After nearly a month of negotiations, Oregon has reached an agreement with U.S. Bank to eliminate many of the fees the bank charges people to access their unemployment benefits.
"The changes we have negotiated will benefit Oregon card users and taxpayers," said Oregon State Treasurer Ted Wheeler in a statement released Tuesday. "I want to thank U.S. Bank for listening to the needs of Oregonians and for their commitment to making the program even better for all involved."
Oregon is one of 41 states that have entered into contracts with some of the nation's biggest banks to provide access to unemployment benefits on prepaid debit cards. States say the prepaid debit cards save millions on check printing and mailing costs, and help people who don't have bank accounts to avoid check-cashing fees. But the arrangements often allow banks to charge unemployed people small fees for ordinary activities, such as visiting an ATM or calling customer service. Nearly a dozen states are set to renegotiate their prepaid debit card contracts before the end of 2012.
The precise schedule of fees -- what U.S. Bank will charge people in Oregon who receive unemployment benefits or child support payments on one of their prepaid debit cards -- has not been released. But beginning Jan. 1, U.S. Bank will allow people using the ReliaCard to make unlimited withdrawals at its ATMs or at teller windows where the VISA logo is displayed, according to the Oregon State Treasurer's office. ReliaCard users will also be able to make two free withdraws per month at machines that aren't owned by U.S. Bank.
Additionally, due to a change in federal law last year requiring customers to opt into overdraft programs offered by banks, the state asked U.S. Bank to stop allowing purchases or charging fees that send ReliaCard users into the red.
The state's current deal with U.S. Bank allows the bank to charge ReliaCard users fees if they visit an ATM more than four times in one month. The bank could charge card users $3.00 each time if they visit a teller more than two times in a 30-day period. It also allows the bank to charge card users a $17 overdraft fee, even if the costs that pushed customers into the red were ATM fees and other surcharges. Some card users also complained that they could not access all of their unemployment benefits without incurring a charge, due to the $200 limits at most U.S. Bank ATMs. The same limits apply at many stores where people can access free cash back after making a purchase.
In May, a National Consumer Law Center analysis of the deals negotiated by states gave poor marks to the U.S. Bank ReliaCard offered to unemployed people in Oregon.
After stories appeared in the Wall Street Journal, The Huffington Post and the Oregonian detailing the fees, why some cash-strapped consumers had a hard time avoiding them fees, as well as the state's plans to negotiate a new contract with U.S. Bank without taking competitive bids, thousands of readers posted pointed comments online. And, some people contacted the Oregon State Treasurer's office.
"Oregonians took a stand and demanded a fair deal, and they got it," Angela Martin, executive director of Economic Fairness Oregon, said in a statement. Economic Fairness Oregon is a nonprofit organization that advocates for the interests of low-income families.
The new deal is a major improvement, but does have some flaws, said Saadia McConville, a spokeswoman for Economic Fairness Oregon. Much of Oregon's population lives in rural areas, and some of those communities sit as many as 80 miles away from the nearest U.S. Bank ATM. In many of these same cities and towns, unemployment is a significant problem, so customers would be better served if U.S. Bank had also agreed not to charge people when they visit out-of-network ATMs, McConville said. Under the terms of the old and new agreement, these customers may have to pay fees to U.S. Bank and the owner of the ATMs that they use.