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Mon December 20, 2010
Welfare recipients rack up millions in ATM fees
Welfare dollars are supposed to help the poorest of families pay for the necessities of life. But Washington welfare recipients are spending hundreds of thousands of dollars each month on ATM surcharges. That’s what correspondent Austin Jenkins found through a public disclosure request. The finding comes as Washington’s welfare program faces budget cuts.
When you use a non-bank ATM you get a notice that says it will cost $1.50 or more to make a transaction. That's in addition to the amount your own bank will charge to process it. But every day in Washington welfare recipients are saying yes to these fees, and it’s adding up.
In an average month, they’re spending $274,000 in ATM surcharges. Those are your tax dollars that are going not to the welfare recipient but to banks or ATM vendors.
“Frankly it’s outrageous,” says Robin Zukoski.
Zukoski is a legal advocate for welfare families. She calls this a classic example of the poor pay more.
“I think they’re forced to pay the fees, I’m sure there’s poor choices in there, but I would drive five miles avoid a transaction fee and I chose my bank based on the transaction fee and these recipients don’t have those choices to make and they don’t have the freedom of transportation,” says Robin Zukoski.
Washington has a seven year contract, signed back in 2005, with JP Morgan Chase to dole out welfare benefits via debit card.
Here’s how it works:
Each month the card is automatically reloaded with that month’s cash benefit. The recipient can then use the card to purchase items at a store or withdraw cash at an ATM.
Chase ATMs are free to the user – the state does pay a back-end fee. But when a welfare recipient goes to a non-Chase ATM a surcharge often kicks in. Over the past six months alone, Washington welfare recipients have spent $1.6 million on ATM surcharges. That’s more than $3 million a year.
“I am surprised with some of the choices that clients are making,” says Troy Hutson.
Hutson runs Washington’s welfare program at the Department of Social and Health Services. He says welfare clients often do have a choice. Chase, which took over Washington Mutual, has more than 350 ATM machines throughout Washington.
But Hutson says it would be inappropriate for the state to cut-off access to non-Chase ATMs.
“I think you’ve probably been in that situation, as I have, where sometimes you have to make that choice and so I think in that way our clients are behaving no differently than a regular consumer. The difference here is that because they’re on public assistance the level scrutiny of greater," says Hutson.
But it might be easy for somebody to say: "well it’s not my money it’s the taxpayers’ money so yeah, I’ll pay it cause I’m not really paying it."
“Well, I think you are,” replies Hutson.
Because, says Hutson, it comes directly out the recipient’s monthly cash stipend. A family of three in Washington gets about $540 a month – but soon that will drop by 15 percent due to budget cuts – making every dollar count that much more.
Welfare advocate Robin Zukoski says it’s time for the state of Washington to drive a harder bargain with financial institutions – especially in light of the state’s budget crisis and the down economy.