Payroll Cards: The Issues
Consumer Organizations are concerned about how users of payroll cards will get information about their accounts. They would like to require that banks providing payroll card programs also issue regular account statements to the card holders.
Financial institutions face several concerns in this proposal. First, they may not have accurate or current addresses for all cardholders. Second, the statement would be required by including payroll cards in the definitions of Regulation E, effectively making the payroll card holder a customer of the bank. Bankers have concerns about the implications this could have in other regulations, such as privacy and BSA, and even the possibility that identity theft flags could affect the account.
Consumer advocates argue that services connected to payroll cards is an effective way to create connections with the card holders and bring them into the banking system.
Payroll card disclosures may only be the tip of the iceberg. Some consumer advocates would like to see other services included in this type of statement, e.g. child support payments and other wage-like payment plans.
Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 4, 4/05
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