Tuesday, September 17, 2013
In a Sept. 12, 2013, bulletin, the Consumer Financial Protection Bureau reminded employers that they cannot require their employees to receive wages on prepaid payroll cards. The bulletin also outlines the federal consumer protections that apply to paycards, such as fee disclosure regulations, access to account histories, limited liability for unauthorized card usage and error resolution rights.
The CFPB reports that some employers, particularly in the retail and food service industries, distribute wages solely via paycards, which violates federal law. The Electronic Fund Transfer Act and Regulation E of the EFTA, as updated by the Dodd-Frank Reform Act of 2010, gives the CFPB regulatory authority over paycards The bureau added that state law typically governs which alternative payment methods employers must offer.
Noting that employees with paycards have complained of being assessed "unexpected" fees for ATM use, teller withdrawals and checking card account balances, the CFPB reiterated that federal law stipulates certain consumer protections, including:
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