07/03/2013 08:42 am ET Updated Jul 03, 2013

McDonald's, Walmart, Others Probed Over ATM-Style Payroll Cards

New York's top prosecutor is investigating some of the state's largest employers over their use of ATM-style cards to pay their hourly employees, the New York Times reported.

New York Attorney General Eric Schneiderman sent letters seeking information to about twenty employers, including McDonald's, Walgreen Co and Wal-Mart, the paper said, citing people briefed on the matter.

McDonald's, Walgreen and Wal-Mart were not immediately available for comment outside regular business hours.

The inquiry by Schneiderman comes as a growing number of companies are abandoning paper paychecks and direct deposit to offer prepaid cards, it said.

But consumer lawyers, employees, and state and federal regulators have said that use of the cards can generate a range of fees — 50 cents for a balance inquiry and $2.25 for an out-of-network ATM. Those fees can quickly devour the pay of part-time and low-wage workers, the paper said.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Edwina Gibbs)



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