SB 88 Passed, Now What?

Elise Blasingame, Director of Community Education

On April 2 (sine die), the last day of the legislature, Senate Bill 88 passed, 43 yea to 8 nay. The Bill was introduced in order to allow employers the right to put employee earned wages or salary on a payroll card instead of issuing a payroll check. Georgia Watch asked sponsoring legislators to consider amending the bill to ensure that employees receive a disclosure statement regarding payroll card alternatives, including payroll checks and direct deposit into employee checking accounts.

The final version of the bill included two major protections for consumers:
1) Written disclosure of any fees that come with the prepaid payroll card at least 30 days before payroll is issued.
2) The ability to opt out of receiving payment via payroll card in favor of paper check or direct deposit.

Find the full bill here

What does this mean for consumers?
Now that employers have the right to place payroll on prepaid cards, it is important that all consumers read carefully the fees associated with those cards and make an informed choice. We recommend that if at all possible, employees opt to have their wages deposited directly into their bank accounts to both earn good credit history and avoid arbitrary fees. We are likely to see an increase in employers issuing prepaid cards, so make sure you know what you are being charged! It is your hard earned money, after all. Why waste it on unnecessary fees?

What kind of fees come with prepaid cards?
-ATM Balance Inquiry Fees
-Declined Transaction Fees
-Minimum Balance Fees
-ATM Withdrawal Fees (on top of the Bank’s ATM fee)
-Inactivity Fees
-Monthly Service Fee

Can Prepaid Cards be Good for Consumers?
A prepaid card that has no monthly service fee, no atm balance or declined transaction fees, and minimal usage fees could be a good alternative to consumers paying check-cashing fees each time they are paid. In Georgia, 10-12% of consumers do not have bank accounts. Many of these consumers pay high check-cashing fees when they are paid, another reason to opt for a low-cost or no-cost checking account at a local bank of credit union. If the consumer truly does not want to get a bank account, they should weigh the fees between check-cashing and the offered prepaid card, or talk to their employer about selecting a prepaid payroll card without arbitrary fees.

Is there any national legislation governing prepaid cards?
Right now, the Consumer Financial Protection Bureau (CFPB) is reviewing public comment on how to make strong rules to govern prepaid card products. We have submitted formal comments outlining our concerns with these products, and how the CFPB might make them a safer option for consumers. Read Georgia Watch’s comments to the Consumer Financial Protection Bureau on prepaid cards.