Unemployment on prepaid cards can be a rip

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The unemployed are being kicked while they’re down because their unemployment compensation is being doled out by some states on fee-heavy prepaid cards instead of by check.

First, let me clarify that unemployment compensation is not welfare. You have to have worked to be eligible for unemployment and the benefit varies by state. It’s the rare individual who says, “Yippee! I’ve been laid off and now I can just sit back and collect unemployment.” It’s there to (hopefully) put food on the table and let you pay bills.

Some 40 states use prepaid cards instead of checks to issue unemployment compensation. MarketWatch did a study and found Arkansas, Idaho, Nebraska, Ohio and Oregon have the worst fees on their prepaid cards. But the absolute worst by far is Tennessee, according to the National Consumer Law Center.

This whole issue is similar to the recent problem we had with Georgia issuing some tax refunds on fee-laden debit cards.

There’s a real problem when states forget they exist to serve their citizens and instead decide to partner with banks. And who knows what funny stuff goes on between elected and appointed officials and the banks? At best, these are arrangements done out of naïveté. At worst, they’re intended to harm citizens. In either case, it’s unacceptable.



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