Electronic Benefit Transfers and Bank Fees – California

Welfare recipients pay banks millions in fees, By Marisa Lagos, October 15, 2010, San Francisco Chronicle: “Banks are making nearly $1.5 million a month in fees by charging California welfare recipients to withdraw their benefits using ATMs and debit cards – an amount that has nearly doubled since 2008. The sharp increase comes as Gov. Arnold Schwarzenegger’s administration has made cracking down on fraud in the state’s welfare-to-work program a priority, most recently by barring use of welfare debit cards at casinos and cruise ships after media reports revealed that nearly $70 million in benefits had been withdrawn outside the state since 2007. Advocates for the poor say that while Schwarzenegger has rightly cracked down on such abuses, he has failed to curb another source of waste: escalating bank fees that take money from needy families and from the California businesses where that money would otherwise flow. By the end of this year, they estimate, more than $38 million will have been transferred from poor families to banks in the form of ATM and debit fees over the past three years. For example, in 2008, according to state figures, banks collected $10.1 million in fees from welfare recipients; this year, they are on track to collect more than $15 million. In June 2008, recipients paid out $833,000; banks collected $1.44 million the same month this year…”