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  Date / Time: 3/16/2009 3:50 AM UTC

  Another twist for the unemployed: Debit card fees
  

  PHILADELPHIA, Pennsylvania (CNN) -- If you're out of work like Steve Lippe, who was laid off from his job as a salesman in January, you know you already have problems. But looking at the fine print that came with his new unemployment debit card, he became livid.

  

  A brochure that goes out to Pennsylvanians seeking unemployment via debit card lists a number of fees.

  

  "A $1.50 [fee] here, a $1.50 there," he said. "Forty cents for a balance inquiry. Fifty cents to have your card denied. Thirty-five cents to have your account accessed by telephone."

  He was quoting fees listed in a brochure that goes out to every unemployed person in Pennsylvania who chooses to receive benefits via debit card. He was given the option when he filed for jobless payments: Wait 10 days for a check or get the card immediately. Like most of the 925,000 state residents who received unemployment benefits in February in Pennsylvania, he chose the debit card and only then, he says, did he learn about the fees.

  "I was outraged by it," he told CNN. "I was very noisy about it. I just couldn't believe it. An outrage is just too weak a word. It's obscene."

  According to the U.S. Department of Labor, 30 states offer direct deposit cards to the unemployed. Many of the nation's biggest banks have contracts with the individual states. JP Morgan Chase, for instance, has contracts with seven states and has pending deals with two others, according to Chase spokesman John T. Murray. About 10 states, the Labor Department says, pay by check only.

  The National Consumer Law Center says fees range from 40 cents to a high of $3 per transaction, if the debit card is used at an out-of-network ATM. Most banks give jobless debit card users one free withdrawal per deposit period, which averages every other week in most states. But consumer advocates, including the Law Center, say the unemployed "should be able to obtain cash and perform basic functions with no fees."

  A key Democratic member of the House Financial Services Committee, which oversees bank regulation and theTroubled Asset Relief Program (TARP), told CNN she agrees wholeheartedly.

  "Fees should not be attached to unemployment benefits that the taxpayers are paying to help Americans," Rep. Carolyn Maloney, D-New York, told CNN. "Particularly, these fees should not be attached by banks that are getting TARP money and are being supported by taxpayer dollars."

  CNN asked some of the major banks involved in the debit card program for a response. Spokesmen for JP Morgan Chase, Wachovia, Bank of America and Wells Fargo all directed us to the individual state governments for comment.

  The acting secretary of labor and industry for Pennsylvania is Sandi Vito. Via e-mail, her staff invited CNN reporters to Allentown, Pennsylvania, where she was taking part at a public meeting at an elementary school. Afterward, she said, she would answer questions about the debit card fees.

  But when the meeting ended, her staff said she was too busy to talk. Watch Vito leave meeting in a hurry »

  Her spokesman, Troy A. Thompson, spoke with CNN after Vito left.

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  "The distribution system for people getting their benefits has been improved by the use of debit cards, way above and beyond the distribution by check," he said.

  The U.S. Department of Labor provided what it called "talking points" to CNN when asked for comment on the fee structure.

  "States can do a better job negotiating fees with banks," the department said. "Many states have obtained terms far more favorable to claimants than those described in media reports."

  In addition, according to the talking points, the Labor Department said it was aware states are offering unemployment debit cards for good reasons:

  • It is less expensive for claimants without bank accounts because they don't need to pay check cashing fees.

  • Claimants can use the card free at merchants and therefore don't need to carry excess cash.

  

  • Generally, these cards are safer and more secure than checks.

  "We will be working with states as they gain experience with debit cards to resolve these problems related to fees," the Labor Department said

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