Debit and Credit Card Security

Citizen Wealth Financial Justice

payroll-debitcardLittle Rock  There was an interesting piece in the paper about what one commentator jokingly referred to as a “hot bank on bank” story based on First American Bank of Chicago going public and shaming Bank of America and Mastercard for not shutting down and issuing warnings about taxicab machines that were perpetrating debit card thefts.  They had caught the problem one day when a couple of dozen of their customers were hit, and had issued almost 500 new cards to try to prevent the problems, but went public after 18 days when they couldn’t get any action or response from Bank of America and Mastercard who were handling the transactions.   These days it feels like all of us either have “been there, done that,” or are preparing for the worse to come someday soon because the card folks just aren’t doing right on protecting security.

             The card companies say, no problem, they have a “zero liability” policy, meaning that customer doesn’t absorb the burn, but the article correctly points out that this is little comfort for many, and that’s what I want to underline here.  Increasingly companies are moving to direct deposit or where lower income workers are “unbanked,” issuing debit cards that are loaded with their pay.  In negotiating one of these programs recently for a 400-worker unit represented by Local 100, the company had gone as far as they reasonably could to assure us that this would work better for our unit, and in fact we had a petition going around the worksites complaining about payroll snafus, so we were a ready audience.

            But, look at the problems even in the best of circumstances and with the best of intentions.  There was an offer for the workers to choose either Chase or Bank of America for their cards, but once we looked Bank of America in fact had shut down all of their ATMs in Baton Rouge and these workers were concentrated in that city as well as Lafayette and New Orleans, so clearly that was not going to work for 150 workers there, and if they mistakenly chose the wrong bank, there would be a charge on every other ATM they were using to access their money.   The cards were designed so that there were no charges if you took all of your pay in cash in one lump, but we all know that many ATMs, especially in our neighborhoods, limit the amount of withdrawals so that’s another problem.  You could use the debit cards to buy some things without charges, but there were hidden shoals sure to crash some of our members’ boats. 

            We’ll work it out as best we can, but there’s only so much the union and company can do, when the credit card outfits and their banks refuse to take security seriously.  When there is a problem these will be workers with no money and a deluge of bills and problems.  Recently we found a charge of almost $1000 on a corporate American Express card at Fair Grinds Coffeehouse.  The company says no problem, we’ll figure it out, but that was a couple of weeks ago, and this is the Chicago bank’s complaint.  They waited 18 days.  We’ve been waiting at least that, but lower waged workers are in no position to hang out with no money for 24 hours much less 24 days.

            I also can’t get the story out of my mind of the McDonald’s workers in New York City who were paid on debit cards as well, but the franchise operator was less careful than our company and the cards were loaded down with charges driving the workers’ wages below the minimum as they tried to access their money.  The settlement is on its way, but they’ve been waiting and without in the meantime.

            A business model that screws the customers because the companies don’t want to use cards with embedded chips or take other security measures seems destined to fail, but in the meantime the rough edge is dragging, particularly on lower waged workers and smaller businesses not in position to wait for the by and by.