains?).  

    These fees existed before the state decided to force its unemployed citizens into using this system and paying these fees.  If the state would just offer her, and others in her situation, an alternative funds distro option (e.g., a check in the mail), there would be no issue.

  2. Amazing that it costs money to access your money in the US. In Netherland using ATMs is free. Even abroad (at least within the Eurozone) it’s free, as far as I know.

    But if it costs money to withdraw from other banks’ ATMs while its free to withdraw from your own bank’s ATMs, why not just transfer the money to a bank that does have an ATM in her home town? And why not have the unemployment benefits paid to a more practical bank account in the first place? Or does the bank have some sort of horrible monopoly contract with the government that only they get to screw unemployed people?

    1. (Disqus just ate my comment. Did I mention that Disqus seriously sucks? Way shorter version below.)

      In Europe this depends on the country and the bank. In some countries _most_ (never all) banks don’t charge you anything for using a competitor’s ATM. In some countries this is reversed, as in you pay most of the time. (Your bank _does_ have to pay a competitor if you use their ATM. It’s not free for them. You either pay upfront or your bank adjusts its account fees accordingly.)

      Within the Eurozone you can’t be charged more abroad than you’d be charged at home at an ATM that doesn’t belong to your bank. For some people this means no fees, others pay what they’d pay in their own country.

      Outside the Eurozone all bets are off however.

      Addressing your second paragraph: cause a bank account would run you more than $5/month in fees?

  3. BoA and the other banks are rapacious, money and power hungry beast and burdens on the economy.

    The problem starts at the top with imbecilic management which figures that since their banks handles X dollars per year, they must be worth more than smaler banks, making a lie out of the “economies of scale” which enabled their size in the first place.

    By that kind of counting, the lowest programmer/IT staffer is worth more than the CEO, but its the CEO doing the counting and he doesn’t have an engineering degree.

  4. Bank of America isn’t reaping the big ATM fees here. It’s the owners of those non-Bank of America ATMs that are charging the fees. For once, BofA is not at fault.

    1. Not exactly true. The owner of the non-BofA ATM takes a cut, but BofA takes its cut too. You get charged by the ATM for not being a whatever customer, and then bofa charges you for not using a BofA atm.

    2. BOA is getting their cut too. They charge the ATM owner,the ATM owner charges you, you get to hold the bag (with less of your money in it because two greedsters got to dip their grubby mitts in it before you do).

      So in the typical round-about shell game BOA is still a practical target in this arena. The gov’t is also to blame as they could have easily negotiated for a no-fee system in the interest of the people they are serving. The true injustice here is that the gov’t (and the bank) don’t give a shit about making the system sensible to the poor, worked-ove,  little guy. And on top of that, all of us taxpayers see a little less bang for our buck. I damn sure would like a person on assistance to see every dime of that money that they need to get by instead of some rich jerks getting even more money that they don’t really need.

  5. Bank of America? Always terrible people (go credit union!)

    However, the blame for this lies not with the banks (although they are making a tidy side-profit) but with your elected officials. They are the ones who thought it would be a brilliant cost-saving idea to use those shitty prepaid cards to disburse benefits.

    I don’t know if it was just whimsy (‘hey, paper checks are so passe! cards are hip!’) or plain greed (‘man, it costs a lot to print these checks, let’s let some bank handle the administrative costs… oh wait, corporations always pass costs to consumers’), either way: your elected officials at work.

    1. It does turn out to be cheaper on the overhead to send out a single reusable / rechargeable debit card instead of a paper check every week or every other week. Once the card is mailed all other activity with the card is done electronically(unless of course they are doing something stupid like mailing a new debit card out at every pay period, now that would be dumber than owl shit).

      Also there is a good chance that many people would be just as screwed over with paper checks in the situation that the recipient did not have a bank account at all since every bank I know of will charge you to cash a check if you don’t have an account.  And shittiest of all is that some banks won’t even cash a check written by an account holder at that bank if you don’t have an account too and I am sure BOA is scuzzy enough operate like that. Not to mention the infernal thumb print and info gathering hoops they make one go through. Either way it’s a shitty deal.

      1. Yes it WOULD be cheaper, except that they still send a form every two weeks in the mail which used to be attached to the check, only now where the check used to be is just a blank strip of paper to tear off. So they are actually not saving any paper and just using more plastic…

        1. Well that is something I had not imagined(not the way they do it in my neck of the woods) and that too fits into the “would be dumber than owl shit” category.

  6. Schadenfreude is when you take pleasure in the misfortune of others.  But to actually go so far as to profit from it?  …That’s just banking.

  7. Uh-mazing.  & I can’t really get my head around people apologizing for this, like this is “just the way it is.”  No.  We don’t have to be complacent about injustice.  You want to point the finger at government, too?  Sure!  Heck yeah!  You are right, the creep of corporate control into government operations is downright evil.   This is a great time to point out that for all the “I’m a libertarian because government is so dumb & inefficient!” that corporations are also dumb & inefficient…& predatory.  That is the big difference, you know?

  8. Odd.  I was on unemployment earlier this year (their prepaid card was through Chase, not BofA, but same principle), and my paperwork said if I didn’t like the card I could call them up and switch to direct deposit at my existing bank.

    Ultimately I opted to stick with Chase because there’s one in biking distance and I figured it’d be more hassle to set up DD than just to go there occasionally.

    1. …my paperwork said if I didn’t like the card I could call them up and switch to direct deposit at my existing bank.

      She does have the option of direct deposit: “Even now that she is cognizant of the fees, she is afraid to switch to direct deposit, fearing a resulting gap in her weekly benefits. Her family’s finances are so tight, she says, that any delay puts them behind on the bills.” I don’t know enough about her situation or the timing involved to say whether that’s a legitimate objection.

      So the article is misleading, certainly. (They’re not “forced to use the bank.”) But I think the point is that having these fees in place on unemployment benefits guarantees that there will be a lot of people who don’t know how to switch, or don’t know it’s an option, or are afraid it’s another scam, and will end up paying fees they don’t understand and can’t afford. Basic compassion tells us that those of us who are most in need should not have to negotiate their way out of a fee structure or read the fine print to get the aid we’re trying to give them.

      1. Thank you jere7my. I was about to post a 3-paragraph explanation of why Just Because I Figured Out Direct Deposit Doesn’t Mean It Is Easy For Everybody And How That Ticks Me Off, but you said it more succinctly and kindly.

  9. So, I am not going to comment on the banks possible predatory behaviour, as I think others would do a better job, but…

    The dateline of that article says Cordova, S.C.. Putting that into BoA’s branch locator pulls up a BoA ATM just under 5 miles away (seems to actually be in a Bi-Lo supermarket). The nearest branch is supposed to be in SW Orangeburg (though I can’t see it on streetview), but there is definitely a branch at the Orangeburg mall 6.26 miles away. These aren’t exactly walking distance, but I don’t see why the lady in question has to go to Columbia. Maybe the dateline location is wrong.

    1.  Just to double-check (not because I thought you were wrong, but because I thought maybe the dateline on the article was where the reporter works from, vs where the story takes place…) I looked up Columbia and Cordova.  If Cordova was 50 miles south of Columbia, then we must be in the right place, because the article says she could drive 50 miles north to Columbia.

      So gooooogle maps (driving directions) from one to the other say 49.7 miles, and I think we must be in the right area.  Even if this woman lives 3 miles outside of Cordova, she still has other options besides 50 miles each way, assuming the Bi-Lo or Orangeburg mall are open.

      Nicely done.

  10. You can change the default ATM deposit to direct deposit at your local bank by simply changing an account preference on your State’s unemployment commission’s website.

  11. holy shit. just change banks. or get an account at your local bank and change the unemployment  to transfer into that account. 

    1. If you think it works that way, no wonder you’d be annoyed.

      I would also be that annoyed if I were only paying as much attention as you are.

      1. I don’t think it works that way. I know it works that way. There is undoubtedly a credit union in this town that does not charge ATM fees. If, by the snowball’s chance, there isn’t, then why not switch to one of the major large banks that does not charge ATM fees. I don’t really care to get into this too much but I am very curious about the complicated nuances about this that you claim I don’t understand.  

          1. Actually you are right. I was wrong. You won’t see someone on an internet message board admit that every day. Now if only I could go back and delete the comments that make me look stupid. Now I finally have a reason to get to work on that time machine that I have been procrastinating. 

        1. 1) Bank of America charges the account holder for withdrawing money from a non BoA ATM.

          2) This is not a bank account that she can close and transfer–this is a prepaid debit card that her state unemployment deposits into. She cannot close the account or transfer the funds, because the account isn’t really hers.

  12. ATMs don’t cost anything when you do a point-of-purchase transaction (and certainly not $3/throw). Yes, it’s nice to have a few bucks in your pocket, but most of her costs sound like they come from her actually drawing out cash — which is largely unnecessary.

    1. You be surprised the number of places that still don’t accept debit or credit cards. Doctors, dentists, school lunches, bus rides, corner stores. Everyplace isn’t as wired as you’d think. There are many places where there are no 7-11s or Circle-Ks. There is always a need for a few bucks.

    2. Unnecessary for many, maybe. But cash is still pretty useful to just about everybody. I wouldn’t necessarily cast down the use of cash so easily.

      FWIW, cash is also mostly untraceable and much easier to utilize, for example how many baby-sitters do you know that carry around a debit machine?

  13. UK Basic Bank Account… in the UK, every person has to have their wages paid into a bank account and to facilitate this for those who have no credit rating, there is the Basic Bank Account where you get a cash card to use at ATMs and you can make payments for regular bills like utilities with direct debits. What you do NOT have though is any credit facility or means to set up standing orders. You also can’t use it in shops like a debit card. I have one as my credit rating was shot after I had to do a runner from the bank etc. after my ex left me holding massive bills and the two kids to look after (I got custody). Basically the Citizen’s Advice Bureau told me to set up a basic account with another bank and to get my employers to start paying my wages into that one instead and then told my original bank to get lost and come for what I owed via the CAB and reach an agreement. That was six years ago and I’ve finally finished paying everything off.

    What’s annoying about the basic bank account cash point card now is that the big banks now want to start charging fees for my usage of it at ATMs… up till now is was mandated by law that it was feeless. They don’t like free banking anymore in the UK… they think only the rich should be able to have it…

  14. One can also usually get some cash out of a debit card at a supermarket without fees.  Unless these cards have some special fees beyond the normal.

    The state might need to do   some more training about how to avoid banking fees.  That would probably be a good thing anyway.

    Oh, and South Carolina ought to negotiate the same deal as California and New Jersey… and not keep their contracts secret.  Secret outsourcing contracts create a perception of corruption.

  15. It’s not BofA that is charging that ATM fee, it is whatever bank or networks she’s going to that is charging her the ATM fee.  BofA does not revenue share on outside ATM’s.  Basically other banks are screwing her. 

    1. It’s not BofA that is charging that ATM fee, it is whatever bank or networks she’s going to that is charging her the ATM fee.  BofA does not revenue share on outside ATM’s.  Basically other banks are screwing her.

      Dude, already discussed several times on this thread.  BoA ALSO CHARGES FEES for using non-BoA ATMs.  In fact, pretty much all banks do this.  You get charged a fee by the ATM vendor and charged another fee by your bank for going out-of-network.  It is a double whammy.

      Someone else said, “just use point-of-sale debit”…yeah, article is about someone in a rural area.  My guess is she buys most of what she needs at stores without the equipment needed for that.

      Also, for the “it’s all the government’s fault”…yeah, the government is certainly culpable but why does BoA get completely off the hook?  They could do fee-free debit cards for unemployment or they could have failed to lobby for an exclusive contract in the first place, both of which would have been more ethical than this.  It’s completely fair to criticize BoA for taking advantage of people collecting unemployment insurance even if they’re doing so by exploiting someone else’s boo-boo.

  16. The ATM fee is a “convenience charge” … which is to say “It’s convenient for us to take some more of your money, so we will.”

  17. Oddly, one of the BofA accounts I have is an “E-checking” account, where you are strongly encouraged to use the ATM for as many transactions as possible, and actually pay a penalty if you go to a teller for a transaction that could have been done at an ATM.* These days, I only see a teller if I need to get quarters or access my safe deposit box.
    *The teller can (and has, for me) waive the fee if there’s some sort of exception, like a broken ATM.

  18. Its not just having your money in that debit card, its that by using it you accept an agreement where banks will own you.

    I think in the long run the banks are angling to have all payments go through their cards, particularly paychecks and benefits, so they will get a cut of everything and there will be no alternative.  Not to mention the Leonine Contract your forced into by using one.

    There was the United States Coinage Act of 1965 that defined United States coins and currency as legal tender for all debts, public charges, taxes, and dues.  I would like to know how that is bypassed. 

    For employers, they just fire you if you don’t  agree to everything.  But how are benefits sidestepped? Do you waive your rights when applying, law change, or simply your not rich enought to fight?

  19. I’m currently unemployed in California and I can’t tell you all how disgusted I was when the checks stopped coming and a BofA card showed up in my mailbox. 

  20. Cory  – your article needs an update. 

    When the card arrives in the mail, along with it is a very short instruction booklet. In UNDER ONE MINUTE  you can log onto your new new B of A unemployment account and select the option which immediately transfers any EED deposit into your real account at whatever bank or credit union you have. 

    It’s not as good as direct deposit into your own account, but it’s still better than paper checks. 

    Seriously, as problems go, this one is unbelievably simple to fix.

    1. … unless you don’t have a bank account (although it appears that the Busbys have a joint account, according to the article).  I know that trick myself, having been off work for two months.

  21. Sweet holy hell.  Are there rules in place that don’t allow direct deposit in other states?  Here in NC I’m unemployed and have direct deposit to BB&T and have no fees what so ever for it.  At one time my wife was unemployed and received the BoA card.  She looked at the fees, switched it over to direct deposit to her own BoA account, and then emptied out the card once the switch over went through.

    No wonder people ended up in mortgage hell.  If you can’t follow a few basic rules when having a bank card maybe we should go back to straight cash and checks.

    Considering my wife now works at a bank and tells me about the number of people that come in with overdraft after overdraft this doesn’t surprise me at all.

  22. Paper welfare cheques are a real curse.  I lived in a poor neighbourhood where cheque day was truly dreaded.  They were routinely stolen and kited.  The thieves then took them to the No Questions cheque cashing service and got thoroughly coked-up.  One apartment building had a shopping cart rammed through the lobby windows 1 minute after the postman finished delivery, so that the mailboxes could be sledge-hammered open, every single month for over a year.  Apparently we can’t have direct deposit here in Canada due to some incoherent non-reasoning revolving around welfare queens withdrawing money from ATMs during their cruise-liner vacations.

    I note that WalMart, the working man’s true friend, charges a small fraction of what everyone else charges to cash cheques.  Guess why the existing banksters threw a fit when WalMart tried to get a full banking license?  They do this because of  the enlightened self-interest they have in having bargain shoppers who’ve just cashed their cheques inside their stores.  

    1. Paper welfare cheques are a real curse.  I lived in a poor neighbourhood where cheque day was truly dreaded.  They were routinely stolen and kited.  The thieves then took them to the No Questions cheque cashing service and got thoroughly coked-up.

      Not that I doubt your scenario at all, but unless you’re living in Mogadishu, why would kited-check-cashing businesses be allowed to stay in business?  That would seem like a slam dunk for law enforcement.

  23. It’s still better than student loans. They are at least still maintaining the pretense that her income is hers to take away from her, instead of flatly admitting that she’s just a perennial crop planted and owned by the bank.

  24. As other people have said, there are a lot of reasons to Dislike Bank of America, but this isn’t one.  You say BofA is “raking in profits”, but in all honesty they charge a flat 2.00 fee when a customer uses an ATM that isn’t owned by BofA.  Not 5.00.    The five dollars is charged by the LOCAL bank for her using a BofA card.

    So a few other things to think about.  BofA has a large presence in SC from what I remember, so the state probably chose them because they had the most ATMs.  Obviously, not every bank is represented in every area so they had to choose what was best for most people in the jurisdiction.  

    As other people have pointed out, she could transfer the money into a bank that’s more convenient.  More importantly why is she using the ATM that much?   If it’s really costing that much she should immediately take all of the money out and just use cash.  Neither article mentions the length of her unemployment, so it’s hard to say what period those 350 dollars in fees were accrued over.  But, using it twice a month at five dollars a pop that would put her at 35 months.  

    I might get accused of blaming the victim (this is BoingBoing afterall), but I’m pretty sure she could save a considerable amount if she merely thought about this situation a bit.

    1. I might get accused of blaming the victim (this is BoingBoing afterall), but I’m pretty sure she could save a considerable amount if she merely thought about this situation a bit.

      She could indeed. But I think the story here is that the SC government, to save money on their unemployment system, has switched to what is effectively an opt-out fee structure. Those of us who are blessed with education, internet research skills, critical thinking skills, &c. are usually quick to see that it’s to our advantage to opt out, but not everyone has those privileges. Not to say that nobody who’s unemployed in SC knows how to use the internet, but the reason opt-out fees are so pernicious is because there are always going to be people who get caught by them, and those are often exactly the people who most need help.

  25. Actually, you can use something called “the Internet” to have the payments automatically transferred to your own non-BofA bank account automatically, free of charge, and use your own ATM card for whatever without ever using the BofA benefits card. 

    This whole article is very much a tempest in a teapot.

  26. i recommend a book called ‘portfolios of the poor’ – in it they explain how very poor people (say those living on $2 a day) will actually pay negative interest on their savings, as a way of ensuring that money doesn’t get spent.

    so withdrawing all of the deposit at once, while it may seem logical to those with more money, to a poor person it may be perfectly rational to not withdraw it all to avoid the temptation to spend it all.

  27. Whatever we may think about it, when it’s all said and done, the banks will have found ways to make up for lost interchange revenues, which are at the bottom of the current debit card fee turmoil.  The only relevant question seems to me to be how they will do it.

    Right now it looks like the top contenders to make inroads into debit territory are prepaid and credit cards.  We are already seeing how they may be used to lure consumers away from debit cards.

    American Express, for example, recently launched a prepaid card that is practically fee-free, which is unheard of for a product that usually comes loaded with fees for activation, purchases, balance inquiries and monthly maintenance, among others.

    Credit cards, on the other hand, are now being marketed more aggressively than at any time since before the financial crisis began and issuers will no doubt try to make them a more attractive payment option than debit.

  28. I’ve actually come up with an idea that I’ve shared with some of my friends.  I think everyone should buy enough stock in the banks so they are allowed to attend a stock holder meeting.  Then, if we can pool enough and get the majority, vote to break the banks up.  It could be called, “Buy the Banks that bought the World!

  29. The state of Ohio offers direct deposit of unemployment compensation. If she has an account at any financial institution she can just have the money deposited there avoiding anything to do with the BofA debit card. She chose to use the debit card for her compensation.

    EDIT: Just realizing it was Columbia and not Columbus. But SC also offers direct deposit.

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