Bank Of America Makes Millions Charging Fees To Withdraw Unemployment Benefits

Bank Of America Makes Millions Charging Fees To Withdraw Unemployment Benefits

By Marie Diamond on Nov 14, 2011 at 11:40 am

Late last month, a national backlash forced Bank of America to abandon its plan to charge customers $5 a month to use their debit cards. But Huffington Post reports that the corporation has quietly been mining other sources of fees, preying on its most vulnerable customers to rake in millions in revenue:

Shawana Busby does not seem like the sort of customer who would be at the center of a major bank’s business plan. Out of work for much of the last three years, she depends upon a $264-a-week unemployment check from the state of South Carolina. But the state has contracted with Bank of America to administer its unemployment benefits, and Busby has frequently found herself incurring bank fees to get her money.

To withdraw her benefits, Busby, 33, uses a Bank of America prepaid debit card on which the state deposits her funds…Busby visits the ATMs in her area and begrudgingly accepts the fees, which reach as high as five dollars per transaction. She estimates that she has paid at least $350 in fees to tap her unemployment benefits. [...]

In short, the same banks whose speculation delivered a financial crisis that has destroyed millions of jobs have figured out how to turn widespread unemployment into a profit center: The larger the number of people who are out of work and dependent upon the state for sustenance, the greater the potential gains through administering their benefits.

Millions of jobless Americans like Busby have little choice but to rely on the bank’s prepaid debit cards to collect their monthly benefits. Forty-one states have contracted with Bank of America, Wells Fargo, JP Morgan Chase, and other banks to provide access to public benefits, allowing them to collect unlimited fees, both from the unemployed and state governments. South Carolina, for instance, pays Bank of America a fee for each transfer it facilitates on a debit card, and for handling direct deposit of unemployment benefits.

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