In yesterday's New York Times story Paid via Card, Workers Feel Sting of Fees, reporters Jessica Silver-Greenberg and Stephanie Clifford raise an important question but fail to answer it: Are a significant number of employers forcing hourly workers to use expensive payroll cards?
The three key conditions here are "significant number," "forcing" and "expensive." If these conditions are true, this clearly is a front-page size problem. But I can't find a single concrete example in the story of an employer that forces employees to use expensive payroll cards as an only option.
Instead, the story smears by implication all payroll prepaid cards by naming a couple of outlier fees. And it implicates major retailers like Taco Bell, Walgreens and Wal-Mart up high, only to emphasize later in the story that these companies offer their employees payroll cards as one choice out of several, not as an only option. The story also fails to examine whether these companies' payroll cards have expensive fees for common uses. I am familiar with the Wal-Mart prepaid card programs. They are known in the industry as some of the most cost-effective accounts available to consumers.
The problem with a story like this is it sows mistrust without adding relevant information for the people who are most impacted: the underbanked.
What would be more helpful? For one, show an actual fee table for a card like the JP Morgan Chase payroll card so readers can see if it is expensive for the way they bank. Then compare those fees side by side with a more affordable prepaid program, a checking account and the cost of relying on check-cashing stores and money order services. Base everything on someone whose annual income is below $25,000 and whose average monthly account balance is below $500.
Also, explore alternatives. For instance, ATM fees are complicated because there are multiple networks involved in different ATMs. It's unclear whether the charges are from the payroll card program or the ATM network. But most prepaid cards let consumers get cash back for free at the grocery store. People like Krystal McLemore in the Times story who like to get smaller amounts of cash out more frequently can avoid fees altogether by skipping the ATM and using the free cash back features.
For broader context, mention that groups like the Center for Financial Services Innovation (CFSI) have published a set of principles - the Compass Principles -- and that consumers and employers may want look at and prioritize card programs that subscribe to these principles.
And perhaps point to the Consumer Financial Protection Bureau's Project Catalyst program, which has a major initiative to research how the underbanked use features on the more advanced prepaid programs to do things like avoid high-interest payday loans.
I wouldn't expect New York Times journalists to be experts in the payments industry or underbanked consumers. But if the story is about how employers are forcing employees to use expensive payroll cards, I would expect good reporting to uncover specific examples and additional reporting to provide high-quality data and context to put the problem in perspective. Finding a few people to say they're upset and citing the general growth of prepaid cards as a proof of the problem's scope just places all payroll programs under the same umbrella and paints them with a black brush.
The lack of specific examples, quality data and thoughtful context turns this into a "he said she said story" that no doubt gets people excited and drives clicks but that is more likely to confuse than help the impacted audience.