There's been a lot of controversy of late over employers forcing their workers to accept their checks solely via debit cards. Well, the Consumer Financial Protection Bureau recently told the nation's employers in no uncertain terms, "You can't do that."
The Consumer Financial Protection Bureau recently issued a letter to employers reminding them of the law and warning them that the bureau intends to use its enforcement power to stop violations.
“Employees have a choice,” said Marla Blow, an assistant director at the CFPB. “It’s the law.”
The CFPB has received complaints from employees that some companies – especially fast food restaurants and retail stores – pay all of their employees with payroll cards. Workers said they were upset about high and unexpected fees for routine transactions, such as checking the card balance and withdrawing cash.
The bulletin, viewable here
, states that the Electronic Fund Transfer Act and the regulations implementing it forbid any "financial institution or other person" from requiring an employee to get direct deposit at a specific financial institution. The CFPB considered payroll cards to be the same as direct deposit accounts--and therefore, employers are not allowed to force their workers to get payroll cards. The bulletin also outlines specific protections available to those who opt to use payroll cards--such as disclosure of fee information, access to account information, limited fraud protection and error resolution rights.
At least one state is already on the ball to correct these abuses as well. New York state attorney general Eric Schneiderman recently asked 42 large employers doing business in New York to provide information about their payroll card policies.
Comments are closed on this story.