Washington State Proposes Problematic Payroll Card Rules (Jan. 21, 2016)
Add another state in play regarding proposed restrictions on payroll cards. Washington state representatives introduced a bill making it unlawful for payroll card providers to charge certain fees. The rules could be so restrictive that some industry observers fear the prepaid product would become unprofitable in the state.
The legislation, introduced Jan. 14, stipulates that a payroll card provider must offer access to at least one ATM that offers withdrawals from the payroll deposit account at no cost to the consumer. Also, providers cannot charge consumers a maintenance fee, or fees for declined transactions or balance inquiries, according to the bill.
“The proposed bill contains far-reaching fee restrictions not seen in most states, including restrictions on fees wholly unrelated to a cardholder’s ability to access their wages and that are entirely avoidable by the cardholder,” says Eli Rosenberg, attorney at Baird Holm LLP and a Pay Gov contributing editor. An example of an avoidable fee is for declined transactions, which can be avoided if cardholders keep track of their balances, he explains.
The New York State Department of Labor has taken a similar stance on fee restrictions for payroll cards, issuing a proposed rule (see page 6 of PDF) last October. The DOL has not yet issued a final rule, but some in the industry believe it could be soon.
“A concern with the proposed payroll card requirements in New York and now Washington is that they may serve as a bellwether for other states implementing similar restrictions that could, in worst-case scenarios, make it economically unfeasible to continue offering the products to a state’s consumers,” Rosenberg tells Pay News.
The Washington bill, HB 2505, is sponsored by Democratic Reps. Sam Hunt, Steve Kirby, Timm Ormsby and Republican Rep. Matt Shea. The legislation has been referred to the Business and Financial Services Committee.