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Beneficiaries of aid for victims of the Nickel-and-Diming coronavirus

Eugene Schwartz almost threw away $ 2,400 in free government money. His Economic Impact Payment (EIP), the money Congress ordered to send Americans to alleviate the pandemic, arrived on a debit card, in a plain white envelope, just before he and his wife moved. from Maryland to Florida. He expected a paper check, so when his wife asked him if he had ordered a debit card, “My first thought was to cut it up,” he said.

The strangeness did not stop there. The name on his card was Eugene Walker, his wife’s last name, not his.

But what Schwartz went through to withdraw the money from the card was even stranger. The envelope included not only the debit card and a letter signed by Donald Trump, but a fee schedule: $ 2 for each out-of-network ATM withdrawal after the first, $ 0.25 for a balance request, and $ 7. $ 50 to replace a lost card plus $ 17 to ship it via priority mail. He also had a transaction limit of $ 1,000 at any ATM or bank.

These terms seem advantageous compared to some prepaid debit cards, which cost consumers $ 10 to $ 12 per month at the median just to use. But this reflects a haphazard disparity created by the delivery of payments approved in the CARES law of March.

Those who received direct deposit payments had to keep all the money, with no strings attached, at least if their bank or a debt collector i didn’t catch it first to offset an existing debt. But the four millions people like Schwartz who received the money on debit cards had to work their way through a maze of Byzantine rules in order to get their payment out intact.

Four million people who received money on debit cards had to fight their way through a maze of Byzantine rules in order to come out with their payment intact.

Only one subset of people who did not provide the IRS direct deposit information and whose tax returns were processed from Andover, Massachusetts, and Austin, Texas, received their PIEs on debit cards. But it seemed like a dry phase for future relief payments, most or all of which could be issued this way. This would benefit Fiserv and MetaBank, two dominant prepaid debit card service providers, which keep the contract for EIP cards. If everyone is given a card and businesses only earn a tiny amount on each, that could translate into hundreds of millions of dollars in fees, in funds for Americans to pay for rent, food, or money. drugs during an economic crisis.

Beyond the costs, the beneficiaries who spoke with the Perspective describes other barriers to accessing their money. There have been several instances where the government put the wrong name on the debit card by swapping spouses’ last names. Recipients said they were unable to find banks or service providers willing to accept the cards, even when they were listed on the card. EIP card website as program participants.

For example, Schwartz immediately took his card to a branch of Bank of America, where he has had an account for half a century, but when he tried to get money through an ATM there, this gave him an error message. When he brought it to the branch manager, “He looked at it and laughed,” he said. The bank would not accept it.

An attempt to transfer funds from the card to his bank account was also unsuccessful. Finally, a customer service agent explained to Schwartz the “secret” to withdrawing his money: take the card to an ATM in the network and withdraw the money as a lump sum. Eventually, he found a Wawa gas station six miles from his house with an ATM listed as networked.

Schwartz withdrew $ 1,900 in four installments, fearful of withdrawing large sums in the middle of a busy food court. It wasn’t until he got back into his car and looked at his receipts that he saw that his balance was not $ 500 as it should have been, but $ 494. So he came home and checked the ATM balance. The amount fell even lower, to $ 493.75. He had been billed $ 2 for each of the last three transactions, plus $ 0.25 for the balance request.

He called the toll-free EIP card number and was told that the $ 2 charge levied was in error because he should not have been charged for network withdrawals, so they would be refunded. But nothing could be done about the balance request fee.

For a low-income person who is in desperate need of relief during the pandemic because they have lost their job or reduced their hours, losing money because of fees is an ordeal.

Karen (who requested that we not disclose her last name), a senior from Brunswick, Maine, also received her CARES Act funds on a debit card. His daughter Laurie took care of the cash withdrawal, using a tool on the EIP card website that lists free network ATMs. She went to four different places near her home. Three of them spat the card and did not accept it. The fourth said he would charge an ATM fee of $ 2.

“Even though on principle I wanted to continue traveling, I got the money,” Laurie said. In the end, the ATM charged $ 2.50. Her withdrawal left money on the card, so she tried to make a purchase with it, but the total was more than what was on the card, and the store didn’t allow split payments. Another transaction for less than the remaining balance also failed. “You are supposed to be able to use it like a credit card,” she said. She eventually made it work, but an unused balance of $ 16 remains on the card.

Others in Maine who have spoken to Perspective reported similar issues, including fees for withdrawing cash and an inability to use cards at retail outlets.

These were mostly inconveniences. “It’s not that I couldn’t exist without the money,” Schwartz said. Once he got them, the funds came in handy: his wife hadn’t worked for a few years due to a health issue, and his job which involved extensive travel dried up during the pandemic, so the money was a cushion.

For a low-income person, however, who is in desperate need of relief during the pandemic because they have lost their job or reduced their hours, losing money over fees is a hardship. Also, many don’t have the time to make endless phone calls and drive to make sure they’re getting the money the right way. “When you’re on the edge, this money is supposed to be for an emergency and not the ATM providers or the issuing bank,” Laurie said.

The EIP card deal states that recipients can convert the debit card to a check, but Laurie found delivery would take seven to ten days. Poor Americans desperate for funds don’t have that kind of time.

“People with moderate incomes, people with low incomes pay more for financial services,” noted Sen. Sherrod Brown (D-OH), who sent a letter to the Secretary of the Treasury with fellow Democrats complaining of the high fees, as well as a letter sound the alarm about a forced arbitration clause in the fine print of the cards. “It’s important to put money in people’s hands. “

The charges appear to go directly to Fiserv and MetaBank. It is not known what happens to unused balances on the cards. Fiserv and MetaBank referred questions about the EIP card to the Office of the Treasury Tax Service. The Treasury did not respond to a request for comment.

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The White House and Congress have expressed a desire to send another round of payments, although negotiations are on ice after Trump himself issued executive orders over the weekend. But if another round ends, at least some of the money, if not all, would likely be spent on the EIP cards again. This is why Brown is still pushing the problem. “We hope that in the next package these consumer protections will be there, a ban on fees for debit cards and a ban on arbitration clauses,” he said.

Ultimately, Brown noted, what he wants is to create a way for all Americans to have bank accounts. Six percent of adults have no bank account at all, while a further 16% have accounts but still have to rely on alternative services such as check registers or payday loans. Brown introduced legislation this would allow anyone to create a free account at local banks and post offices, not only to receive federal coronavirus relief, but also to gain access to other services available to people with regular accounts.

Schwartz refuses to withdraw the few dollars remaining on his card, out of spite. The situation left him outraged, he said. “Why hire a company to [send debit cards] when all they had to do was hit a button and send it the same way they send refund checks or whatever else they do? “