JPMorgan Chase’s debit card contract to be extended despite state employees’ call to end an estimated $1M a year in user fees
LANSING – Michigan is set to extend a lucrative contract with JPMorgan Chase Bank that has taken an estimated $1 million a year out of unemployed workers’ pockets by charging them exorbitant debit-card fees to access or keep track of their own money. The action comes despite requests by state employees that Michigan join other states in ending this practice that takes precious dollars away from struggling families and local small businesses.
“When you’re out of work and counting every dime, it hurts to have to pay just to get your own money out of the bank,” said Tarrecus Humes, an unemployed Lansing resident who accesses his unemployment benefits through a debit card and participated in a protest outside Chase bank in Lansing today. “Chase bank is already making millions off their state contract but that’s not enough for them. They have to feed their greed by kicking unemployed workers while we’re down.”
Since 2008, Michigan has contracted with JPMorgan Chase to administer the state’s unemployment benefit payment system, which hundreds of thousands of Michigan residents use to access their unemployment benefits either through direct deposit or debit cards.
On top of receiving $830,000 from the state through Sept. 30 with an additional authorization of $500,000, the bank also charges unemployed residents a variety of fees to use their debit cards – fees that are estimated to total more than $1 million a year. About one-third of unemployed residents are estimated to use the debit-card option to receive their benefits, and they can be assessed fees for ATM withdrawals, balance inquiries, transaction denials and in-person teller usage. “
Michigan’s card currently has the nation’s highest fees for ATM balance inquiries and denied transactions, according to an analysis by the National Consumer Law Center.1
Members of SEIU Local 517M who work at the Unemployment Insurance Agency talked with state officials months ago to urge them to negotiate a better deal as part of union members’ efforts to find new solutions for cost savings, accountability improvements and better public services. However, the state has indicated that the contract, which expires Dec. 31, is being extended for another year with no meaningful changes.
Michigan’s unemployed citizens are already at a disadvantage because Michigan’s unemployment system pays the lowest maximum benefits in the Midwest and compares poorly in other ways, according to a recent report by the Michigan League for Human Services.2
“Unemployment benefits are supposed to help people get back on their feet, not take advantage of them when they’re down,” said Joey Combs, an SEIU 517M member who works at the Detroit UIA office. “As a Michigan resident, I am infuriated that JPMorgan Chase is allowed to make so much money off those who are trying so hard to find a job and take care of their families.”
Big banks’ lucrative and often exploitive contracts with state governments to administer critical benefits have come under increasing scrutiny during this economic downturn. Following a year-long campaign by members of SEIU Local 503 and allies, Oregon’s State Treasurer negotiated a new contract with US Bank eliminating abuses associated with fees for that state’s debit card.
Unemployed citizens in many other states pay few if any of these fees. Arizona has a contract with Chase that costs the state nothing and eliminated the denial fee in 2010; California just signed a contract with Bank of America that is free for the state and guarantees mostly free access for unemployed citizens.
1“Falling Short: Michigan’s Unemployment Insurance Compares Poorly with Other Midwestern State,” Nov. 21, 2011: www.milhs.org/highest-unemployment-weakest-benefits
2 “Unemployment Compensation Prepaid Cards,” National Consumer Law Center, May 2011: www.nclc.org/images/pdf/pr-reports/uc-prepaid-card-report.pdf