News

Apr 2, 2012 6:28 AM by AP

State using prepaid debit cards for some refunds

NEW ORLEANS (AP) - After trying to help her homebound mother use her state refund, Barbara Ewell is convinced the new prepaid debit card program was set up with banks rather than people in mind.

"I've found it incredibly complicated," said Ewell, an English professor in New Orleans, told The Times Picayune. "It really was tedious, and not at all straightforward. I was quite annoyed at the charges."

The Louisiana Department of Revenue is issuing some refunds by prepaid debit card to people who don't get them deposited directly into their bank accounts. "MyRefund" cards are being used for state income tax refunds and refunds of assessments on property insurance bills to support Louisiana Citizens Property Insurance Corp.

The revenue department estimates that it will save $315,000 to $500,000 by not issuing checks this year. "We're always looking for savings for the taxpayers," said Deputy Assistant Secretary Gary Matherne.

So far, 604,833 taxpayers have gotten refunds by direct deposit, and 355,421 MyRefund cards worth more than $57 million have been issued by Chase, the bank that won Louisiana's contract. More than $52 million of that has been spent or withdrawn from the cards. About 300 people have rejected them and requested checks.

Many taxpayers were caught by surprise, despite a radio and television campaign to alert people to the changes. Some have adjusted, but others say it's unfair to rural residents who don't live near a Chase bank or elderly people who can't use computers to track their card usage. Rep. Regina Barrow, a Democrat from Baton Rouge, introduced HB 635 to let people choose whether they want a debit card or a check. It is pending final passage in the House.

Ewell said her mother received five cards for five years of Citizens' refunds. Since her mother doesn't leave the house, spending them wouldn't be easy. Since automated tellers give out money in $10 or $20 bills, each card would be left with a small amount of money on it if Ewell withdrew all the money at ATMs.

To cash them at the bank, Ewell had to know how much money was on each card.

ATM withdrawals at Chase are free and anyone can go inside and visit a teller. But at machines that are not Chase or MoneyPass network ATMs, Chase gets $1.50 for each usage after the first, and the ATM operator will have its own charge. Requesting a check or transferring the money to a person's regular bank account costs 75 cents if the bank is not Chase.

Ewell set up an online account at Chase and paid 75 cents on each of the five cards to have the money transferred to her mother's regular account at another bank. But she didn't like having to disclose lots of sensitive information about her mother to a financial institution with which she has no relationship.

Matherne said any information that Chase gleans from handling state tax refunds for people who aren't already Chase customers is confidential, and the bank isn't allowed to use it for marketing or other purposes.

All in all, Ewell says it feels as though the program was set up to trick the little guy into paying excessive fees and leaving money on the cards. "It did seem like it was set up for the careless," Ewell said. "Chase will do very well on this."

Chase said it was unable to comment, and referred queries about the prepaid debit card program to the state.

The Louisiana Department of Revenue said that Chase beat out two other applicants in a competitive bid for the three-year contract.

The fees were approved as part of a contract that does not charge the state anything, said Byron Henderson, a spokesman for the revenue department. He said the program gives people without bank accounts the ability to spend money from the debit cards or cash them at Chase locations, and the fees are less than those charged by check-cashing companies.

»Comments

»Topics in this article

Top Videos

1 2 3 4

Most Popular