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Missouri lawmakers' plan would cap ATM fees for jobless benefits

Friday, March 13, 2009 | 6:48 p.m. CDT

JEFFERSON CITY — Missouri lawmakers have proposed capping bank fees that unemployed residents pay to withdraw jobless benefits using state-issued debit cards.

About 100,000 Missourians — or roughly three-quarters of those receiving jobless benefits — receive their payments through MasterCard debit cards managed by Central Bank of Jefferson City. Others receiving the benefits use alternatives such as having the funds deposited directly into their bank accounts.

Those using the debit cards can access their money for free at Central Bank and at Allpoint ATMs. Central Bank also won't charge for one withdrawal each week at other ATMs, though the bank that owns the ATM might.

After that one free withdrawal, Central Bank charges $1.75 for each transaction, and the price gets even higher — up to $3 — if someone is trying to access unemployment benefits while in another country.

To limit those fees, House budget writers this week added a provision to the state's roughly $22 billion budget that would cap ATM charges at 85 cents per transaction after the first withdrawal each month.

State Rep. Rob Schaaf, R-St. Joseph, said he offered the cap to protect residents from what he called "outrageous" bank fees. Supporters of his idea went even further in criticizing the banks.

"The banks have been taking people to the cleaners," said state Rep. Chris Kelly, D-Columbia.

But Schaaf's amendment doesn't limit the other fees that can be charged. For example, users can use another bank's ATM once per week to check their account balances, but they are charged 50 cents per transaction if they check it more than once a week. And if there are no deposits, withdrawals or purchases for 180 days, the unemployed worker is charged $1.50.

Frustration with ATM fees has grown as more Americans are out of work and qualifying for jobless benefits.

The Associated Press reported last month that 30 states have inked deals to provide unemployment benefits with banks that include Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. and US Bancorp. The AP review found all the programs carry fees.

In 2003, states paid out $4 million of unemployment insurance through debit cards, but by 2007, that increased to $2.8 billion. That's likely to continue growing and could top $10 billion by next year.

In Missouri, the Department of Labor and Industrial Relations signed a two-year contract with Central Bank last April. Administering the debit card payments doesn't cost the state any money, and after the contract expires in 2010, it can be renewed for five more years.

Labor Department spokeswoman Wanda Seeney said the state doesn't track how many withdrawals are made per person each month or how much the unemployed pay in fees. Analysts say a recipient uses a card an average of six to 10 times a month.

Seeney said Missouri stopped writing paper checks to save postage and printing costs and because of security concerns such as having the payments lost or stolen in the mail.

"The debit card is a faster and more efficient payment, and the workers still have the option of having their deposit put into an account," Seeney said.

Central Bank did not immediately return a call seeking comment Friday.

Several state lawmakers have raised concerns about the ATM fees, but at least one member of the House Budget Committee defended the program.

"The processing fee for the ATM machine is an expense to the bank," said state Rep. David Sater, R-Cassville. "They don't make any money on those things; they lose money. They do it as a customer service."


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