Workers can refuse to get paid by debit card

The Consumer Financial Protection Bureau is now warning employers against this increasingly common practice.

By Jonathan Berr Sep 16, 2013 12:33PM
Credit and debit cards (© Image Source, Getty Images)It turns out that low-wage workers at companies such McDonald's (MCD),  Wal-Mart (WMT), Home Depot (HD) and Darden Restaurants (DRI) don't have to get paid by debit card -- unless they want to see their earnings eaten away by high fees.

At least, that's the view of the Consumer Financial Protection Bureau (CFPB), which issued a bulletin warning employers against the practice that has spurred at least one class action, according to the Associated Press. New York Attorney General Eric Schneiderman has also raised questions about using debit cards as an alternative to paychecks. Companies have argued that the cards are a cost-effective means of paying their workers.

ATM pay cards are mainly used by people without bank accounts, which experts say is a growing problem.

A 2011 survey by the Federal Deposit Insurance Corp. found that 28.3% of households are either unbanked or underbanked, meaning they conduct at least some of their financial transactions outside the traditional banking system. In 2009, that rate was 18.2%. Roughly 9% of households do not have a savings account, while about 10% lack a checking account. 

"The most common reasons why households report they do not have bank accounts are that they feel they do not have enough money for an account, or they do not need or want one," said the FDIC.

Unfortunately, many of these consumers wind up paying high fees to access their money through outlets such as check-cashing services. This proves yet again that many Americans remain angry at the nation's financial institutions five years after the start of the worst economic bust since the Great Recession.

A whopping 37% of voters surveyed by the Center for Responsible Lending said they had been "overcharged" or deceived by a financial company. That perception is prevalent among African Americans, voters in their 40s and middle-income voters. Not surprisingly, support for the CFPB's stance on debit card pay practices is high among people who feel this way.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

Sep 16, 2013 4:59PM
then pass a law makig it less profitable for banks to charge outragous fees .  in fact why don't we throw in the insurance co too Talk about trust in banks, the insurance companies rip off more than money and they find clever ways to not pay claims that people deserve.
Sep 16, 2013 2:08PM

Sooner or later, the people facing downward mobility will start to vote for people who have ways

 to stop it!

Sep 16, 2013 4:26PM
Paying employees by debit card is another way for companies to take advantage of them. So much of recent profit gains has consisted of little more than beating up employees.
Sep 16, 2013 4:29PM
It is not just companies. In NJ, for unemployment, if you don't do direct deposit, they (the state) gives you a debit card and deposit the money into that card. However, I beleive that the card is completely no fees.
Sep 16, 2013 7:26PM
That giant sucking sound is the government at work misspending our tax dollars.
Sep 16, 2013 1:26PM
Just Ross Perot said: Hear that giant sucking sound?? The Serferdude
Sep 17, 2013 9:34AM

I would suggest a federally insured Credit Union as a alternative to a Bank. Their profits above a reserve required by the government, have to be returned to their members as dividends or lower cost for services.


Banks by their very nature SUCK as much of your money as possible. Their managers are paid bonuses for making money on the backs of their depositors and squeezing  those with loans.


Consolidation of these small banks into large multi national corporations have removed the personal service from the equation. If you feel your bank doesn't know your are right. Just get online and see who owns your local bank.


There is not way to fix the basic nature of a bank. You just need to figure out a way to use their services less.


Turn off your I-pad and use your head!





Sep 17, 2013 2:41AM
I like the way banks tell you no fee with direct deposit but then tell you that you don't have direct deposit and steal your interest for those months when your deposit arrives early for the coming month because the beginning of the month falls on a weekend.  Common sense doesn't always trump law but it seems like it should in this case.  Problem is, there's probably not enough money involved to make it worthwhile for a lawyer to fight as class action and the little guy hasn't even a chance of winning by himself.  And, banking somewhere else doesn't help.  I've identified more than one institution that does the same thing.  So, tell me banks are cheating you out of your money, and I would have to agree.   And, I'm a middle income single white guy with a degree from an engineering college. 
Sep 17, 2013 3:17AM
I'm not sure how to get along without some kind of banking.    How do you pay your bills?  How do you get cash?  Even if you could use direct deposit to a credit card, some merchants won't accept credit card because they have to pay a fee to get their money or they want to pass the fee on to you.  To add insult to injury, credit card companies don't pay interest on an outstanding credit.  I could live with the latter problem but if I'm going to have to pay a fee anyway, I might as well have a bank account.  They got you coming and going.  The banks have become as bad lawyers.  Bend over bubba, it's just business!  Notice how everyone is pushing printing costs off to you?  Banks want to charge for a monthly statement if you don't accept it electronically.  To get one electronically, you have to have an internet account.  Who pays for that?  Bzzzt times up.  You do!   Then you need your own printer, paper, and ink not to mention a computer.  Banking has become the great American ripoff!
Sep 16, 2013 7:31PM
The one guy in here had it right....why pay the bank to use your money? It isn't like you'd be missing out on a really good interest rate if you didn't put your money in the  bank.
Sep 16, 2013 7:45PM
Congress passed a bill making it ok to charge fees on debit cards.  We had to explain to employees why its cost them more for their candy bar in a vending machine when they use their debit card to pay.  And if they get money from the ATM we have on site they are charged 2.00 to get 20.00. No win situation for them.
Sep 16, 2013 3:11PM
With most of these companies you don't get a choice.  No bank account then if you want to get paid you HAVE to take the card.  Most companies no longer cut an actual paper check.  And if you refuse the debit card???  companies have the right not to hire you... 
Sep 16, 2013 7:24PM
I don't trust banks, they are tied to the government. The government can spy on your banking no questions asked. banks do not protect you, they are in bed with the government.. I get paid with a debit card and don't see any problems, I also do not work at McDonalds.....Id rather pay with money-orders, its cleaner that way. Not that I have anything to hide but its nobody's business including the government what or how I spend my money.
Sep 16, 2013 8:54PM

I do not understand this high fee nonsense. Just look around. SS told me I had to have a card

so instead of using theirs I looked around. I use Netspend. With direct deposit the monthly fee

is $5.00 and no charge to the account holder for transactions. Plus, it has cash back benefits like a

credit card ! If you are using an employer provided debit card and the fees are on everything then your employer is most likely making money off you as well as the card provider.

Sep 17, 2013 7:15AM
Laws vary from state to state. In some states an employee can request to be paid with a check.
Sep 16, 2013 8:38PM
I am all for using prepaid debit cards. With the credit requirements a person has to meet in order to open a checking account, it's almost impossible to get one. It's almost as if someone has to have perfect credit just to open a checking account. If someone is lucky enough to be able to open an account, the bank will charge outrageous fees for the account. Sure, the fees associated with te debit cards can be a little high, depending on the card you get. But, if someone is unable to get a regular bank account, a prepaid debit card may be the best way to go. They're better than carrying a large amount of cash.
Sep 16, 2013 2:11PM
Two things I don't agree with in this little bit from MSN.  First, I wouldn't open a savings account right now if I didn't have one considering I was just offered a CD for 0.15% interest.  Are you kidding me!?  That doesn't even cover the inflation in this country!  Also, if people are that stupid to keep paying fees to get there money out, why not keep charging them.  We can't keep dumbifying thigs for people, if they are stupdi with their money, they should pay more!  WAKE UP!!!
Sep 16, 2013 1:48PM

No bank? A bunch of criminals writing bad checks, hiding money from the IRS or just to plain stupid to be able to balance one.


That is why no bank account, so who really cares if they get ripped off.

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