U.S. Bank Gets a Thumbs Down for Charging Unemployed Oregonians Excessive Fees

By Angela Martin of Portland, Oregon. Angela is the Executive Director of Economic Fairness Oregon, a non-profit organization that works for economic fairness.

Call it what you will: courtesy fee, convenience charge, or my personal favorite - overdraft protection. It all adds up to profit at the expense of Oregon’s unemployed. When Tony Soprano charges steep fees for “protection” we know who the victim is. When a reputable financial institution charges Oregon’s unemployed “protection” fees, some call it a fair business deal. Not me, and not the smart folks at National Consumer Law Center. In their recently released report on nationwide unemployment compensation prepaid cards, Oregon’s program was found to be among the worst in the country.

U.S. Bank holds the state contract to distribute Oregon unemployment benefits on a prepaid debit card. Last year, 40% of recipients received their benefits on the U.S. Bank ReliaCard. This translated to $1.1 billion that Oregon transferred to U.S. Bank. The state no longer distributes paper checks for unemployment or child support payments. This was a money saver for the state and in theory, a good move for those receiving UI or child support. However, to say that Oregonians using the ReliaCard pay less than they would cashing a paper check is impossible to verify. That’s because U.S. Bank does not disclose the amount of money they collect through the various fees ReliaCard users must pay.

According to the NCLC report:

• Oregon is one of only five states that allow overdraft charges. U.S. Bank is the only bank–issued unemployment card that allows overdraft.
• Oregon is one of five states that offer two or fewer free in-network ATM withdrawals and one of those states - Alabama - has a lower fee ($1).
• Oregon is one of only 13 states that received a problematic rating.

U.S. Bank is the only unemployment payment card issuer that still allows overdraft “protection” fees. U.S. bank doesn’t charge overdraft fees in every state where they are the unemployment card issuer; overdraft fees are charged in five of the nine states where U.S. Bank is the card issuer. NCLC’s investigation reveals that U.S. Bank recently eliminated the overdraft fees tied to unemployment cards in Minnesota, North Dakota, South Dakota and Wyoming.

In the five states that still allow U.S. Bank to collect overdraft fees, the fee can be triggered for automatic withdrawals, such as those set up for automatic bill pay, even if the customer has not selected to “opt-in” to overdraft coverage.

The NCLC report provides a roadmap of how we can do better when the U.S. Bank contract comes up for renegotiation. More information on our state’s current contract can be found in EFO’s recently released report, Bad Math: Oregon’s Sour Banking Deals.

As part of the growing call to ensure unemployed Americans have full access to their benefits, SEIU gathered thousands of signatures from Oregonians demanding a new U.S. Bank contract. Those signatures were hand delivered by one of their members to the U.S. Bank shareholder meeting in St. Louis last month.

This effort echoes the conclusion of the NCLC report - that states with contracts unfavorable to consumers, such as Oregon, should renegotiate their benefit card contracts to secure better deals for their residents. This has already been done by a number of states, and EFO joins other consumer advocates in calling on Treasurer Ted Wheeler to immediately review and revise Oregon’s current contract, which expires at the end of this year.

You can pledge your support for this effort right now.