Policy & Practice | Summer 2023

CFPB continued from page 10

“Each time my benefits were debited to the account they were immediately credited back under a ‘Transaction Type’ called ‘RETURN UNPINNED DEPOSIT.’ I contacted the customer service phone number for [the card] ten times—they even charged me for each phone call.”

The CFPB observed fee variations in the cards used to distribute TANF. Some Electronic Benefits Transfer (EBT) or Electronic Payment Cards (EPC) charge familiar fees, such as out-of-network ATM withdrawal fees, but some prepaid card providers charge recipients addi tional fees, such as a fee to check their account balance at an ATM, to call customer service, or to receive a “mobile balance alert.” Many TANF cards limit the number of free transactions avail able to users, including in network. Because recipients don’t have a choice in selecting the program’s card products on which they receive their assistance, they may not know what services are available, at what cost, or where to access funds without incurring fees. Even seemingly nominal fees can have an outsized impact on families with low incomes. This is especially the case for individuals who live in rural areas, where it may be difficult to access in network ATMs and users may be forced to incur out-of-network ATM fees, which are often substantially higher. Where possible, consumer choice can be promoted through intentional

match competitive industry standards in fees, accessibility, and security. Card services should offer timely, respon sive, and individualized customer service to benefits recipients needing assistance. Additionally, card fees should be limited, clear, and mostly—if not entirely—borne by the program. We know that state administra tors play an essential role in ensuring programs do not include high-cost financial products. For that reason, we are committed to building on our engagements with them to ensure high-cost financial products do not prevent their clients from advancing their economic mobility.

program design. Program beneficia ries should be able to elect to receive benefit payments via direct deposit or on a program card. However, the card option that the consumer may ulti mately use can be limited at multiple junctures in the benefits program’s life cycle; this includes limited availability of card options, even in programs that currently require the use of cards, such as SNAP. Separately, the CFPB has noted the limited number of EBT card providers. Nationwide, there are currently four EBT card providers that state administrators can choose from. This scarcity of providers could affect the quality of program cards. Through CFPB’s work and in our conversations with public adminis trators, we know how to ensure such programs do not impose high-cost financial products on recipients. For instance, public benefits cards should

Amelia O’Rourke-Owens is an Engagement and Policy Fellow in Community Affairs at the Consumer Financial Protection Bureau.

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