Workers can refuse to get paid by debit card
The Consumer Financial Protection Bureau is now warning employers against this increasingly common practice.
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.
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[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 added just over a point, holding its weekly gain at 1.0% while the Nasdaq lost 0.4%.
The major averages began the day on an upbeat note, but relinquished their opening gains during the first 90 minutes of action. The early sentiment was boosted by a better-than-expected nonfarm payrolls report for February (175K versus Briefing.com consensus 163K), but a closer look into the report suggested that ... More
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