Asset Building Program and Partners Recommend Best Practices for TANF Payment Card Contracts

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WASHINGTON, DC – Today, New America’s Asset Building Program, the Center for Law and Social Policy (CLASP) and the California Reinvestment Coalition (CRC), submitted a letter urging the Consumer Financial Protection Bureau (CFPB) and Administration for Children and Families at the U.S. Department of Health and Human Services to provide guidance to states about best practices for their contracts with Electronic Benefit Transfer (EBT) vendors, so that families accessing public assistance can do so safely and with fewer fees.
 
Currently, families participating in the Temporary Assistance for Needy Families program (TANF/cash assistance) often must pay significant fees and surcharges to withdraw their benefits at an ATM. In California, fees charged to recipients of TANF and other public assistance programs added up to $19 million in 2012, according to a new report from CRC. Since families’ average monthly grants are only a few hundred dollars, these small fees can have a significant impact on their ability to make ends meet.
 
“Some benefit payment card contracts appear cheap to the states because the real costs are passed on to recipients in the form of fees,” said Elizabeth Lower-Basch, Policy Coordinator and Senior Policy Analyst with CLASP. “This memo offers recommendations on how states can protect recipients’ interests in contracts with benefit card providers and make sure taxpayer funds are going to needy families—not banks.”
 
“For families living on the brink, small expenses add up fast,” said Aleta Sprague, Policy Analyst with the Asset Building Program. “Reducing EBT fees and connecting more striving households with safe, affordable bank accounts are two strategies that would help taxpayers get the most from their investment.”
 
“States must protect taxpayer investments in safety net programs so they can support families and children, not private corporate profits,” said Andrea Luquetta, CRC's Policy Advocate. “In the face of constant cuts to these critical programs, we cannot continue to allow nickel and diming fees to casually drain family resources at ATMs and check cashers. We have to give families as much opportunity as possible to put every safety net dollar to work."
   
Specific best practices the groups recommend include:

  • permitting a certain number of fee-free withdrawals per month
  • providing clear and accessible information about fees and surcharges
  • ensuring protections against theft and fraud
  • permitting and encouraging direct deposit to a bank account as a less expensive and more convenient alternative to receiving benefits on a state-issued card

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