Friday, February 20, 2009

Bank Scams on Unemployment Benefits

My brother is on unemployment, as we were chatting a few days ago he told me that the state is not issuing live checks any longer, but the only option is debit card or your checking account.

My brother optioned the debit card because the last time he was on unemployment he ended up owing because they paid him too much. I asked why not direct deposit to his checking account? He said, "You must read the fine print. Unemployment can go into your account and withdraw any money, etc., for any mistakes they make." In other words, he did not want unemployment messing up his checking account with over draft fees.

Many in this country do not have checking accounts with banks and the way things are going now, I don't blame their choice. Banks now do credit checks before you can open a checking account and many in this country have hits on their credit. So, now the debit card.

The thing with this debit card is this, the card is not with a main stream bank, like Bank of America or J.P. Morgan, but an obscure bank that you never heard of in some out of the way place that you can't get to. So, here come the banking fees.

Bank of America, J.P. Morgan, etc., are charging from 3.00 on up to withdraw any money from their ATM machines which are on practically every corner. Oh, it gets better as my brother told me. The bank your debit card was issued for unemployment also charges an ATM fee because you did not withdraw the money from their ATM machine, which of course, is no where to be seen.

And the banks wonder why folks are livid with their practices which continue to dump on those struggling?

For hundreds of thousands of workers losing their jobs during the recession, there's a new twist to their financial pain: Even as they're collecting unemployment benefits, they're paying bank fees just to get access to their money.

Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 — even though they could decline charges for more than what's on the card.

"It's a racket. It's a scam," said Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October. Davis was given a MasterCard issued through Central Bank of Jefferson City and recently paid $6 to make two $40 withdrawals.

The banks say their programs offer convenience. They also provide at least one way to tap the money at no charge, such as using a single free withdrawal to get all the cash at once from a bank teller. But the banks benefit from human nature, as people end up treating the cards like all the other plastic in their wallets.

The fees are raising questions from lawmakers who just recently voted to infuse banks with taxpayer money to keep them afloat. read more here....

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