March 2013

Unemployed Nevadans who want banks to be more hands-off when it comes their weekly unemployment payments may be happy to know that at least two members of the Nevada Congressional delegation say they feel the same way.

Currently, the unemployed in Nevada and four other states do not have any other option but to receive their unemployment payments through a prepaid debit card, according to The Huffington Post.  Specifically,  in Nevada, these payments are made through the Nevada EPPICard, which is issued through Visa. This card allows users to receive cash or make purchases at any number of ATMs and retail stores, but  can  also result in a variety of transaction fees that are taken out from the individual’s unemployment payment. Tim Hogan, spokesman for Nevada’s U.S. House Member Steven Horsford, says the Congressman thinks these transaction fees are unfair to the unemployed.

“This is an issue Congressman Horsford confronted in the State Legislature too,” Hogan says. “He was a proponent of fair and transparent transactions with federal programs like SNAP and unemployment insurance, and he still holds those beliefs today. He believes that when every penny matters, it is unfair to be charged additional fees on unemployment insurance. Those fees could be meals for your family or gas to get to a job interview.”

Some of the transaction fees that unemployed Nevadans using their EPPICard face include 50 cents for a balance inquiry following the first free one at the ATM and $1.75 for a withdrawal at a Well Fargo ATM following the first free one. U.S. House Member Dina Titus recently wrote a letter to Nevada Governor Brian Sandoval urging him to quickly act to help bring about changes to the payment system in the state.

“The United States Department of Labor does not mandate that states make direct deposit an option to recipients, but strongly encourages them to do so,” Titus writes. “The media have recently reported that 45 states already follow such a policy, and it is unfortunate that Nevada is not one of them.

“I write to encourage you to expedite this change, so the State does not add to the economic burden of Nevadans who have been hit so hard by the recession. Should you need any assistance or guidance from the federal government, my Congressional office remains at your service.”

The Huffington Post reports that the other states not offering direct deposit to their unemployed include California, Indiana, Kansas and Maryland. But yet another Huffington Post piece written by Columnist Adam Levin indicates that not allowing unemployment recipients to receive payments by direct deposit, or by check for that matter, is illegal under the Electronic Funds Transfer Act. Again, U.S. House Member Dina Titus says she is in support of expanding these payment options to include direct deposit.

“I believe the State should institute a system that allows Nevadans receiving unemployment compensation to receive their claims without encountering unnecessary fees or hurdles,” she says. “One option to meet this goal is through direct deposit which allows a claimant to utilize his/her current financial institution as a means to receive and access benefits. My understanding is that Nevada is planning to offer this option to unemployment recipients beginning in April of this year.”

If this turns out to be the case, this change would be  a significant expansion to the state’s current EPPICard  payment system, which has been in place since November 2007. In fact, of the five states that do not offer direct deposit, three of those – California, Kansas, and Maryland – at least do allow recipients to set up automatic transfers to their own private bank accounts, reports The Huffington Post.

Yet, even in states where unemployment recipients are given the choice to have direct deposit but choose prepaid bank cards instead, transaction fees are still levied. Such recipients can be charged for balance inquiries, for calls to a bank’s customer service department, or for using the card to make a purchase at a retail store by entering the PIN. The Huffington Post reports that in California alone, it is estimated that $1.8 million in annual payments are lost to unemployed recipients due to transaction fees charged through that state’s prepaid debit cards.

However, The Huffington Post also reports on one federal program, the Supplemental Nutrition Assistance Program, or SNAP, that distributes payments through prepaid debit cards but does not allow recipients to be charged bank fees. Levin, The Huffington Post columnist, suggests its time to consider similar options for unemployment payments.

“We can make unemployment benefits fairer for everyone, and we can do it without reinventing the wheel,” he says. “Let's use the tools we already have to put more money back into jobless workers' pockets, and back into the economy.”

However, it is up to the states to decide how those payments are made. Yet, U.S. House Member Dina Titus is not without giving her opinion on how Nevadans can be helped.

“This is a difficult time for the record number of Nevadans currently out of work,” she says in a press release. “We should do all that we can to support them as they seek new employment opportunities. Providing Nevadans the option to receive unemployment compensation through direct deposit that avoids unnecessary bank fees just makes sense.”