“I'm spending money I desperately need on fees instead of diapers, my kid's allergy medicine, toilet paper… Sure, I can go elsewhere and avoid fees, but then I'd be out the cost of gas or the bus fee. It’s a vicious cycle.” -response to a survey about ATM fees charged to people in order to obtain their CalWORKs (TANF) and/or General Assistance benefits in California.
Remember the $19 million ATM fee report, and the subsequent petition sponsored by Daily Kos that garnered over 40,000 signatures, calling on the banks to stop charging these fees? Since then, the California Reinvestment Coalition (CRC) has negotiated with several banks to waive the fees (including Banc of California, Rabobank, City National, Mechanics, and Tri Counties Bank), though the nation’s largest banks continue to charge these fees.
A new survey of people who receive CalWORKs and General Assistance shares their perspective and strategies for dealing with these fees. CRC, with help from the California Community Colleges CalWORKs Association (CCCCA) and the Alameda County Social Services Agency (SSA), surveyed 107 aid recipients about how the fees impact them and what they think should be done about them. (Full disclosure: I'm the report author).
ATM fees charged to access benefits are especially egregious because they represent a significant cost to families surviving on very little. The average grant for CalWORKs, California’s TANF program, is only about $500 a month while General Assistance, the state’s program for indigent adults who do not qualify for CalWORKs, averages $220 a month. More than one in four respondents reported spending $15 or more (total) on ATM fees in the three months leading up to this survey.
A respondent commented: “I have almost no money. So, every dollar counts. $3 here and there adds up. I live in a tiny mountain town, where there are no feasible free options. My cash assistance should not be wasted on unavoidable fees.”
Participants were asked a range of questions about their experiences with ATM fees, and cited strategies such as traveling further for fee-free ATMs, getting cash-back at a grocery store, or withdrawing large amounts of cash to avoid multiple ATM fees, but also noted the drawbacks of using these strategies. These include having to buy something to get cash back, concern about getting robbed with large amounts of cash, or spending gas and time to travel to an ATM that doesn’t charge more fees.
One respondent questioned: “Why would you use a system that further takes money from the needy? In essence, the [state] is paying these fees since they are [state] funds. If you add them all up I bet it's a lot of wasted money for everyone. Well except, the banks and ATM companies who once again profit from everyone's misfortune.”
When asked for recommendations, respondents focused on two main points:
1)The state should provide better access to free ATMs and help finding them, and
2)The state should help people set up direct deposit into bank and credit union accounts that are safe from fees that can drain their income, like overdraft.
While the survey was taken by 107 CalWORKs and General Assistance recipients in California, the results are nationally relevant given the new law signed by Governor Brownback in Kansas, which the LA Times called “spectacularly punitive.”
Under Kansas’ new law, recipients will only be able to withdraw $25 of their benefits at a time. Add in the ATM fees people are charged in order to get their benefits, and it’s an estimated 20% tax signed into law by the governor for being poor.
For the full report, visit www.ebtforfree.com
Next steps to reduce the fees
After the $19 million CalWORKs report, Assemblymember Mark Stone (D-Monterey Bay) sponsored legislation so that CalWORKs recipients would receive information about the ATM fees and direct deposit as an option to avoid the fees. It also requires future vendors to notify recipients and retailers if an EBT outage is expected to last more than an hour. Looking forward, CRC and our allies are advocating with the state of California to consider how it can structure its next Request for Proposal for the next EBT vendor so that there are fewer fees being charged to CalWORKs and other public assistance recipients. Stay tuned!